LW ENG flashcards

There are three essential elements of a contract. Two of them are “consideration” and “intention”. What's the third element?

Agreement

There are three essential elements of a contract. Two of them are “agreement” and “consideration”. What's the third element?

Intention

The case Williams v Carwardine is a case involving an advert of a reward offered for information. This type of case is an exception to which principle?

A reward case is an exception to the general principle that an advert is an invitation to treat and not an offer .

Is it true that death of the offeror has the effect that the offer is no longer capable of acceptance?

No! If the offer does not involve the personality of the offeror, then it's the notification of the death which makes the offer no longer capable of acceptance (not the death itself)

What is being discussed in the sentence: “It must be sufficient but need not be adequate”

Consideration – must be sufficient to merit the title “consideration” ie it must have some value

Performance of an existing contractual duty is not sufficient to be classed as consideration for a different contract. Which case established that principle?

Stilk v Myrick

Which case established the principle that acts over and above an existing natural duty already owed are sufficient to merit the title “consideration”?

Ward v Byham

What's the main difference between a term which is a condition and a term which is a warranty?

A condition, when breached, means the contract can be treated as ended. A breach of warranty, means the contract still exists

In any answer to an exam question concerning damages, two cases are always mentioned.  What are they?

Hadley v Baxendale (remoteness) and Victoria Laundry v Newman Industries (measurement)

What is the main common law remedy for the innocent party in the event of breach of contract?

Damages

Which remedy is the Court granting when the Court says (effectively!) “Just do it”?

A Specific performance

So far as auditors are concerned, which tort is (unfortunately) most likely to affect them?

The tort of negligence

“The duty of care owed by accountants is greater when advising on take-overs than when auditing”. Is this statement true?

It's true as illustrated by the case Morgan Crucible v Hill Samuel Bank

In a “contract of service” is the contracted person an employee or is he an independent contractor

the contracted person is an employee

The contracted person is an independent contractor

If an employee is a threat to national security, would their dismissal be classed as automatically fair?

Yes

“Participation in an unofficial industrial action is not an automatically fair reason for dismissal”. Is that statement true?

No, participation in an unofficial industrial action IS an automatically fair reason for dismissal

Where a person has, historically, been allowed to act as though they were a Chief Executive Officer, the other directors would be ****** from denying that title.  Complete the gap

“estopped”

What's another word commonly used to express “apparent” as in “apparent authority”?

Ostensible

“In some circumstances a principal may ratify the acts of an agent retrospectively”. Is this statement true?

Yes, it is true

In company law, when the Chief Executive Officer dies, the company ceases to exist until a replacement CEO is appointed. Is this statement true?

No!

“The acts of a partner done in the course of the firm's business do not bind the firm. Only the individual partner is liable” Is that statement true? No. The acts of a partner done in the course of the firm's business bind the firm and the partners

Is it necessary for a firm registered under the Limited Liability Partnerships Act 2000 to have an annual audit?

Yes, it's part of the “price payable” for the benefit of limited liability

“Insanity of a partner is an automatic ground for the dissolution of a partnership”. Is this statement true?

No.  Insanity as a ground for dissolution is a matter for the Court to decide. It's not automatic

Is it always true that once a company has been incorporated it has a separate legal identity?

Yes, it is always true

Is it always true that as soon as a company has been incorporated it may commence trading?

No. Following incorporation, a public company must obtain a trading certificate before it may commence trading

“Where a public company enters a trading contract before it has obtained a trading certificate, the contract is void”. Is that statement true?

No, it is not true.  An “innocent” third party can enforce the contract against the company.

There are three ways of incorporating a company. By “Royal charter” and by “statute” are two. What is the third way?

By registration

There are three ways of incorporating a company. By “registration” and by “statute” are two. What is the third way?

By Royal charter

There are three ways of incorporating a company. By “Royal charter” and by “registration” are two. What is the third way?

By statute

The case Salomon v Salomon & Co Ltd confirmed conclusively a basic principle of company law. What was that principle?

The concept that a company is a separate legal entity, distinct from its owners and from those who manage its affairs

In very rare cases the Courts are prepared to look to see who are the actual beneficial owners of a company.  This is called “Lifting *** ****” Complete the sentence

Lifting the veil

Is it possible for a member to have their liability increased even in a limited liability company?

Yes, in a number of situations including if they give their written consent.

