Answers

Applied Skills, LW – IRL

Corporate and Business Law – Irish (LW – IRL) June 2020 Answers

Section A

1 6 years
The limitation period for wrongful dismissal is 6 years as this is a breach of contract case.

2 Public limited company

A public limited company must obtain a trading certificate before it starts trading.

3 Request for further information

A request for further information will not terminate an offer.

4 A person who is a director of 20 other companies

Section 142(1) Companies Act 2014 states that a person shall not be a director of more than 25 companies.

5 5 January
Where the two-stage procedure is used, the date of receipt of the first notification will determine the priority of the charge.

6 Ordinary resolution
Under s.394 Companies Act 2014, an auditor may be removed by an ordinary resolution.

7 Members’ voluntary winding up

A declaration of solvency is required in order to initiate a members’ voluntary winding up.

8 Supreme Court
The reference of a Bill by the President will be heard by the Supreme Court, under Article 26 of the Constitution.

9 A promise to pay for an existing legal duty

A promise to pay for an existing legal duty is not regarded as good consideration.

10 The reason for the decision

The ratio decidendi refers to the reason for the decision.

11 Money laundering
Money laundering does not result in the imposition of personal liability.

12 Words must be given their plain and ordinary meaning unless this produces an absurd result
The golden rule can be used to avoid an absurd result arising from the use of the literal rule.

13 It must be registered with the Companies Registration Office

Under the Limited Partnership Act 1907, a limited partnership must register with the Companies Registration Office.

14 Rescission
The equitable remedy of rescission aims to return the parties to their original positions.

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15 Company law
Company law is an area of private law not public law.

16 A breach results in the repudiation of the contract

An express term does not automatically result in the repudiation of the contract.

17 Wrongful dismissal
A wrongful dismissal is a termination by the employer which is in breach of the terms of the contract of employment.

18 The company may choose to ratify the contract

Section 45 Companies Act 2014 states that the company may ratify a pre-incorporation contract.

19 Reserve capital
Reserve capital is part of the uncalled capital which will not be called up unless the company goes into liquidation.

20 An examiner must have the same qualifications as a receiver

The examiner must have the same qualifications as a liquidator not a receiver.

21 Representation
A representation does not form part of a contract.

22 Two weeks’ pay for each year of service plus one bonus week
Under the Redundancy Payments Act 1967 – 2014, a statutory redundancy payment is calculated on the basis of two weeks’ pay
per year of service plus one bonus week.

23 Anticipatory breach of contract

A declaration by one party that they do not intend to fulfil their contractual obligations is an anticipatory breach of contract.

24 20
The maximum number of partners in a general partnership is 20.

25 By either party to the contract

A term may be implied by law, custom, the Constitution or by the courts. A term cannot be implied by a party to the contract.

26 Second reading
The second reading is a general debate about the main principles of the Bill.

27 4 weeks
Under the Minimum Notice and Terms of Employment Acts 1973 – 2005, the minimum period of notice for an employee with 6
years of service is 4 weeks.

28 Implied authority
The usual authority which an agent is assumed to have is referred to as implied authority.

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29 It involves criminal liability only
Fraudulent trading can result in criminal and/or civil liability.

30 Family/domestic agreement
Family/domestic agreements are presumed not to give rise to a legally binding contract unless there is clear evidence to the contrary.

31 To provide a reference
There is no legal duty requiring an employer to provide a reference for an employee.

32 Unilateral contract
A contract based on an advertisement offering a reward is a unilateral contract.

33 Vicarious liability
Vicarious liability arises where one person is held legally responsible for the actions of another.

34 Enterprise test
The enterprise test examines whether the worker is in business on their own account.

35 Anne has a remedy as the shop cannot exclude liability in this situation
Any attempt to exclude the implied terms in a consumer contract is prohibited.

36 Circuit Court
The Circuit Court can hear a breach of contract case involving a claim between €15,000 and €75,000.

37 Dismissal on grounds of trade union membership

There is no minimum service requirement where an employee is dismissed for reasons connected to trade union membership.

38 The difficulty of assessing the financial value of the damage sustained

The difficulty of assessing the financial value of the damage sustained is not a relevant factor in determining whether the duty of care
has been breached.

