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ALL TEN questions are compulsory and MUST be attempted 1 (a) In relation to the English legal system distinguish

between the following: (i) Criminal law; (ii) Civil law. (5 marks) (b) Explain the jurisdiction of the courts dealing with criminal and civil law. (5 marks) (10 marks) 2 In relation to the law of contract explain the meaning and effect of: (a) the doctrine of privity; (6 marks) (b) the intention to create legal relations. (4 marks) (10 marks) 3 In relation to the law of tort explain the concept of remoteness of damage. marks) 4 In relation to a companys memorandum of association, explain the following: (a) the registered office clause; (3 marks) (b) the capital clause; (3 marks) (c) the name clause. (4 marks) (10 marks) 5 In relation to the rules governing the payment of company dividends explain: (a) how dividends may be properly funded; (4 marks) (b) the rules which apply to public limited companies; (3 marks) (c) the consequences of any dividend being paid in breach of those rules. (3 marks)(10 marks) 6 In relation to employment law explain: (a) the meaning of constructive dismissal; (5 marks) (b) the remedies available in relation to a successful claim for unfair dismissal. (5 marks)(10 marks) 7 In the context of corporate governance explain the role of the external company auditors, paying particular regard to the following issues: (a) their qualifications; (b) their powers; (c) their duties. (10 marks) 8 Ali is an antique dealer and one Saturday in November 2007 he put a vase in the window of his shop with a sign which stated exceptional piece of 19th century pottery on offer for 500. Ben happened to notice the vase as he walked past the shop and thought he would like to have it. Unfortunately, as he was late for an important meeting, he could not go into the shop to buy it, but as soon as his meeting was finished he wrote to Ali agreeing to buy the vase for the stated price of 500. The letter was posted at 11:30 am. Later on the same day, Chet visited Alis shop and said he would like the vase but was only willing to pay 400 for it. Ali replied that he would accept 450 for the vase, but Chet insisted that he was only willing to pay 400 and left the shop. However, on his journey home Chet realised that 450 was actually a very good price for the vase and he immediately wrote to Ali agreeing to buy it for that price. His letter was posted at 12:30 pm. Just before closing time at 5 pm. Di came into Alis shop and she also offered 400 for the vase. This time Ali agreed to sell the vase at that price and Di promised to return the following Monday with the money. On the Monday morning Ali received both of the letters from Ben and Chet before Di could arrive to pay and collect the vase. (10

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Required: From the point of view of the law of contract advise Ali as to his legal relations with Ben, Chet and Di. (10 marks) 9 Earl has been employed by Flash Ltd for the past 20 years. During that time he has also invested in the company in the form of shares and debentures. Earl owns 5,000 ordinary shares in Flash Ltd. The shares are of 1 nominal value and are paid up to the extent of 75%. The debentures, to the value of 5,000, are secured by a fixed charge against the land on which Flash Ltds factory is built. In April it was announced that Flash Ltd was going into immediate insolvent liquidation, owing considerable amounts of money to trade creditors. As a result of the suddenness of the decision to liquidate the company, none of the employees received their last months wages. In Earls case this amounted to 2,000. Required: Advise Earl as to his rights and liabilities in relation to Flash Ltd in regard to: (a) his unpaid wages; (3 marks) (b) his shareholding; (3 marks) (c) his debentures. (4 marks) (10 marks) 10 Katch Ltd is a small private company. Although there are three members of its board of directors, the actual day-to-day running of the business is left to one of them Len, who simply reports back to the board on the business he has transacted. Len refers to himself as the managing director of Katch Ltd, although he has never been officially appointed as such. Six months ago Len entered into a contract on Katch Ltds behalf with Mo to produce some advertising material for the company. However Katch Ltd did not wish to proceed with the advertising campaign and the board of directors have refused to pay Mo, claiming that Len did not have the necessary authority to enter into the contract with him. Required: Analyse the situation with regard to the authority of Len to make contracts on behalf of Katch Ltd and in particular advise whether or not Katch Ltd is liable to Mo. 1 In relation to the English legal system, explain the main sources of contemporary law. (10 marks) 2 In relation to the law of contract, explain what is meant by breach of contract, paying attention to anticipatory breach. (10 marks) 3 In relation to defences in the tort of negligence, explain the meaning of: (a) contributory negligence; (5 marks) (b) volenti non fit injuria (consent). (5 marks)(10 marks) 4 In relation to a companys shares, explain the following: (a) the statement of capital and initial shareholdings; (4 marks) (b) authorised minimum issued capital in a public company; (2 marks) (c) paid-up capital; (2 marks) (d) the difference between nominal value and market value. (2 marks)