The duty to act with reasonable skill and care is an example of what type of duty?

The duty to act with reasonable skill and care is an example of a fiduciary duty

If a promoter enters into a contract on behalf of company which has not yet received its certificate of incorporation, is the company liable or, in fact, is anyone liable?

The promoter is liable personally – the company doesn't exist and therefore has no liability

What matters must be disclosed in an “Application for registration” of a new company?

Proposed name, country of domicile of registered office, liability of members, company status (plc or ltd) , postal address of registered office

“The date on the certificate of incorporation is ***** proof that that was the date the company was created”. Complete the sentence

The date on the certificate of incorporation is conclusive proof that that was the date the company was created

A Register of Directors shall contain what information relating to the directors?

Present and former names, address (ideally home address), nationality, business occupation, date of birth

In a company with 1,000 members, what is the MINIMUM number of members who must vote in favour in order to pass a special resolution?

No! Just one! I didn't say that everyone voted!

“At the time someone becomes a member of a company, it is as though they have entered a contract with **** and with ****”. Complete the sentence

“At the time someone becomes a member of a company, it is as though they have entered a contract with the company and with all the other members individually”

What sort of resolution is required if a company wishes to change the company name?

A special resolution is required if a company wishes to change the company name

Within how many days must a copy of a special resolution be filed with the Registrar of Companies after being passed at a general meeting of a company?

Within 15 days

“A person becomes a member of a company when their name appears in the Register of Members” Is this statement true?

Yes, a person becomes a member of a company when their name appears in the Register of Members

“A person becomes a member of a company when they have successfully bought shares in the company” Is that statement true?

No, a person becomes a member of a company when their name appears in the Register of Members

“If a person's name appears in a Register of Members, this indicates that they are a shareholder of the company” Is this statement true?

No, if a person's name appears in a Register of Members, this indicates that they are a member of the company, but not necessarily a shareholder

What does the word “proxy” mean in the expression “present in person or by proxy”?

A proxy is appointed by a member to represent the member at a general meeting where the member is unable to attend

“A proxy appointed by a member of a company to represent the member's wishes must be also a member of the company” It this statement true?

No, it is not necessary that a proxy be a member of the company

“If a private company wishes to have a company secretary, the person appointed must be appropriately qualified” Is this statement true?

No, it is not true, no qualifications are necessary for a person to be appointed as a private company secretary

A preference share has that name because of its preferential entitlements over equity shares. One preference is that it shall receive its dividend before any equity dividend is paid. What is the other?

In the event of a liquidation, preference shareholders shall be repaid their capital, in full, before the equity shareholders receive a single cent in repayment of their capital

For the purposes of the F4 examination, it is important to know the difference between “loan stock” and  “debentures”. Is this statement true?

No, it is NOT necessary to be able to differentiate between loan stock and debentures in the F4 examination

“At a general meeting of the company, the debenture holders' votes are counted before those of the equity shareholders” Is this statement true?

No, this is not true. At a general meeting of the company, the debenture holders have no votes – they are creditors, not members

“On a liquidation, the floating charge debenture holders are paid in priority to all others. Their claim “floats” to the top of those people who are owed by the company” Is this statement true?

No, on a liquidation, the FIXED charge debenture holders are paid in priority to all others.

To be valid, a charge must be registered with the Registrar of Companies within how many days of its creation?

 To be valid, a charge must be registered with the Registrar of Companies within 21 days of its creation

In order that a company may reduce its share capital, it requires three authorities.  What are they?

 In order that a company may reduce its share capital, it requires permission within the Articles, a special resolution and permission of the Court

“In the context of shares in a company, the expressions “face value”, “par value” and “nominal value” mean the same.” Is this statement true?

Yes, “face value”, “par value” and “nominal value” do have the same meaning

“To write off preliminary and formation expenses” is one of the few allowable uses of the share premium account. Is this statement true?

Yes, “to write off preliminary and formation expenses”  is one of the few allowable uses of the share premium account.

Special notice is sometimes required for what type of resolution in a company's general meeting?

An ordinary resolution sometimes requires special notice

“Special notice is required of an ordinary resolution in the event that a director is to be removed from office” Is this statement true?

Yes, special notice is required of an ordinary resolution to remove a director from office

“Whenever a company wishes to change auditors, they must pass an ordinary resolution with special notice” Is this statement true?

