Answers

Fundamentals Level Skills Module, Paper F4 (MYS) Corporate and Business Law (Malaysia) 1

June 2008 Answers

This question tests the candidates knowledge of the advantages and operation of the doctrine of binding judicial precedent in Malaysia. (a) The doctrine of binding judicial precedent is a doctrine which requires decisions of higher courts to be followed by courts which are lower in the hierarchy of the court structure. It must be noted that it is actually the ratio decidendi that binds future courts. The ratio decidendi refers to the rationale or principle of law on which the decision is based. The ratio decidendi must be distinguished from obiter dicta, which refers to opinions or other matters expressed by the judge, which are not directly relevant to the case before him. In order to better understand the operation of the doctrine, the hierarchy of the courts must be borne in mind. The Federal Court is the highest court in Malaysia. Below it is the Court of Appeal. Below the Court of Appeal is the High Court. Below the High Court are the lower courts comprising the Sessions Courts, Magistrates Courts and the Penghulus Courts, which are referred to as the Subordinate Courts. The doctrine operates as follows: (i) Decisions of the Privy Council (which was formerly the highest court of appeal for Malaysia) given on appeal from Malaysia or from another Commonwealth country where the law is in pari materia to Malaysia are binding on the Malaysian courts. See: Khalid Panjang and Ors v PP [1964] MLJ 108. D.G.I.R. v Kulim Rubber Plantation Ltd [1981] 1 MLJ 214. Decisions of the Federal Court (the highest court in Malaysia) are binding on all courts below it. In the same way as the House of Lords of England is not bound by its own decisions, the Federal Court is also not bound by its own decisions and may depart from them. See: Arulpragasan v Public Prosecutor [1997] 1 MLJ 1. However, this will only be sparingly done. See: Tunde Apatria v Public Prosecutor [2001] 1 MLJ 259.

(ii)

(iii) Decisions of the Court of Appeal will be binding on all the courts below it. As this courts position is analogous to the Court of Appeal of England, it is bound by its own previous decisions to the same extent as the latter. See: Young v Bristol Aeroplane Co Ltd [1944] K.B. 718. (iv) Decisions of the High Court are binding on all Subordinate Courts, but one High Court judge is not bound to follow the decision of another. See: Sundralingam v Ramanathan Chettiar [1967] 2 MLJ 211. Subordinate Courts are bound by precedents laid down by the Superior Courts but their own decisions do not bind any court. (b) The advantages of the doctrine of judicial precedent are the following: (i) (ii) It helps to achieve certainty and uniformity in the law as like cases will be treated alike. The law developed through the cases is more practical as it is based on actual situations rather than on hypothetical ones.

(iii) Flexibility in the application can also be achieved. Although judges of the lower courts are generally bound by the decisions of the higher courts, they do not always have to be so. For example, a judge may avoid following an earlier precedent if the case was decided per incurium i.e. without taking into account a relevant legal principle or statute. He could also avoid it by distinguishing the precedent from the facts of the present case. This flexibility allows the law to be adapted to the changing needs of society.

This question, on agency law, tests the candidates knowledge on the duties of an agent towards his principal under the Contracts Act 1950. Candidates are only required to explain any FIVE such duties. The Contracts Act 1950 imposes several duties upon an agent towards his principal. These may be explained as follows: (a) Section 164 imposes a duty upon an agent to obey the principals instructions or, in the absence of such instructions, to act according to the custom which prevails in doing business of the same kind at the place where the agent conducts the business. When the agent acts otherwise, he must make good any losses or account to the principal for any profits made by him. Section 165 imposes upon the agent a duty to exercise care and diligence in carrying out his work and to use such skill as he possesses. The agent is expected to conduct the business of the agency with as much skill as is generally possessed by persons engaged in similar business unless the principal has notice of his lack of skill. He will have to compensate the principal for the consequences of his own neglect, want of skill or misconduct. (c) (d) Section 166 imposes upon the agent a duty to render proper accounts when required. The agent has a duty to account for all the monies and property handled by him. Such accounts must be produced by the agent when demanded by the principal. Section 167 imposes upon the agent a duty, in cases of difficulty, to use all reasonable diligence in communicating with his principal and in seeking to obtain his instructions.

