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properly addressed and stamped. For example. These are promulgated by the relevant Minister. Cases are referred to for the purpose of assisting in the interpretation of statutory provisions. In Singapore. Every partner may take part in the management of the limited liability partnership. With the President’s assent. such as Carlill v Carbolic Smoke Ball Co (1893). Communication of revocation may be made through a reliable third party: Dickinson v Dodds (1876). that legislative body is the Parliament of Singapore. Statutes start out as Bills that have to be passed by Parliament and assented to by the President. The LLP functions very much like a partnership as regards the internal relations between the partners. In order for an acceptance to be valid. In the common law system. An exception to the general rule applies where the offeror has waived the right to receive communication. a conditional acceptance cannot create a binding contract. is posted. acceptance must be communicated to the offeror and silence does not amount to acceptance: Felthouse v Bindley (1863).. Case law. (b) Revocation refers to the cancellation of an offer and occurs when the offeror withdraws his offer. No person may be introduced as a partner without the consent of all the existing partners. The LLP allows partners to carry on business as a partnership and at the same time. An offer may be revoked at any time before acceptance. there are statutes like the Penal Code (Cap 224) and the Computer Misuse Act (Cap 50A). Both parties are bound and the offeror can no longer revoke. In the criminal realm. Acceptance may be express (either orally or in written form) or implied (from conduct). There is a range of statutes (or legislation) covering a wide range of subjects in the Statutes of the Republic of Singapore. to be incorporated with limited liability. It is also known as the common law. In the commercial realm. Some of these are: – – All the partners of a limited liability partnership are entitled to share equally in the capital and profits of the limited liability partnership. nor can the offeree withdraw his acceptance. who has powers delegated to him by Parliament. – – – 7 . The contract is concluded even if the letter subsequently fails to reach the offeror: Adams v Lindsell (1818). Revocation is effective only when it is actually received by the offeree: Byrne v Van Tienhoven (1880). there is. such as regulations. 8J–SGPAA Paper F4SGP (b) Law is also found in court decisions. once an offer has been revoked. An offeree who introduces new contractual terms into their purported acceptance is making a counter-offer. withdraw his offer. on the date it is published in the Singapore Gazette. It should be further noted that even where there is a statute on the subject. Paper F4 (SGP) Corporate and Business Law (Singapore) 1 (a) June 2008 Answers Statutes are laws passed by the legislative body created by the Constitution. and developed and refined by subsequent cases. acceptance occurs when the offeree performs the required act and does not have to inform the offeror. or reported decisions of judges. So the partners can use the partnership agreement to determine how they will own and conduct business through the LLP. Another exception to the general rule requiring communication is where the acceptance is made by post.e. is a primary source of law. Statutory law also includes subsidiary legislation. Relations between the partners are governed by the provisions of the First Schedule to the Limited Liability Partnership Act (Cap 163A). it must be an unequivocal acquiescence to the terms of the offer. A counter-offer also operates to cancel the original offer. the tort of negligence was established not by statute but by the case of Donoghue v Stevenson (1932). Acceptance by post is complete as soon as the letter. orders and notifications. Thus in unilateral contracts. and for this purpose. The Act will come into force on the date specified in the Act or if no date is specified. The limited liability partnership must indemnify each partner in respect of payments made and personal liabilities incurred by him: – in the ordinary and proper conduct of the business of the limited liability partnership. or – in or about anything necessarily done for the preservation of the business or property of the limited liability partnership. the Companies Act (Cap 50) which has more than 400 sections on many aspects of company law. subject to the terms of any limited liability partnership agreement. such as where there is ambiguity in the meaning of a section. 8J–SGPAC Paper F4SGP 3 This question requires a discussion of how the limited liability partnership (LLP) combines benefits of both a partnership and a company. Any matter or issue relating to the limited liability partnership shall be decided by resolution passed by a majority in number of the partners. However. which does not constitute acceptance: Hyde v Wrench (1840). the offeree can no longer accept the original offer: Routledge v Grant (1828). a judgment contains principles.8J–SGPIX Paper F4SGP Fundamentals Level – Skills Module. 8J–SGPAB Paper F4SGP 2 This question requires an explanation of the rules relating to the acceptance and revocation of offers in contract law. for example. The statutes provide the principles as well as the detailed rules on the subject. It refers to law that has been created by judges through the decisions in the cases they have heard. The First Schedule contains the default provisions for the rights of partners. which may be binding in subsequent cases. each partner shall have one vote. cases can still be a source of law. (a) A contract comes into effect when an offer is accepted. As a general rule. a Bill becomes an Act of Parliament and a law of Singapore. i. Likewise.