Yes, in every circumstance when a company wishes to change auditors the company must pass an ordinary resolution with special notice

When a director is proposed to be removed from office, the director has the right to prepare “written **** of *****  *****” Complete the sentence

When a director is proposed to be removed from office, the director has the right to prepare “written representations of reasonable length and not defamatory in nature”

At the first annual general meeting of a public company, what proportion of the directors must retire and (may) seek re-election

 At the first annual general meeting of a public company, all the directors must retire and (may) seek re-election

A public company must hold its first annual general meeting no later than 6 months after its first year end ie a maximum of 18 months after incorporation

Is it allowable for a director who has recently declared herself to be bankrupt to continue in office as a director of a company?

No, it is not allowable for a director who has recently declared herself to be bankrupt to continue in office as a director of a company

“Ultra vires” literally translates as “beyond the powers”

Is it reasonable for a director to claim that she could not be expected to promote the interests of the company?

No, it is a statutory duty of directors to promote the interests of the company

“It is the members' right in a general meeting to determine the level of the auditors' remuneration” Is this statement true?

Yes, but it is normal that the members will authorise the board to negotiate the level of the auditors' remuneration

Is it possible to hold an annual general meeting of a public company with only 2 days' notice?

Yes, it is possible to hold an annual general meeting of a public company with only 2 days' notice provided short notice has been approved by the holders of 100% of the votes

A special resolution requires how many days' notice if it is to be validly passed?

A special resolution requires 14 days' notice if it is to be validly passed

Whose responsibility is it to call / convene a general meeting of the members of a company?

It is the directors'  responsibility to call / convene a general meeting of the members of a company, but they normally delegate that duty to the company secretary

“A director who has reached the age of 70 is disqualified from continuing to hold office as a director of a company” Is this statement true?

No, a director who has reached the age of 70 may continue to serve as a director of a company but, in the case of a public company, the director must seek re-election every year

In the case of A Large Company plc, how many members represent a quorum at a general meeting?

 It's whatever it says in the Articles

If a members' voluntary liquidation is a voluntary action of the members, a creditors' voluntary liquidation is a voluntary act of which group of people

The members! It's called a creditors' voluntary liquidation because the creditors are not likely going to be paid their debts in full

Is it true that the Court may, on application, direct that a public company be liquidated where the company has failed to obtain a trading certificate within 12 months of incorporation?

Yes, it is true.  It's one of the six grounds for which the Court may make that compulsory liquidation order

What sort of resolution is required to be passed by the members to put their company into liquidation?

A special resolution requiring a 75% majority voting in favour

Which type of liquidation requires the directors to prepare a declaration of solvency?

A members' voluntary liquidation requires the directors to prepare a declaration of solvency

Re German Date Coffee Company is a case where the Court granted a liquidation order. Why did the Court make that order?

The Court made the order on the grounds that it was just and equitable – the sub-stratum of the company no longer existed

What was the case when the Court granted a liquidation order on the grounds that there was deadlock on the board?

The case when the Court granted a liquidation order on the grounds that there was deadlock on the board was re Yenidji Tobacco

A person who is to be appointed as liquidator must hold a specific qualification. What is that qualification?

A person who is to be appointed as liquidator must be a “qualified insolvency practitioner”

A person who is to be appointed as administrator must hold a specific qualification. What is that qualification?

A person who is to be appointed as administrator must be a “qualified insolvency practitioner”

To what does the expression “comply or explain” refer within the UK Corporate Governance Code?

 The expression “comply or explain” refers to public quoted companies which must state within the financial statements that they have complied with the Code or, if not, why not.

In an FTSE 350 company, for what period of time are directors appointed before they must seek re-election (if they wish to be re-elected!)?

In an FTSE 350 company, all directors must retire each year and seek re-election (if they wish to be re-elected)

Is unpublished price-sensitive information which is greater than 6 months old really price-sensitive?

No, the information should be less than 6 months old

If you were given investment advice by a director to “Get out of equities and invest in Government bonds”, would that qualify as passing on unpublished price- sensitive information?

No, to be an offence, the information needs to be specific and not just general investment advice

“The punishment for money laundering is a prison sentence of up to 14 years and / or a fine” Is this statement true?

Yes, the punishment for money laundering is a prison sentence of up to 14 years and / or a fine