(b)

(e)

Section 168 imposes upon the agent a duty to act solely for the benefit of his principal. If he deals on his own account in the business of the agency without the consent of the principal, the principal has a right to repudiate the transaction. Further, by s.169 the principal also has the right to claim from the agent any benefit received by him from the transaction. Section 171 imposes upon the agent a duty to pay to the principal all sums received on his behalf. This duty is, however, by virtue of s.170, subject to the right of the agent to retain or deduct from such sums received, advances made or expenses incurred by him in carrying out his duty, commission and other remuneration payable to him for acting as agent. Further, s.174 allows him to retain his principals property in his possession until his remuneration is paid. The agent also has a duty not to make a secret profit out of his position as agent. Secret profit refers to a bribe or other financial advantage obtained by the agent in the course of carrying out his duties, without the knowledge of the principal. When the principal discovers it, he may recover the secret profit from the agent. He may also repudiate the transaction concerned: ss.168 and 169.

(f)

(g)

This question, which contains two parts, tests the candidates knowledge on the meaning of a contract of service in the context of employment law and the right of employees to be involved in a trade union, under the Employment Act 1955. (a) A contract of service is basically a contract between an employer and an employee under which the employee agrees to work for the employer. The Employment Act 1955 defines a contract of service as, any agreement whether oral or in writing and whether express or implied, whereby one person agrees to employ another as his employee and that other agrees to serve his employer as employee and includes an apprenticeship contract. The Industrial Relations Act 1967 also defines such a contract but refers to it as a contract of employment. Under this Act, a contract of employment is defined as, any agreement whether oral or in writing and whether express or implied whereby one person agrees to employ another as a workman and that other agrees to serve his employer as a workman. Despite the differences in wording, it has generally been accepted that there is no distinction between the two phrases. See: American International Assurance Co Ltd and Dato Lam Peng Chong & Others (Award 275 of 1988). (b) (i) The Employment Act 1955 requires contracts of service exceeding one month to be in writing. This is evident from s.10(1) which states as follows: A contract of service for a specific period of time exceeding one month or for the performance of a specified piece of work, where the time reasonably required for the completion of the work exceeds or may exceed one month, shall be in writing. Thus, only contracts of service for a period of only one month or less can be made orally. Others must be in writing. (ii) Further, an employer cannot restrict an employee from being involved in a trade union or trade union-related activities. This is provided for in s.8 as follows: Nothing in any contract of service shall in any manner restrict the right of any employee who is a party to such contract: (i) (ii) to join a registered trade union; to participate in the activities of a registered trade union, whether as an officer of such union or otherwise; or

(iii) to associate with any other persons for the purpose of organising a trade union in accordance with the Trade Unions Act 1959.

This question tests the candidates knowledge of the veil of incorporation in company law as well as the situations where that veil may be lifted. (Candidates are only required to discuss any FIVE instances of lifting the veil of incorporation.) (a) The veil of incorporation refers to the legal phenomenon that upon the incorporation of the company it becomes in law a separate legal entity distinct and separate from the members. The company is regarded as an artificial legal person having its own rights, duties and liabilities. For example, the company has power to hold land and to sue and be sued in its own name. It also enjoys perpetual succession (unlike the partnership) and in the case of a limited company its members enjoy limited liability in the sense that their liability to contribute to the assets of the company in the event of a liquidation is limited to the amount, if any, unpaid on their shares. See: Salomon v Salomon & Co Ltd [1897] AC 22; s.16(5) Companies Act 1965. Although the company is a separate legal entity, there are a number of circumstances where the courts are prepared to depart from this principle. This is often referred to as the lifting of the veil of incorporation. Such lifting of the veil of incorporation may occur either by virtue of a statutory provision or by established case law. The following are the main circumstances: Under Statute: (i) Section 36 Companies Act 1965 By this section where the number of members of a company falls to one and the sole remaining member knowingly carries on business for a period longer than six months, he will be personally liable for the debts incurred after the first six months.