The defence of consent or voluntary assumption of the risk. before winding up. Another significant difference between a partner in a partnership and partner in an LLP is the fact that the latter is not personally liable for obligations incurred by the LLP (s. – On a winding up of the company creditors have priority over shareholders for repayment of the principal. – Creditors have no right to share in any surplus assets on a winding up of the company whereas shareholders have a right to participate in surplus assets on a winding up of the company. 8J–SGPAF Paper F4SGP 6 By virtue of s.75 Companies Act (Cap 50). the damages recoverable by him may be reduced to such an extent as the court thinks just and equitable having regard to the claimant's share in the responsibility for the damage. The class meeting refers to the meeting of a particular class of shareholder. has perpetual succession and any change in the partners will not affect the existence of the LLP (s. when a patient signs a consent form prior to an operation) or implied from conduct (for example. The principal differences between equity and debt are as follows: – Creditors are paid interest at an agreed rate regardless of whether the company is making a profit whereas dividends are payable to shareholders only out of profits if declared by the directors.177.4). acquire. as it is also called.As far as relations between the LLP and external parties are concerned. – Creditors are not members of the company and generally have no membership rights such as voting rights whereas shareholders are members of the company with rights conferred by the Companies Act (Cap 50). The purpose of the AGM is for the company to report to members on the affairs of the company and the business conducted at AGMs tends to be routine such as the re-election of directors. Section 3(1) Contributory Negligence & Personal Injuries Act (Cap 54) provides: ‘Where a person suffers damage as the result partly of his own fault and partly of the fault of any other person. The defendant has to show that the plaintiff knew of the risk. those who hold a type of share providing particular rights. subject to approval by a unanimous vote. a spectator to a motor racing event is regarded as having consented to the risk of injury: Hall v Brooklands Racing Club (1933)). – Capital provided by creditors under a debt is for a fixed period and is expected to be repaid at the end of the term of the loan. i. In order to achieve this approval. Under s. it is no longer necessary for a private company to convene a general meeting where the members have unanimously signed a written resolution setting out a particular course of action. is expressed in the maxim volenti non fit injuria. and agreed to it. then it must hold its next AGM by 31 March 2008 at the latest.175A. In line with the recognised distinction between public and private companies the Companies Act permits private companies. it will reduce his claim by half. the plaintiff himself may have been partly at fault as well.176. The directors of the company may convene meetings under Article 37 of Table A and s.8). The court may order a meeting under s. Like a company. Debt or loan capital on the other hand refers to money borrowed by a company on terms that the company will pay interest as well as the principal sum when due.5). if the plaintiff has himself been at fault (and fault is defined in the section to include negligence). The risk may be assumed by the defendant by express agreement (for example.182 where it is impracticable otherwise to call a meeting. which means literally – ‘that to which a person consents cannot be considered an injury’. Where it is proposed to alter the rights attached to particular shares.74(6). every company is required to hold a meeting of its members referred to as an annual general meeting (AGM) at least once in every calendar year.4). consideration of accounts and approval of dividends.e.’ Essentially. The extraordinary general meeting (EGM) is any meeting other than an AGM. if the court is of the view that the plaintiff’s negligence contributed equally to the damage. – The company is required to repay the principal at the end of the term of the loan whereas shareholders do not normally expect repayment of the equity capital so long as the company is a going concern. a meeting of those holding such shares has to be called to seek their approval of any proposed alteration s. although members holding 10% of the voting shares may requisition such a meeting under s. The manner in which meetings may be convened is governed by the articles of association and the Companies Act. 8J–SGPAE Paper F4SGP 5 Equity or share capital refers to the money or assets contributed by the members to the company when they subscribe for shares in the company. subject to a maximum period of 15 months. the court will reduce his claim to the extent that his negligence has caused the damage. Two or more members holding not less than 10% of the issued share capital may call a meeting of the company under s. whereas share capital provided is long-term and there is no expectation that it shall be repaid until a winding up of the company. EGMs are usually called by the directors. The question of distribution of the equity among shareholders only arises when the company is in liquidation and is subject to rules. This means that if a company held its AGM on 1 January 2007. such as preference shares. The money contributed becomes the property of the company and shares are issued to the members in return.176. 8 . own and hold property (s. to dispense with the holding of AGMs. The LLP is a body corporate and is a separate legal entity from its partners (s. For example. 8J–SGPAD Paper F4SGP 8J–SGPAC Paper F4SGP 4 The concept of contributory negligence is that although the defendant may have been negligent and thereby caused damage or injury to the plaintiff. the company’s memorandum and the articles of association. the LLP functions very much like a company. it is necessary to obtain the approval of the holders of those particular shares to any such alteration. the LLP can sue and be sued in its own name.