39 15 months
The maximum time permitted between annual general meetings in a company is 15 months.

40 It is past
Past consideration is where a promise to pay is made after the contract has been performed.

41 It may have a single director

A designated activity company must have at least two directors.

42 20 November
Under the postal rule, a letter of acceptance in contract takes effect when it is posted.

43 The receiver can be a natural person or a body corporate

Under s.433 Companies Act 2014, a body corporate is not eligible to act as a receiver.

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44 After the date for implementation
Under the principle of direct effect, a directive may have direct effect once the date for implementation has passed.

45 Strict liability
Strict liability refers to the imposition of liability without proof of fault.

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Section B

46 (a) Consideration is required for a valid contract. It has been defined in cases such as Curie v Misa (1875) and Dunlop v
Selfridge (1915). Consideration distinguishes a contract from a mere promise and is based on the idea that something is being
exchanged by the parties and that each party is providing something in exchange for something under the contract.

(b) In this case, it would appear that there are two potential issues in relation to the element of consideration. It could be argued
that the consideration is in the past. As in Re McArdle (1951), the work was completed before the promise to pay was made.
However, it could be argued that this case falls into the exception identified in Lampleigh v Braithwaite (1615) in that the
request to stay and work late implied that there would be payment.
A second issue is that there is a lack of valid consideration because Eimear has an existing contractual duty to carry out this
work. On the basis that Eimear was doing additional work and therefore providing fresh consideration, it could be argued that
the promise to pay her extra is binding. In addition, it can be argued that there was an implication here that she would be paid,
so this is not a case of past consideration.

47 (a) The constitution of a designated activity company consists of a memorandum of association and an articles of association. The
memorandum of association regulates the company’s relationship with outsiders and includes a name clause, objects clause
and limited liability clause. The articles of association are the internal regulations of the company dealing with matters relating
to shareholders, directors, meetings and voting.

(b) The company’s activities could be restricted to interior design only by drafting a very narrow objects clause in the memorandum
of association. In this case, the company would be required to act within those parameters and any other activities would be
ultra vires the company’s objects clause.

(c) The objects clause can be altered by special resolution of the members (s.974 Companies Act 2014). Shareholders representing
15% of the nominal capital can apply to the court to have the alteration cancelled. Where such an application is made, the
alteration will not take effect until confirmed by the court. In this case, it would appear unlikely that Dónal will be able to make
the change to the constitution without John’s support.

48 (a) All shares must have a nominal value. This value represents the minimum amount which the company must receive as
consideration for a share. The company cannot sell shares at a discount, i.e. below the par value.
The share premium is the difference between the nominal value and the amount received by the company for a share where
the share is issued for a price greater than the nominal value.

(b) Where companies allot shares for a value greater than the nominal value, the excess amount (premium) must be transferred to
a share premium account. This forms part of the undenominated capital of the company and its uses are restricted under s.71
Companies Act 2014. Undenominated capital can be used to provide a bonus issue of new shares to the existing members.
Dividends must be paid from distributable profits, therefore it is not possible for ABC Ltd to pay a dividend from the share
premium account.

49 (a) Executive directors are those involved in the day-to-day running of the company. They will often have a contract of employment
with the company and a specific job title or area of responsibility.
Non-executive directors are not involved in the day-to-day running of the company. They are expected to attend board meetings
and bring an objective view to the decision making. Both categories of director owe the same duties under the Companies Act
2014 but the extent of the duty may vary depending on the individual directors’ experience and knowledge.

(b) Under s.228(1) Companies Act 2014, a director has a duty to avoid a conflict of interest between the interest of the company
and their own personal interests. In addition, there is a specific duty of directors to disclose any interest in a company contract
to the board of directors – s.231 Companies Act 2014. The disclosure of interest must be made at the meeting of the board at
which the entering of the contract is first considered. The disclosure must also be recorded in a register kept by the company.
In this case, it would appear that Anne has breached the general fiduciary duty under s.228 and the duty to disclose under
s.231 owed to DEF Recruitment Ltd.
Remedies for breach of directors’ duties could include accounting for any secret profit made by the director. In addition, DEF
Recruitment Ltd could sue for damages to compensate the company for any losses. In this case, DEF Recruitment Ltd could
therefore seek to recover any personal profit made by Anne from her involvement in Quick IT Solutions and also claim the
€100,000 as compensation to cover the cost of replacing the IT system.