(10 marks)

5 In relation to private companies, explain the meaning of, and the procedure for passing, the following: (a) an ordinary and a special resolution; (5 marks) (b) a written resolution. (5 marks) (10 marks)

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6 In relation to the Companies Act, 2006, explain the duty of directors to promote the success of the company, and to whom such a duty is owed. (10 marks)

7 In relation to employment law, explain: (a) the grounds upon which dismissal may be fair; (5 marks) (b) the meaning and effect of constructive dismissal. (5 marks) (10 marks) 8 Alvin runs a business selling expensive cars. Last Monday he mistakenly placed a notice on one car indicating that it was for sale for 5,000 when in fact its real price was 25,000. Bert later noticed the sign and, recognising what a bargain it was, immediately indicated to Alvin that he accepted the offer and would take the car for the indicated amount. Alvin, however, told Bert that there had been a mistake and that the true price of the car was 25,000. Bert insisted that he was entitled to get the car at the lower price, and when Alvin would not give it to him at that price Bert said that he would sue Alvin. After Bert had left, Alvin changed the price on the car to 25,000 and subsequently Cat came in and said she would like to buy the car, but that she would have to arrange finance. On Tuesday Del came by and offered Alvin the full 25,000 cash there and then and Alvin sold it to him. Required: Advise Alvin, Bert, Cat and Del as to their rights and liabilities in the law of contract. (10 marks) 9 Fred is a member of Glad Ltd, a small publishing company, holding 100 of its 500 shares; the other 400 shares are held by four other members. It has recently become apparent that Fred has set up a rival business to Glad Ltd and the other members have decided that he should be expelled from the company. To that end they propose to alter the articles of association to include a new power to require any member to transfer their shares for fair value to the other members upon the passing of a resolution so to do. Required: Advise the parties concerned whether or not the proposed change to the articles is legally enforceable and whether or not it can be used to force Fred to sell his shares. (10 marks) 10 Ham, Sam and Tam formed a partnership to run a petrol station. The partnership agreement expressly stated that the partnership business was to be limited exclusively to the sale of petrol. In January 2008 Sam received 10,000 from the partnerships bank drawn on its overdraft facility. He told the bank that the money was to finance a short-term partnership debt but in fact he used the money to pay for a round the world cruise. In February Tam entered into a 15,000 contract on behalf of the partnership to buy some used cars, which he hoped to sell from the garage forecourt. In March the partnerships bank refused to honour its cheque for the payment of its monthly petrol account, on the basis that there were no funds in its account and it had reached its overdraft facility. Required: Advise Ham, Sam and Tam as to their various rights and liabilities in relation to partnership law. (10 marks) 1 In relation to the English legal system explain the following sources of law: (a) Common law; (6 marks)