8J–SGPAJ Paper F4SGP 10 Whether the company is bound by the purchase agreement depends on the authority of Dan and the effect of the restriction in Article 58. the right to commence legal action against the wrongdoer belongs to the company (this principle is known as the rule in Foss v Harbottle).8J–SGPAG Paper F4SGP 7 When a wrong is done to a company. Transfers of shares of the company requires the approval of the liquidator. Dan therefore has actual authority to enter into agreements up to this limit. The role of the liquidator is to take possession of the company’s assets (s. he is acting in good faith. 9 . A contracting party is entitled to a discharge if there was a breach of condition or a breach of an innominate term where the consequences went to the root of the contract: Hong Kong Fir Shipping Co v Kawasaki Kaisen Kaisha (1962). Winding up is deemed to have commenced from the time of the passing of the special resolution to wind up the company.000. Article 58 authorises the managing director to enter into purchase agreements of up to $500. The directors cease to have power to act on behalf of the company on the appointment of the liquidator except with the consent of the liquidator (s. the company is dissolved. That was caused by Speedy’s breach because Heng would not have to look for another car rental if not for Speedy’s breach. If the liquidator feels that the company will not be able to pay its debts in full within the 12-month period. Heng also has a duty to mitigate his loss by taking reasonable steps to minimise loss. Special resolution by members at a general meeting to wind up the company voluntarily: s.293 Companies Act (Cap 50). In addition to these sections. Heng’s loss is the difference in rental. Article 58 goes on to say that for agreements exceeding $500.275 and s. The company ceases to carry on business except where the liquidator deems it necessary for the beneficial disposal or winding up of the business (s.000. Although the alternative car rental is at a higher price. The steps involved include the following: – – – Written declaration of solvency by directors of the company stating that the company will be able to pay its debts in full within 12 months. When the winding up is completed. A condition is a term that is very important or fundamental to the contract. Dan in his capacity as the managing director of the company generally has very wide powers to enter into contracts in the day-today running of the company’s business. to distribute the surplus among the members (s. realise the company’s assets (s. it is derived from the company. the term specifying the type of car was likely to be a condition as the choice of a Mercedes was important to the contract. he has wide implied authority. and Appointment of a liquidator at a general meeting: s. in the usual course of things.272(2)) and distribute the proceeds among the company’s creditors and if there is any surplus. the court may in its discretion allow him to commence the derivative action. It is arguable whether a managing director would usually be considered as having authority to sign purchase agreements on behalf of the company as property acquisitions are serious matters and more appropriately decided by the board of directors. In addition to his express authority. Heng would be entitled to claim damages. If he satisfies the court that: – – – he has given 14 days’ notice to the directors of his intention to apply. As regards the higher rental. Cheong has the option of a member’s voluntary winding up.216(2)(c) makes provision for a derivative action to be taken where there has been oppression.308). are such a document. including legal fees and disbursements. Finally the liquidator’s job is to dissolve the company (s. The company is said to be the proper plaintiff. being accessible to the public at the Registry of Companies & Businesses. However.269(1)). 8J–SGPAI Paper F4SGP 9 As a shareholder. The difference in price would also pass the test of remoteness in Hadley v Baxendale (1854) as it arose naturally.292(2). s.294(1).300). The articles of association. and are affected by. As long as Speedy has breached a contract term. According to the doctrine of constructive notice. Sections 216A and 216B of the Companies Act (Cap 50) allow a shareholder of a company (other than a listed company) to apply to the court for permission to commence a derivative action (or to intervene in an action to which the company is a party). otherwise it will be void: s.294(2)). Speedy has breached the term that specified a Mercedes Benz as the type of car to be rented. prior board approval is required. the liquidator is required to call a meeting of the company’s creditors and to carry on with winding up as a creditors’ voluntary winding up: s.295. A member’s voluntary winding up is only for the liquidation of a solvent company. 