50 (a) Fraudulent trading is committed when any person was knowingly a party to the carrying on of the business of the company with
intent to defraud the creditors of the company or any other person for any fraudulent purpose – s.610 Companies Act 2014.

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 (b) In a winding up situation, the liquidator can seek a declaration that certain persons were engaged in fraudulent trading and
seek to have personal liability for some or all of the debts of the company imposed on such persons. In addition, the matter
can be referred to the Director of Public Prosecution for a possible criminal prosecution – either summarily or on indictment.
As fraudulent trading applies to ‘any person’ not just directors, Paul, Séan and Marie are all potentially liable. However, it might
be difficult to prove the required level of knowledge and intent on the part of Marie, given her limited involvement in LMN Ltd.
In the case of Paul and Séan, there is a stronger indication of the required elements being present, however, if they are both in
personal insolvency, it seems unlikely that they will be made personally liable for the debts of LMN Ltd.

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Applied Skills, LW – IRL
Corporate and Business Law – Irish (LW – IRL) June 2020 Marking Scheme

Section A

1–45 One or two marks per question; total marks 70

Section B

46 This question requires an explanation of the rules relating to consideration in contract law.

(a) 2 marks Good explanation of consideration.

1 mark Some explanation, but lacking in detail or application.
0 marks No knowledge whatsoever of the topic.

(b) 3–4 marks A good explanation and application of past consideration.

1–2 marks Some, but limited, explanation or application.
0 marks No knowledge or explanation.

47 This question requires an explanation of the rules relating to the constitution of a designated activity company.

(a) 2 marks Good analysis of content and structure of the constitution.

1 mark Some explanation, but lacking in detail.
0 marks No knowledge whatsoever of the topic.

(b) 2 marks Good explanation and analysis of objects clause.

1 mark Some explanation, but lacking in detail or application.
0 marks No knowledge whatsoever of the topic.

(c) 2 marks Good explanation and analysis of alteration of the constitution.

1 mark Some explanation, but lacking in detail or application.
0 marks No knowledge whatsoever of the topic.

48 This question requires an explanation of the meaning and permitted uses of the share premium.

(a) 2 marks Good explanation of nominal value and share premium.

1 mark Some explanation, but lacking in detail or application.
0 marks No knowledge whatsoever of the topic.

(b) 3–4 marks A good explanation and application of uses of the share premium.
1–2 marks Some, but limited, explanation/application.
0 marks No knowledge or explanation.

49 This question requires a consideration of the role and duties of directors.

(a) 2 marks Good explanation of executive and non-executive director.

1 mark Some explanation, but lacking in detail or application.
0 marks No knowledge whatsoever of the topic.

(b) 3–4 marks A good explanation and analysis of breach of relevant directors’ duties.
1–2 marks Some, but limited, explanation or application.
0 marks No knowledge or explanation.

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50 This question requires a consideration of the rules relating to fraudulent trading.

(a) 2 marks Good explanation of the main elements of fraudulent trading.

1 mark Some explanation, but lacking in detail or application.
0 marks No knowledge whatsoever of the topic.

(b) 3–4 marks A good explanation of whether the parties are liable for fraudulent trading, and the possible sanctions.
1–2 marks Some, but limited, explanation or application.
0 marks No knowledge or explanation.

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Additional marking guide for section B Marks available Marks awarded

46 (a) Consideration in a contract 2

–––

(b) Past consideration 2

Existing legal duty 2
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4
–––
Total marks 6
–––

47 (a) Constitution content and structure 2

–––

(b) Objects clause 2

–––

(c) Alteration of constitution 2

–––
Total marks 6
–––

48 (a) Nominal value and premium 2

–––

(b) Dividend 2
Bonus shares 2
–––
4
–––
Total marks 6
–––

49 (a) Executive and non-executive 2

–––

(b) Breach of directors’ duties 4

–––
Total marks 6
–––

50 (a) Main elements 2

–––

(b) Liability and sanctions 4

–––
Total marks 6
–––

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