(b)

(ii)

Section 121 Companies Act 1965 By this section where an officer signs on behalf of the company, a cheque, promissory note etc, and the companys name is not properly stated therein, he will be personally liable to the holder of that cheque, etc, for the amount stated therein, if the company does not pay.

(iii) Section 304(1) Companies Act 1965 By this section where the companys business has been carried on with intent to defraud creditors or for other fraudulent purpose, any person knowingly a party thereto may be made personally liable to pay the debts or other liabilities of the company as the court deems fit. (iv) Sections 303(3) and 304(2) By these sections where the company had incurred a debt when there was no reasonable prospect of the company being able to repay, the person or persons responsible for it may be made personally liable to repay it. (v) Section 169 and the Ninth Schedule of the Companies Act 1965 By these provisions a holding company is required to produce group accounts in which the assets, liabilities, profits and losses of the group as a whole are reflected. Under Case Law: (i) In times of war to determine whether the company is controlled by enemy aliens. This is illustrated by the case of Daimler Co Ltd v Continental Tyre & Rubber Co (Great Britain) Ltd [1916] 2 AC 307 where the court lifted the veil of incorporation to look at the nationality of the persons in effective control of the company. (ii) Where the company has been set up to perpetrate a fraud or to avoid a legal obligation. In Jones v Lipman [1962] 1 WLR 832, the defendant who had agreed to sell property to the plaintiff sold it instead to a company which he formed, in order to avoid an order of specific performance. The court lifted the veil of incorporation, holding that the defendant and the company were one and the same. See also: Aspatra Sdn Bhd v Bank Bumiputra Malaysia Bhd [1988] 1 MLJ 97.

(iii) For tax purposes. See: Unit Construction Ltd v Bullock (1960) AC 351. In this case the court held that three subsidiary companies in Kenya were in fact resident in the UK for purposes of tax because central control and management was with the holding company in the UK. (iv) On the basis that a company is in fact the agent of its controllers. This may be illustrated by the case of Smith Stone & Knight Ltd v Birmingham Corpn (1939) 4 All ER 462, where the court held that the subsidiary company was acting as the holding companys agent in carrying on a business, thus enabling the holding company to get compensation for the disruption of business following a compulsory acquisition of its land. (v) Group enterprise Sometimes the courts are prepared to treat groups of companies as one. See: DHN Food Distributors Ltd v Tower Hamlets LBC [1976] 3 All ER 462; Hotel Jaya Puri Bhd v National Union of Hotel Bar & Restaurant Workers [1980] 1 MLJ 109. (vi) When the justice of the case requires the veil to be lifted. In recent times the Malaysian courts seem to show a greater willingness to lift the veil of incorporation when the justice of the case so requires. See: Tengku Abdullah Ibni Sultan Abu Bakar v Mohd Latiff bin Shah Mohd [1996] 2 MLJ 265.

This question, on the law of obligations, tests the candidates knowledge on the difference between a tort and a contract as well as the main elements of the tort of negligence. (a) There is no clear-cut definition of a tort. It has been variously defined. Salmond, the well known author on torts, has defined a tort as a civil wrong for which the remedy is a common law action for unliquidated damages and which is not exclusively the breach of a contract or the breach of a trust or other equitable obligation. A tort may also be said to be a civil wrong which arises by operation of the law and not through the agreement of the parties concerned. The basis of liability in tort is that no one has the right to cause injury or damage to a person or his property. The person suffering the injury or damage has the right to claim monetary compensation (damages) from the party who caused such injury. Trespass, negligence and defamation are examples of torts. A contract, on the other hand, arises through the agreement of the parties concerned. The essential requirements of a contract are that there must be an offer and an acceptance of that offer. The parties must have the capacity to contract and also have the necessary intention to create legal relations. The parties must also have provided consideration. Liability is based on the failure of one party to adhere to the terms of the contract.

