ACCA AS Corporate & Business Law (UK) 1 — Questions and Answers
Question 1: Which of the following correctly describes a 'contract'?
- Any written agreement between two or more parties
- A legally binding agreement supported by offer, acceptance, consideration and intention to create legal relations (Correct answer)
- An agreement that must always be witnessed by a solicitor
- A promise that is binding regardless of consideration
Correct answer: A legally binding agreement supported by offer, acceptance, consideration and intention to create legal relations
A valid contract requires: offer, acceptance, consideration, intention to create legal relations and capacity. Written form is not required for most contracts.
Question 2: In English contract law, consideration must be:
- Adequate and sufficient
- Sufficient but need not be adequate (Correct answer)
- Adequate but need not be sufficient
- Provided in money only
Correct answer: Sufficient but need not be adequate
Consideration must be sufficient (have some value in law) but need not be adequate (it need not be a fair or equal exchange). Courts do not investigate adequacy.
Question 3: Under the Companies Act 2006, a private company limited by shares is denoted by:
- plc
- Ltd (Correct answer)
- LLP
- LP
Correct answer: Ltd
A private company limited by shares uses the suffix 'Ltd' (or 'Limited'). Public companies use 'plc' (or 'Public Limited Company').
Question 4: Which of the following is a duty of a company director under the Companies Act 2006?
- To maximise dividends for shareholders every year
- To act in the way they consider most likely to promote the success of the company for the benefit of its members (Correct answer)
- To ensure the company is listed on a stock exchange
- To attend every board meeting without exception
Correct answer: To act in the way they consider most likely to promote the success of the company for the benefit of its members
Section 172 CA 2006 requires directors to act in the way they consider, in good faith, most likely to promote the success of the company for the benefit of its members as a whole.
Question 5: Which type of company resolution requires a majority of more than 50% to pass?
- Ordinary resolution (Correct answer)
- Special resolution
- Written resolution
- Unanimous resolution
Correct answer: Ordinary resolution
An ordinary resolution is passed by a simple majority (more than 50%). A special resolution requires at least 75% of votes cast.
Question 6: A company's articles of association:
- Define the external capacity of the company
- Govern the internal management and administration of the company (Correct answer)
- Must be registered at Companies House only when the company is wound up
- Have no legal effect between shareholders
Correct answer: Govern the internal management and administration of the company
The articles of association constitute the internal rulebook of the company, governing matters such as directors' powers, share transfers and shareholder meetings.
ACCA AS Corporate & Business Law (UK) 1
Which of the following correctly describes a 'contract'?