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(b) Legislation. (4 marks) (10 marks) 2 In relation to contract law explain the meaning and effect of: (a) an offer; (4 marks) (b) an invitation to treat. (6 marks) (10 marks) 3 In relation to the tort of negligence explain the standard of care owed by one person to another. (10 marks) 4 In the context of company law explain: (a) the doctrine of separate personality and its consequences; (6 marks) (b) the circumstances under which separate personality will be ignored. (4 marks) (10 marks) 5 In relation to company law explain the meaning of the following: (a) ordinary shares. (3 marks) (b) preference shares. (3 marks) (c) debentures. (4 marks) (10 marks) 6 In relation to company law distinguish between: (a) executive directors; (4 marks) (b) non-executive directors; (3 marks) (c) shadow directors. (3 marks) (10 marks) 7 In relation to employment law: (a) Explain why it is important to distinguish between contracts of service and contracts for services. (4 marks) (b) State how the courts decide whether someone is an employee or is self-employed. (6 marks) 8 Astride entered into a contract with Bild Ltd to construct a wall around the garden of a house she had just purchased. The wall was to be three metres high to block out a view of a rubbish tip. The wall was due to be finished in May and Astride entered into another contract with Chris to landscape the garden starting on 1 June. Bild Ltd finished the wall on 25 May. However when Astride came to examine it for the first time she found that it was only 250 metres high and that the rubbish tip was still visible from the top of her garden. On 1 June, Chris informed Astride that he was too busy to landscape her garden and that she would have to get someone else to do it. The only person available, however, will charge Astride 500 more than Chris had agreed for doing the work. Required: Analyse the scenario from the perspective of the law of contract, advising Astride: (a) Whether she can require Bild Ltd to reconstruct the garden wall in order to make it the agreed height, and if not, what alternative action is available to her. (5 marks) (b) Whether she can require Chris to undertake the work on the garden, and if not, what alternative action is available to her. (5 marks) (10 marks) 9 Clare, Dan and Eve formed a partnership 10 years ago, although Clare was a sleeping partner and never had anything to do with running the business. Last year Dan retired from the partnership. Eve has subsequently entered into two large contracts. The first one was with a longstanding customer Greg, who had dealt with the partnership for some five years. The second contract was with a new customer Hugh. Both believed that Dan was still a partner in the

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business. Both contracts have gone badly wrong leaving the partnership owing 50,000 to both Greg and Hugh. Unfortunately the business assets will only cover the first 50,000 of the debt. Required: Explain the potential liabilities of Clare, Dan, and Eve for the partnership debts. (10 marks) 10 Sid is a director of two listed public companies in which he has substantial shareholdings: Trend plc and Umber plc. The annual reports of both Trend plc and Umber plc have just been drawn up although not yet disclosed. They show that Trend plc has made a surprisingly big loss and that Umber plc has made an equally surprising big profit. On the basis of this information Sid sold his shares in Trend plc and bought shares in Umber plc. He also advised his brother to buy shares in Umber plc. Vic who is also a shareholder in both companies sold a significant number of shares in Umber plc only the day before its annual report was published. Required: (a) Analyse the above scenario from the perspective of the law relating to insider dealing; (8 marks) (b) In particular advise Vic as to his position. (2 marks) (10 marks) 1 In relation to the courts powers to interpret legislation, explain and differentiate between: (a) the literal approach, including the golden rule; and (5 marks) (b) the purposive approach, including the mischief rule. (5 marks) (10 marks) 2 In relation to the law of contract, explain: (a) the postal rule; (5 marks) (b) the doctrine of privity. (5 marks) (10 marks) 3 In relation to remedies for breach of contract, explain: (a) the difference between liquidated damages and penalty clauses; (7 marks) (b) the duty to mitigate losses. (3 marks) (10 marks) 4 In relation to the law of negligence, explain the extent of a company auditors duty of care and to whom any such duty is owed. (10 marks) 5 In relation to company law: (a) explain the meaning of limited liability. (3 marks) (b) Explain and distinguish between: (i) unlimited companies; (2 marks) (ii) companies limited by guarantee; (2 marks) (iii) companies limited by shares. (3 marks) (10 marks) 6 In the context of companies in fi nancial diffi culty, distinguish between and explain the operation of: (a) compulsory winding up; (4 marks) (b) administration. (6 marks) (10 marks) 7 In the context of contracts of employment, explain the common law duties imposed on: (a) employers; (6 marks) (b) employees. (4 marks) (10 marks)

