AAT L2 Introduction to Business and Company Law 2

Question 1

The Partnership Act 1890 provides that, in the absence of a partnership agreement, profits and losses are shared:

Accepted Answer

Equally between all partners

Answer

In proportion to each partner's capital contribution

Answer

According to the hours each partner works

Answer

Only profits are shared — losses are borne by the senior partner

Question 2

Consideration in contract law is best described as:

Accepted Answer

Something of value given by each party to the contract — it is the price of the promise

Answer

Thinking carefully about the contract

Answer

The time taken to negotiate the contract

Answer

A cooling-off period after signing

Question 3

A limited liability partnership (LLP) provides:

Accepted Answer

The flexibility of a partnership with the limited liability protection of a limited company

Answer

Unlimited liability for all partners

Answer

No requirement to file accounts

Answer

Automatic protection from all business risks

Question 4

The Memorandum of Association for a limited company:

Accepted Answer

Is a document signed by the initial subscribers stating their intention to form a company

Answer

Sets out the internal rules for running the company

Answer

Details the directors' salaries

Answer

Is only required for PLCs

Question 5

Breach of contract occurs when:

Accepted Answer

One party fails to perform their obligations under the contract without lawful excuse

Answer

Both parties agree to change the contract terms

Answer

A contract is signed by only one party

Answer

A contract reaches its agreed end date

Question 6

The Articles of Association of a company:

Accepted Answer

Set out the internal rules governing how the company is managed, including directors' powers and shareholders' rights

Answer

Detail the company's contracts with suppliers

Answer

List all the company's assets

Answer

Are filed with HMRC for tax purposes