(b)

In order to succeed in an action in the tort of negligence, a plaintiff is required to prove the following: (i) That the defendant owed the plaintiff a duty of care; (ii) That the defendant breached that duty of care; and (iii) That the defendant suffered damage as a consequence of that breach. These three requirements may be further explained as follows: (i) The duty of care This means that a person has a duty to take reasonable steps to avoid acts or omissions which he can reasonably foresee is likely to injure his neighbour. Neighbour refers to any person who is so closely and directly affected by the defendants act or omission that the defendant must have him in mind when he does the act or omission in question (see: Donoghue v Stevenson [1932] AC 562). For example, a road user owes other road users a duty of care. He has the duty to avoid acts or omissions which he can reasonably foresee will cause injury to other road users. (ii) Breach of the duty of care In addition to proving that the defendant owed the plaintiff a duty of care, it has to be shown that the defendant has breached that duty of care. A breach of the duty of care is said to occur when the defendant has failed to do what a reasonable person would have done or has done something which a reasonable person would not have done. The test is one of reasonableness. Whether or not the defendant has breached that duty is a matter of fact to be determined by the court, in the particular circumstances. See: Bourhill v Young [1943] AC 92. (iii) Resultant damage The plaintiff has to further prove that it was because of the breach of duty by the defendant that he (plaintiff) has suffered damages. The damages must also be reasonably foreseeable and not too remote. See: The Wagon Mound (No 1) [1961] AC 388.

This question tests the candidates knowledge of the duties of company promoters and the remedies available to the company against them for breach of their duties. (a) A company promoter is a person who undertakes the responsibility of setting up a company. The promoter is in a fiduciary relationship with the company he promotes and as such he owes fiduciary duties towards it. This means that though he is not a trustee as such, he is nevertheless in a position of trust towards the company. Therefore the law requires that at all times he must act honestly and in good faith for the benefit of the company as a whole. A promoter owes a duty not to make a secret profit in connection with the promotion of the company. Where he does make any profit or acquire any other benefit from the promotion, he has a duty to make adequate disclosure to the company. The disclosure must be by him either to an independent board of directors or to all the members of the company. Usually the board of directors will not be an independent one as the promoter himself is likely to have nominated the directors and be a director himself. In the event of breach of duty by the promoter, the company may have recourse to the following remedies: (i) Rescission Upon the discovery of the breach by the promoter, the company is entitled to rescind any contract it has entered into with him. A case in point is Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218. In this case Erlanger headed a syndicate which bought an island containing phosphate for 55,000. Later, Erlander promoted a company and sold the property to it for 110,000. There had been no disclosure of the circumstances of the sale to the members of the company. All the directors of that company were nominees of Erlanger and two of them were under his control. Later, the board of directors was replaced by a new board which brought an action to rescind the contract with Erlanger. The court held that as there had been no adequate disclosure of the circumstances of the sale, the company was entitled to rescind the contract. However, it must be borne in mind that rescission is an equitable remedy and courts may not grant such a remedy if it is inequitable so to do. Thus the remedy of rescission may be lost, for example where there has been undue delay in initiating the action, where third parties have acquired rights bona fide and for value and where the parties cannot be restored to their original position. See: Lagunas Nitrate v Lagunas Syndicate [1899] 2 Ch 392. (ii) Recovery of the secret profit The company may also be entitled to recover any secret profit made by the promoter. The case of Gluckstein v Barnes [1900] AC 240 may be used to illustrate this point. In this case the defendants bought debentures cheaply in a company at a time when the company was faring very badly. Later, they bought over the company for 140,000. The debentures were redeemed at full value and they made a good profit. Later still, they formed another company and sold the company to the new company at a profit of 40,000. This profit was disclosed in the prospectus but not the amount of profit they made on the redemption of the debentures. The court held that they were in breach of their duties as promoters and the company was entitled to recover the profit from them. (iii) Damages for breach of fiduciary duties The company may also be entitled to claim damages from the promoter for breach of his fiduciary duties as illustrated in the case of Re Leeds and Hanley Theatres of Varieties Ltd [1902] Ch 809.