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8 Whilst at work Andy always parked his car in a car park operated by Bash Ltd. On the entry to the car park just in front of the payment machine there is a large sign in fl uorescent red paint which states: These premises are not staffed by our employees and may be dangerous. Clients use these facilities strictly at their own risk and Bash Ltd accept no liability whatsoever for any damage or injury sustained by either those using this facility or their vehicles or property, no matter how caused. Andy was aware of the sign, but had never paid much attention to it. However, one day he returned to his car to find that it had been badly damaged by a towing vehicle driven by an employee of Bash Ltd. Whilst on his way to the car park office to complain he was hit by the same towing vehicle, which was clearly being driven dangerously by one of Bash Ltds employees. As a result, not only was his car severely damaged, but he suffered a broken leg and was off work for eight weeks. Bash Ltd has accepted that its employee was negligent on both counts but denies any liability, relying on the exclusion clause. Required: On the understanding that the clause excluding Bash Ltds liability was incorporated into its contract with Andy, advise Andy whether there is any action he can take against Bash Ltd. (10 marks) 9 Caz is a director of Dull plc, but she also carries out her own business as a wholesale supplier of specialist metals under the name of Era Ltd. Last year Dull plc entered into a contract to buy a large consignment of metal from Era Ltd. Caz attended the board meeting that approved the contract and voted in favour of it, without revealing any link with Era Ltd. Required: Analyse the situation explaining any potential liability that Caz may have in relation to the sale of the metal to Dull plc by Era Ltd. (10 marks) 10 Fran, Gram and Hen registered a private limited company Ire Ltd in January 2005 with a share capital of 300, which was equally divided between them, with each of them becoming a director of the company. Although the company did manage to make a small profit in its first year of trading, it was never a great success and in its second year of trading it made a loss of 10,000. At that time Fran said he thought the company should cease trading and be wound up. Gram and Hen, however, were insistent that the company would be profitable in the long-term so they agreed to carry on the business, with Fran taking less of a part in the day-to-day management of the business, although retaining his position as a company director. In the course of the next three years Gram and Hen falsified Ire Ltds accounts to disguise the fact that the company had continued to suffer losses, until it became obvious that they could no longer hide the companys debts and that it would have to go into insolvent liquidation, with debts of 100,000. Required: Advise Fran, Gram and Hen as to any potential liability they might face as regards: (a) fraudulent trading, under both criminal and civil law; (5 marks) (b) wrongful trading under s.214 of the Insolvency Act 1986. (5 marks) (10 marks)

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1 Explain and distinguish between the following terms in relation to the doctrine of precedent in the English legal system: (a) ratio decidendi and obiter dictum; (4 marks) (b) binding precedent and persuasive precedent. (6 marks) (10 marks) 2 (a) In relation to the law of contract, define and explain consideration. marks) (b) Explain the following statements regarding consideration: (i) consideration must be sufficient but does not have to be adequate; (3 marks) (ii) past consideration is not good consideration. (4 marks) marks) (3


3 In relation to the law of contract, distinguish between and explain the effect of: (a) a term and a mere representation; (3 marks) (b) express and implied terms, paying particular regard to the circumstances under which terms may be implied in contracts. (7 marks) (10 marks) 4 In relation to company law, explain: (a) the limitations on the use of company names; (4 marks) (b) the tort of passing off; (4 marks) (c) the role of the company names adjudicators under the Companies Act 2006. (2 marks) 10 marks) 5 In relation to company law, explain: (a) the doctrine of capital maintenance; (4 marks) (b) the circumstances under which both a private and a public company can reduce its capital and the procedure to be followed. (6 marks) (10 marks) 6 Explain the grounds upon which a person may be disqualified under the Company Directors Disqualification Act 1986. (10 marks) 7 In relation to employment law, explain the meaning of redundancy and the rules that govern it. (10 marks) 8 In January 2008 Arti entered in a contractual agreement with Bee Ltd to write a study manual for an international accountancy bodys award. The manual was to cover the period from September 2008 till June 2009, and it was a term of the contract that the text be supplied by 30 June 2008 so that it could be printed in time for September. By 30 May, Arti had not yet started on the text and indeed he had written to Bee Ltd stating that he was too busy to write the text. Bee Ltd was extremely perturbed by the news, especially as it had acquired the contract to supply all of the accountancy bodys study manuals and had already incurred extensive preliminary expenses in relation to the publication of the new manual. Required: In the context of the law of contract, advise Bee Ltd whether they can take any action against Arti. (10 marks) 9 Clean Ltd was established some five years ago to manufacture industrial solvents and cleaning solutions, and Des was appointed managing director. The companys main contract was with Dank plc a large industrial conglomerate.

