AAT L2 Introduction to Business and Company Law 3

Question 1

Under the Consumer Rights Act 2015, goods sold to consumers must be:

Accepted Answer

Of satisfactory quality, fit for purpose, and as described

Answer

The Consumer Rights Act 2015 requires that goods must be of satisfactory quality (meeting a reasonable person's expectations), fit for any particular purpose made known to the seller, and match any description given. Failure to meet these gives the consumer rights to a refund, repair, or replacement.

Question 2

A director of a limited company owes a duty of care to:

Accepted Answer

The company itself, acting in good faith to promote its success

Answer

Under the Companies Act 2006, directors owe their duties to the company. They must act in the way they consider most likely to promote the success of the company for the benefit of its members (shareholders) as a whole, having regard to various stakeholders.

Question 3

An agency relationship in business law exists when:

Accepted Answer

One person (the agent) has authority to act on behalf of another (the principal) in dealings with third parties

Answer

An agency relationship arises when a principal authorises an agent to act on their behalf in transactions with third parties. The agent's actions bind the principal. Examples include estate agents selling property and sales representatives closing deals for their company.

Question 4

Statutory law (legislation) is:

Accepted Answer

Law created by Parliament through Acts of Parliament

Answer

Statutory law consists of Acts of Parliament (and secondary legislation such as statutory instruments). Parliament debates and passes bills which become Acts. Examples include the Companies Act 2006, the Employment Rights Act 1996, and the Consumer Rights Act 2015.

Question 5

Case law (common law or precedent) is:

Accepted Answer

Law developed by judges through decisions in court cases, which establishes precedents for future cases

Answer

Case law is developed by judges through their decisions in court cases. When a legal point is decided by a court, it may set a precedent that lower courts must follow in similar future cases. Case law interprets and supplements statutory law.

AAT Level 2 Practice Test

AAT Level 2 Practice Test

AAT L2 Introduction to Business and Company Law 3