(b)

10

This question tests the candidates knowledge on the offence of fraudulent trading in the context of governance and ethical issues relating to business. Liability for fraudulent trading is governed by s.304 of the Companies Act 1965. By s.304(1), if in the course of the winding up of a company or in any proceedings against a company it appears that the business of the company has been carried on with intent to defraud creditors of the company or creditors of any other person or for any fraudulent purpose, the court on the application of the liquidator or any creditor or any contributory of the company may, if it thinks proper so to do, declare that any person who was knowingly a party to the carrying on of the business in that manner shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the court directs. Fraudulent trading as envisaged by the section encompasses the following: (i) (ii) (ii) carrying on business with intent to defraud creditors of the company carrying on business with intent to defraud creditors of any other person and carrying on business for any fraudulent purpose.

It is necessary to prove the dishonest intention for the section to apply. Fraud for the purposes of this section is actual dishonesty involving, according to current notions of fair trading among commercial men, real moral blame. See: Re Patrick & Lyon Ltd [1933] Ch 786; H Rosen Engineering BV v Siow Yoon Keong [1990] 2 MLJ 440; [1997] 1AMR 157. Section 304 imposes both civil as well as criminal consequences for fraudulent trading. By s.304(1), the court can declare any person who was knowingly a party to the carrying on of the business in that manner to be personally liable for all the debts or other liabilities of the company as the court directs. The section therefore would not only apply to directors but also to other persons as the section refers to any person. Thus senior managers and other employees and even outsiders such as customers of the company who were knowingly parties to the fraudulent trading may incur personal liability. Section 304(1) also states who may make an application to the court to make someone personally liable for fraudulent trading. These are: (i) the liquidator (ii) any creditor; and (iii) any contributory. In addition to civil liability, there is also criminal liability. By s.304(5), where any business of a company is carried on with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose, every person who was knowingly a party to it, shall be guilty of an offence. The penalty is imprisonment for three years or a fine of RM10,000.

This problem based question tests the candidates knowledge on some aspects of company meetings and resolutions. (a) The issue here is whether the validity of the proceedings at the meeting can be challenged on the ground that Meera, a member, was not given any notice of the meeting. Although every member is entitled to receive notice of every general meeting, in Meeras case the company had inadvertently failed to send her a notice of the extraordinary general meeting. However, by virtue of s.145(5) of the Companies Act 1965, the accidental omission to give notice of a meeting to or the nonreceipt of a notice of a meeting by, any member shall not invalidate the proceedings at a meeting. Thus Meera will not be able to invalidate the proceedings at the meeting on this ground. The validity of the resolutions to alter the name of the company and to appoint Jambu, aged 73, as a director of the company may be challenged on the ground that the company has failed to follow the proper procedure as required under the Companies Act 1965. By s.23 of the Companies Act 1965, the company may alter its name by special resolution. By s.152, a special resolution is a resolution that has been passed by a majority of not less than three-fourths of the members voting in person or by proxy, at a general meeting of which not less than 21 days notice specifying the intention to propose the resolution as a special resolution has been duly given. In the given problem, notice of the meeting was sent on 1 April 2008. The date of the meeting was 15 April 2008. Therefore the required notice of 21 days was not given. Although the resolution to alter the name was approved by an 80% majority, it does not amount to a special resolution as the necessary length of notice was not given and the relevant procedure was not followed. Hence, Meera will be able to challenge the validity of the resolution to alter the companys name to Bintang Bhd. As for the resolution to appoint Jambu, aged 73 as a director, it also is not valid as the proper procedure has not been followed. By s.129 of the Companies Act 1965, the general rule is that no person of or above the age of 70 may be appointed or act as a director of a public company or subsidiary of a public company. However, such over-aged persons may be appointed or re-appointed as directors through a special procedure as laid down in s.129(6) i.e. by a resolution passed by a majority of not less than three-fourths of the members voting in person or by proxy at a general meeting of which no less than 14 days notice has been given. In the given problem, although the period of notice of the meeting was sufficient, the resolution was only passed by a 70% majority and not a 75% majority. Thus, Meera will also be able to challenge the validity of the resolution to appoint Jambu as a director.