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In the course of its research activity, Clean Ltds scientists developed a new super glue. Des was very keen to pursue the manufacture of the glue but the board of directors overruled him and decided that the company should stick to its core business. The managing director of Dank plc is a friend of Dess and has told him that Dank plc will not be renewing its contract with Clean Ltd as he is not happy with its performance. He also told Des that he would be happy to continue to deal with him, if only he was not linked to Clean Ltd. Following that discussion Des resigned from his position as managing director of Clean Ltd and set up his own company, Flush Ltd which later entered into a contract with Dank plc to replace Clean Ltd. Flush Ltd also manufactures the new glue discovered by Clean Ltds scientists, which has proved to be very profitable. Required: In the context of company law, advise the board of Clean Ltd as to whether they can take any action against Des or Flush Ltd. (10 marks) 10 Greg is a member of the board of directors of Huge plc. He also controls a private limited company Imp Ltd through which he operates a management consultancy business. He also owns all the shares in Jet Ltd through which he conducts an investment business. When Greg learns that Huge plc is going to make a take-over bid for Kop plc he arranges for Jet Ltd to buy a large number of shares in Kop plc on the London Stock Exchange on which it makes a large profit when it sells them after the takeover bid is announced. He then arranges for Jet Ltd to transfer the profit to Imp Ltd as the charge for supposed consultancy work. The money is then transferred to Greg through the declaration of dividends by Imp Ltd. Required: Analyse the above conduct from the perspective of criminal law paying particular attention to the issues of: (a) insider dealing; and (5 marks) (b) money laundering. (5 marks) (10 marks) 1 Describe the structure and functions of the main civil courts in the English legal system, including the Supreme Court. (10 marks) 2 In relation to the law of contract: (a) define an offer; (5 marks) (b) explain the specific meaning and effect of (i) a counter-offer; (3 marks) (ii) a unilateral offer. (2 marks) (10 marks) 3 In relation to the tort of negligence, explain the meaning of duty of care. marks) (10

4 Explain the documents necessary, and the procedure to be followed, in registering a public limited company under the provisions of the Companies Act 2006. (10 marks) 5 Explain the meaning of the following terms in company law: (a) a debenture; (3 marks) (b) a fixed charge; (3 marks) (c) a floating charge. (4 marks) (10 marks) 6 In the context of corporate governance, explain the rules relating to the appointment, duties and powers of a company secretary in a public limited company. (10 marks)

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7 In the context of employment law, state how the courts decide whether someone is self-employed or is an employee. (10 marks) 8 In January 2010 Ami took over an old warehouse with the intention of opening an art gallery. As the warehouse had to be converted, Ami entered into two contracts, one with Bry to do all the necessary plastering and one with Cis, who was to do all the necessary painting. Both Bry and Cis were to be paid 5,000. Both received initial payments of 1,000 and agreed to have the work completed on 31 March, as the art gallery had to be ready for its fi rst exhibition on 1 May. At the end of February, Bry told Ami that he would not complete the plastering in time unless she agreed to increase his payment by a further 1,000. Ami agreed to pay the increased sum in order to ensure that the job was done on time. She then thought it was only fair that she should increase the amount of money promised to Cis by the same amount. However, on completion of the work on time Ami refused to make either of the additional payments to Bry or Cis, beyond the original contractual price. Required: Advise Bry and Cis whether they have any rights in law to enforce Amis promise to pay them an extra 1,000. (10 marks) 9 Chi, Di and Fi formed an ordinary partnership to run an art gallery. Each of them paid 100,000 into the business. As Fi had no prospect of raising any more money it was agreed between them that her maximum liability for any partnership debts would be fixed at her original contribution of 100,000. The partnership agreement specifically restricted the scope of the partnership business to the sale of paintings, sculptures and other works of art. In January 2010 Chi took 10,000 from the partnerships bank drawn on its overdraft facility. She had told the bank that the money was to finance a short-term partnership debt but in fact she used the money to pay for a holiday. In February Di entered into a 25,000 contract on behalf of the partnership to buy some books, which she hoped to sell in the gallery. Required: Advise Chi, Di and Fi as to their various rights and liabilities in relation to the operation of the business under partnership law. (10 marks) 10 Gilt Ltd is a small company with an issued share capital of 100,000 1 shares held by 100 members. Harry, the managing director of Gilt Ltd, has been approached by Itt plc in respect of its making a takeover bid for Gilt Ltd. Itt plc has given Harry what is described as a facility fee of 50,000 for ensuring that the takeover is successful. At the next board meeting Harry convinces the other directors that the take-over bid is in the long-term interest of Gilt Ltd, but they are concerned that the holders of the majority of the issued share capital will not approve of the takeover. In order to ensure the success of the takeover, the directors of Gilt Ltd agree that they should allot suffi cient new shares to Itt plc to ensure that a new majority of members will support the takeover. After the allocation of the shares to Itt plc a general meeting is called to consider the takeover and it is approved, with Itt plc voting in favour. May, a substantial shareholder in Gilt Ltd has subsequently found out about the actions of Itt plc, Harry and the other directors. Required:

