Ham, Sam, Tam and Cam 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 20X8 Sam received £10,000 from the partnership's 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 20X8 Tam entered into a £15,000 contract on behalf of the partnership to buy a stock of bicycles, which he hoped to sell from the garage forecourt.

In March 20X8 Cam retired from the partnership but the creditors were not notified of his retirement until May 20X8. In April 20X8 the partnership's 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.

REQUIREMENT

Which statement concerning the liability of the partners for the overdraft is correct?

Ham, Sam, Tam and Cam 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 20X8 Sam received £10,000 from the partnership's 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 20X8 Tam entered into a £15,000 contract on behalf of the partnership to buy a stock of bicycles, which he hoped to sell from the garage forecourt.

In March 20X8 Cam retired from the partnership but the creditors were not notified of his retirement until May 20X8. In April 20X8 the partnership's 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.

REQUIREMENT

Which statement concerning the liability of the partners for the bicycles is correct?

Ham, Sam, Tam and Cam 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 20X8 Sam received £10,000 from the partnership's 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 20X8 Tam entered into a £15,000 contract on behalf of the partnership to buy a stock of bicycles, which he hoped to sell from the garage forecourt.

In March 20X8 Cam retired from the partnership but the creditors were not notified of his retirement until May 20X8. In April 20X8 the partnership's 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.

REQUIREMENT

Which of the partners are liable for the petrol account debt?

Mick has operated a house building business as a sole trader for a number of years. The business is growing and in recent times, Mick has taken out a business loan to buy business assets. Mick is considering tendering for a couple of very large contracts that should earn the business substantial sums, but also increases his potential liability if he is in breach of contract.

Now his accountant has recommended that he should consider registering as a company in order to gain the benefits of separate corporate personality.

REQUIREMENT

Which of the following describes separate legal personality?

Identify which of the following are benefits to Mick of incorporating the business.

Doc, a supplier of building materials, entered into the following transactions:

An agreement to sell some goods to a longstanding friend, Ed. The contractual document, however, actually stated that the contract was made with Ed's company, Ed Ltd. Although the materials were delivered, they have not been paid for and Doc has learned that Ed Ltd has just gone into insolvent liquidation.

Doc had employed a salesman, Fitt, whose contract of employment contained a clause preventing him from approaching any of Doc's clients for a period of two years after he had left Doc's employment. Doc has found out that, on stopping working for him, Fitt has started working for a company, Gen Ltd, wholly owned by Fitt and his wife, and is approaching contacts he had made while working for Doc.

REQUIREMENT

Which TWO of the following are consequences of limited liability in regards to a private company limited by shares?

Doc, a supplier of building materials, entered into the following transactions:

An agreement to sell some goods to a longstanding friend, Ed. The contractual document, however, actually stated that the contract was made with Ed's company, Ed Ltd. Although the materials were delivered, they have not been paid for and Doc has learned that Ed Ltd has just gone into insolvent liquidation.

Doc had employed a salesman, Fitt, whose contract of employment contained a clause preventing him from approaching any of Doc's clients for a period of two years after he had left Doc's employment. Doc has found out that, on stopping working for him, Fitt has started working for a company, Gen Ltd, wholly owned by Fitt and his wife, and is approaching contacts he had made while working for Doc.

REQUIREMENT

Which statement concerning the clause in Fitt's employment contract is correct?

Doc, a supplier of building materials, entered into the following transactions:

An agreement to sell some goods to a longstanding friend, Ed. The contractual document, however, actually stated that the contract was made with Ed's company, Ed Ltd. Although the materials were delivered, they have not been paid for and Doc has learned that Ed Ltd has just gone into insolvent liquidation.

Doc had employed a salesman, Fitt, whose contract of employment contained a clause preventing him from approaching any of Doc's clients for a period of two years after he had left Doc's employment. Doc has found out that, on stopping working for him, Fitt has started working for a company, Gen Ltd, wholly owned by Fitt and his wife, and is approaching contacts he had made while working for Doc.

REQUIREMENT

Which statement concerning Ed Ltd's debt is correct?

Don was instrumental in forming Eden plc, which was registered and received its trading certificate in December 20X4. It has subsequently come to the attention of the board of directors that the following events had taken place prior to the incorporation of the company:

Don entered into a contract in the company's name to buy computer equipment, which the board of directors does not wish to honour.

Don entered into a contract in the company's name to develop a particular patent, which the board of directors of Eden wishes to pursue but in relation to which the other party does not wish to proceed.

Don entered into a contract with Fad Ltd for business equipment. The contract was made 'subject to adoption by Eden plc' but now Eden plc does not wish to pursue it.

REQUIREMENT

Which of the following statements concerning the contract to buy computer equipment is correct?

Don was instrumental in forming Eden plc, which was registered and received its trading certificate in December 20X4. It has subsequently come to the attention of the board of directors that the following events had taken place prior to the incorporation of the company:

Don entered into a contract in the company's name to buy computer equipment, which the board of directors does not wish to honour.

Don entered into a contract in the company's name to develop a particular patent, which the board of directors of Eden wishes to pursue but in relation to which the other party does not wish to proceed.

Don entered into a contract with Fad Ltd for business equipment. The contract was made 'subject to adoption by Eden plc' but now Eden plc does not wish to pursue it.

REQUIREMENT

Which of the following contracts are NOT enforceable?

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'.

REQUIREMENT

A company's articles of association form a contract between the company and which of the following parties?

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'.

REQUIREMENT

By which TWO of the following methods can Glad Ltd amend its articles of association?

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'.

REQUIREMENT

Will the other members of Glad Ltd will be successful in their attempt to change the articles and require Fred to transfer his shares to them and why?