(b)

11

This problem based question on company law tests the candidates ability to identify and apply the law relating to one aspect of the fiduciary duties of directors as well as the prohibition on the provision by companies of financial assistance for the purchase of their own shares. Directors are in a fiduciary position in relation to the company. As such they owe fiduciary duties to the company. This includes the duty to act honestly and in the best interests of the company. Another aspect of the fiduciary duty, which is relevant to the given problem, is that the directors must exercise their powers (such as a power to issue new shares) for a proper purpose. This can be illustrated by the case of Hogg v Cramphorn Ltd [1967] Ch 254. In this case the directors were invested with the power to issue shares. In exercise of that power the directors issued shares to trustees for the benefit of employees. The purpose of the issue was to prevent a takeover bid. The directors feared that they would lose their position as directors should the takeover bid be successful. The court held that the directors had acted for an improper purpose and the share issue was set aside. In the given problem the directors wish to issue new shares to Tulip, a close friend of Rose and Daisy. Petunia must be advised that today, the power of the board of directors to issue new shares has been restricted by virtue of s.132D of the Companies Act 1965. The section stipulates that directors may only exercise the power to issue shares if they obtain prior approval of the members in a general meeting. The section also provides that an issue of shares in contravention of it would be void. Thus, Petunia would be able to successfully challenge the issue of the shares to Tulip if it is done without a resolution of a general meeting. With respect to their intention to provide security to Bank Senang Pinjam which is prepared to give a loan to Tulip to enable her to purchase the shares, Petunia may be advised that such action would be in contravention of s.67 of the Companies Act 1965. This section provides that a company is prohibited from providing any form of financial assistance (which includes the provision of security) to anyone to enable that person to purchase its shares. See: Chung Khiaw Bank v Hotel Rasa Sayang Sdn Bhd [1990] 3 MLJ 356. However, there are three exceptions to this as follows: (i) Where the companys ordinary business includes the lending of money and the money is lent in the ordinary course of its business. (ii) Where the financial assistance is given to trustees under an employee share scheme for the benefit of employees. (iii) Where the financial assistance is given to full time employees to enable them to purchase the companys shares.

As Tulip is not an employee and the companys business is the cultivation of plants and flowers (i.e. not in the business of lending money), none of the exceptions apply. Therefore Petunia may successfully challenge the validity of the proposed courses of action by Rose and Daisy.

10 This question, on contract law, tests the candidates ability to identify and apply the law relating to the postal rule in relation to offer and acceptance. The issue in this case is whether there has been a valid acceptance by Benny of Azmans proposal (offer) so as to create a binding contract between them. According to s.2(a) of the Contracts Act 1950, a proposal (offer) is said to be made when one person signifies to another his willingness to do or abstain from doing anything with a view to obtaining the assent of that other to the act or abstinence. Section 2(b) states that an acceptance takes place when the person to whom the proposal is made signifies his assent thereto. Mere silence or inaction on the part of the offeree is not acceptance. See: Felthouse v Bindley (1862) 11 CBNS 869. Therefore the statement in Azmans letter that Benny would be bound if he does not reply by 10 March 2008 can be ignored. The general rule is that the acceptance must be communicated to the proposer. The acceptance will only be complete upon such communication. By s.7, the acceptance must be expressed in some usual and reasonable manner unless the proposal itself prescribes the manner in which it is to be accepted. However, there is an exception to this rule. By s.4(2) of the Contracts Act 1950, where the parties have contemplated the use of the post as a means of communication, the communication of the acceptance is complete as against the proposer when it is put in a course of transmission to him so as to be out of the power of the acceptor. In the present problem, Benny accepted Azmans offer by a letter posted on 10 March 2008. Thus, though the letter of acceptance reached Azman only on 12 March 2008, it was effective as against Azman from the date of posting, i.e. 10 March 2008. However, the facts indicate that Azman had revoked his offer by a letter to Benny on 9 March 2008. The question then arises whether the revocation will be effective as against Benny. By s.5(1), a proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer but not afterwards. Further, by s.4(3)(b), the communication of a revocation is complete as against the person to whom it is made when it comes to his knowledge. Applying the law to the given facts, Bennys acceptance was complete as against Azman on 10 March 2008 whereas Azmans revocation, even though it was sent before Benny posted his letter of acceptance, was effective only on 11 March 2008 i.e. the date on which the revocation came to the knowledge of Benny. Benny may therefore be advised that there is a valid contract between him and Azman and he may successfully sue Azman for breach of contract.