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Advise May as to the legality of the share allotment and as to what action can be taken against Harry. (10 marks) 1 In relation to the English legal system: a) explain and distinguish between: (i) primary legislation; and (ii) secondary/delegated legislation. (

6 marks)

(b) explain the powers of the courts in relation to challenging the validity of primary and secondary/delegated legislation. (4 marks) (10 marks) 2 State and explain the remedies available for breach of contract. 3 In relation to the law of tort explain: (a) the neighbour principle; (b) remoteness of damage; (c) liability for economic/financial loss. marks) 4 In relation to the issuing of company shares explain: (a) pre-emption rights; (b) rights issues; (c) bonus issues. (10 marks) (4 marks) (4 marks) (2 marks)


(3 marks) (3 marks) (4 marks)

(10 marks)

5 In relation to the Companies Act 2006: (a) state, and explain the purpose of, the various registers that have to be kept by a company; (4 marks) (b) describe what accounting records will have to be produced and maintained by a company. (6 marks) (10 marks) 6 In relation to company law, explain the duties owed by directors to their companies. (10 marks) 7 In relation to employment law explain: (a) the meaning of unfair dismissal; and (b) the remedies available for unfair dismissal. marks) (6 marks) (4 marks)


8 In January 2009, Amy started a business as an independent website designer. To give her a start in her career, her brother Ben, who ran a retail business, said he would give her 1,000 if she updated his business website. At the same time, her friend Che asked her to do work for his business, also for a set fee of 1,000. However, by the time Amy had completed the two projects her design business had become a huge success and she had lots of other clients. When Ben and Che discovered how successful Amys business had become they both felt that they should not be asked to pay for the work they had commissioned. Ben said he would not pay anything as he had only offered the work to help his sister out. Che said he would not pay anything either, on the basis that he had only given her work to do on the basis of their friendship. Required:

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Advise Amy as to whether she can insist on Ben and Che paying the full amounts of their initial promises. (10 marks) 9 Dee and Eff are major shareholders in, and the directors of, the public company, Fan plc. For the year ended 30 April 2009 Fan plcs financial statements showed a loss of 2,000 for the year. For the year ended 30 April 2010 Fan plc made a profit of 3,000 and, due to a revaluation, the value of its land and buildings increased by 5,000. As a consequence, Dee and Eff recommended, and the shareholders approved, the payment of 4,000 in dividends. Required: Advise Dee and Eff as to: (a) the legality of the dividend payment; and (6 marks) (b) any potential legal liability in regard to the dividend payment. marks)

(4 marks)


10 Geo, Ho and Io formed a partnership three years ago to run a hairdressing business. They each provided capital to establish the business as follows: Geo 20,000; Ho 12,000; and Io 8,000. The partnership agreement stated that all profits and losses were to be divided in proportion to the capital contribution. After 18 months Geo provided the partnership with a loan of 3,000 in order to finance the purchase of more stock. The loan was to be paid back from the profits of the business. Unfortunately the business was not successful and the partners decided to dissolve the partnership rather than risk running up any more losses. At the time of the dissolution of the partnership its assets were worth 20,000. Its external debts were 7,000 and none of the debt to Geo has ever been paid. Required: Advise the partners as to how the financial aspects of the dissolution will be conducted and how the assets will be distributed. (10 marks) 1 In relation to the English legal system: (a) Explain and distinguish between civil and criminal law, providing a statutory example of each category; (7 marks) (b) Identify the courts, below the level of the Court of Appeal, that deal with civil law and criminal law. (3 marks) (10 marks) 2 In relation to the formation of a contract explain: (a) the meaning of an offer; (b) the circumstances under which an offer may be terminated. (10 marks) 3 In relation to liability under the tort of negligence explain: (a) the standard of care owed by one person to another; (b) the defence of contributory negligence. (5 marks) (5 marks)