8J–SGPAH Paper F4SGP 8 Heng will have the right to terminate the contract if he can claim to be discharged from the car rental contract on account of Speedy’s breach. and it is prima facie in the interests of the company that the derivative action be brought. all parties dealing with a company are deemed to know of. In exceptional situations. The sections also empower the court to order the company to pay the costs. It depends on whether Speedy knows that the Mercedes was rented for the purpose of Heng’s wedding. the public documents of a company. the law may allow an individual shareholder or some other person to commence an action in the name of the company. having regard to the company’s affairs: s.290. Such an action is known as a ‘derivative’ action. of the application or the action.292(1)). Heng would be entitled to claim the difference as long as it was a reasonable offer. If so.

8J–SGPAJ Paper F4SGP 10 . The seller is therefore not deemed to know of Article 58. the public documents of a company. in Singapore. Instead. it is debatable whether Dan’s implied authority extends to the purchase of a shophouse. and is not affected by. As explained above. Dan’s lack of authority. the doctrine of constructive notice has been abolished.However. It therefore appears that the seller can rely on the implied authority of Dan as managing director. Section 25A of the Companies Act (Cap 50) provides that a third party is not deemed to have notice of. the seller is affected only if he has actual knowledge of the article and. hence.

lacking in detail or unbalanced in that it does not deal with some aspects of the question. lacking in detail or unbalanced in that it does not deal with some aspects of the question. 10 6–10 0–5 A thorough answer that explains the rules relating to the authority of a managing director to contract on behalf of the company. 7 6–10 0–5 A thorough answer that explains the concept of the derivative action and how a shareholder can bring such action under ss. lacking in detail or unbalanced in that it does not deal with some aspects of the question. lacking in detail or unbalanced in that it does not deal with some aspects of the question. A less complete answer. A less complete answer. lacking in detail or unbalanced in that it does not deal with some aspects of the question. lacking in detail or unbalanced in that it does not deal with some aspects of the question. and class meetings. lacking in detail or unbalanced in that it does not deal with some aspects of the question. 8 6–10 0–5 A thorough answer that explains the application of the rules relating to the discharge of a contract and a damages claim in contract law to the facts in the question. A less complete answer. extraordinary meetings. 6 6–10 0–5 A thorough answer that explains the basic rules relating to annual general meetings.8J–SGPMS Paper F4SGP Fundamentals Level – Skills Module. 9 6–10 0–5 A thorough answer that explains the rules relating to a member’s voluntary winding up of a company. A less complete answer. lacking in detail or unbalanced in that it does not deal with some aspects of the question. 3 6–10 0–5 A thorough answer that discusses how the limited liability partnership combines the features of both a partnership and a company. A less complete answer. 5 6–10 0–5 A thorough answer that explains the differences between share capital and loan capital.216A and 216B of the Companies Act. A less complete answer. A less complete answer. A less complete answer. lacking in detail or unbalanced in that it does not deal with some aspects of the question. Paper F4 (SGP) Corporate and Business Law (Singapore) 1 6–10 0–5 June 2008 Marking Scheme A thorough answer which explains what statutory law is and how it is passed. lacking in detail or unbalanced in that it does not deal with some aspects of the question. 4 6–10 0–5 A thorough answer which explains the rules relating to the two defences of contributory negligence and consent. A less complete answer. 2 6–10 0–5 A thorough answer that explains the rules relating to the acceptance and revocation of offers in contract law. A less complete answer. 11 . also explains what is case law and how law can be found in cases.