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Fundamentals Level Skills Module, Paper F4 (MYS) Corporate and Business Law (Malaysia) 1 (a) 68 45 03 (b) 02

June 2008 Marking Scheme

Good to excellent answer clearly explaining the operation of the doctrine of binding judicial precedent, and the hierarchy of the courts. Average answer reasonably explaining the doctrine of binding judicial precedent and the hierarchy of the courts. Incomplete or inaccurate answer. One mark for each advantage correctly stated.

710 56 04

A very good answer clearly explaining any five duties owed by an agent to his principal with reference to the Contracts Act 1965. Average answer explaining some of the duties of an agent to his principal. Incomplete or inaccurate answer.

(a)

04

An accurate answer will fall into the upper part of this band while an inaccurate or incomplete one will fall into the lower part. Very good answer explaining whether a contract of service can be made orally and whether employees can be restricted from being involved in trade unions. Average answer. Incomplete or inaccurate answer.

(b)

56 34 02

(a)

03

A clear explanation of what is the veil of incorporation with appropriate illustrations will fall into the upper part of this band while an inaccurate answer will fall into the lower part. Approximately one and a half marks for each correctly explained instance of lifting the veil of incorporation.

(b)

07

(a)

04

An accurate answer clearly distinguishing a tort from a contract will fall into the upper part of this band while an incomplete or inaccurate one will fall into the lower part. Very good answer explaining the three elements necessary to be proved to succeed in an action in the tort of negligence. Average answer sufficiently explaining the necessary elements. Incomplete or inaccurate answer.

(b)

56 34 02

(a)

04

A very good answer clearly explaining the duties of a company promoter will fall into the upper part of this band while an incomplete or inaccurate one will fall into the lower part. Very good answer clearly explaining the remedies of rescission, recovery of secret profit and damages, available to the company for breach of duty by a promoter. Average answer giving a satisfactory explanation of what the question requires. Incomplete or inaccurate answer.

(b)

56 34 02

710 56 04

A very good answer explaining what is fraudulent trading, its consequences and the persons who may be made liable as well as the persons who have the right to initiate legal proceedings for such fraudulent trading. Average answer sufficiently explaining what the question requires. Incomplete or inaccurate answer.

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(a)

03

An accurate answer stating whether the validity of the meeting can be challenged on the ground of non-receipt of notice by a member will fall into the upper part of this band while an inaccurate one will fall into the lower part. A very good answer identifying the reasons why the purported resolutions are not valid with accurate advice to Meera. Average answer sufficiently explaining the issues. Incomplete or inaccurate answer.

(b)

67 45 03

710 56 04

Excellent answer identifying both the issues of breach of directors duties, application of s.132D as well as the prohibition on companies giving financial assistance for the purchase of its shares, with accurate advice to Petunia. Average answer identifying the issues with a reasonable explanation of the law on those issues. Incomplete or inaccurate answer.

10

710

Very good answer accurately identifying the issues of whether silence or inaction can amount to acceptance as well as the application of the postal rule in relation to acceptance and revocation of an offer, with accurate advice to Benny. Average answer identifying the relevant issues with a reasonable explanation of the law. Incomplete or inaccurate answer.

56 04

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