(6 marks) (4 marks) (10 marks)

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4 In relation to the formation of a company explain: (a) the role and duties of promoters, and how they are regulated; (b) a pre-incorporation contract, and its legal consequences. marks)

(5 marks) (5 marks)


5 With regard to payment for shares in the context of capital maintenance, explain the meaning and legal effect of the following: (a) issuing shares at a premium; (5 marks) (b) issuing shares at a discount. (5 marks) (10 marks) 6 In relation to company regulation explain: (a) the concept of corporate governance; (3 marks) (b) the role of the UK Corporate Governance Code; (3 marks) (c) the role of non-executive directors within the context of the UK Corporate Governance Code. (4 marks) (10 marks) 7 In relation to employment law distinguish between and explain the meaning of: (a) unfair dismissal; (5 marks) (b) constructive dismissal; (3 marks) (c) wrongful dismissal. (2 marks) (10 marks) 8 Ari operates a business as a designer of internet web pages for a variety of business clients. Unfortunately he has had some difficulty in recovering his full fees from a number of clients as follows: (a) Bi, a newly qualified accountant, told Ari that although she could only raise the cash to pay half of the outstanding fees she would, as an alternative to paying the other half, do all of Aris accountancy work for the coming year. Ari reluctantly agreed to this proposal. (b) Cas, a self-employed musician, told Ari that she could not pay any of the money she owed him. However, her father offered to pay Ari, but could only manage half of the total amount owed. Once again Ari reluctantly agreed to accept the fathers payment of the reduced sum. (c) Dex, a self-employed car mechanic, without contacting Ari, simply sent him a cheque for half of his fees stating that he, Dex, could not pay any more and that the cheque was in full settlement of his outstanding debt. Ari himself is now in financial difficulty and needs additional cash to maintain his business operation. Required: Advise Ari whether, in the context of contract law, he can recover any of the outstanding money from Bi, Cas and Dex. (10 marks) 9 Goal Ltd is a property development company. Before its incorporation 12 months ago, its business was carried out by Hope, as a sole trader. On the formation of Goal Ltd, Hope expanded the business by asking three of his business contacts to supply additional capital in return for which they, together with Hope, became its directors. Although never formally appointed, Hope took the role and title of chief executive and the other directors left the day-to-day running of the business to him and were happy simply to receive feedback from him at board meetings. Six months ago Hope entered into a contract, on Goal Ltds behalf, with Ima to produce plans for the redevelopment of a particular site that it hoped to acquire. However, Goal Ltd did not acquire the site and due to its current precarious financial position and their fear of potential losses, the board of directors has refused to pay Ima, claiming that Hope did not have the necessary authority to enter into the contract with her. Required:

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Analyse the situation with regard to the authority of Hope to make contracts on behalf of Goal Ltd, and, in particular, advise the board of directors of Goal Ltd if the company is liable on the contract with Ima. (10 marks) 10 On the advice of his accountant, Mat registered a private limited company to conduct his small manufacturing business in January 2010. One of the reasons for establishing the company was to avoid liability for potential losses. The initial shareholders of the company were Mat, his wife Mary, and her father Norm, who each took 1,000 shares in the company, each with a nominal value of 1. The accountant explained that they did not have to pay the full nominal value of the shares at once, so they each paid only 25 pence per share taken, with the result that they still owed the company a further 75 pence per share to be paid at a later date. When the company was established it became apparent that it needed to borrow money from a bank to finance an expansion in production. To that end Oop bank plc lent the company 20,000 secured by a fixed charge against the land Mat had previously transferred to the company, with an additional personal guarantee from Mat for any further debts owed by the company to the bank. Unfortunately the business has not proved successful and Mat and the other shareholders have decided that it is better to liquidate the company rather than run up any more debts. The current situation is that the companys land is worth 20,000 and it has further assets to the value of 7,750, but it has debts to business creditors of 10,000 and owes the bank a further 10,000 on its bank overdraft. Required: Explain the rights of the various creditors and the potential liability of Mat, Mary and Norm. (The actual costs of winding up may be ignored.) (10 marks)

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