ACA Business Law 2 — Questions and Answers
Question 1: Which of the following accurately describes a general partnership under the Partnership Act 1890?
- Partners have limited liability for firm debts
- Partners are jointly and severally liable for all firm debts (Correct answer)
- A partnership must be registered at Companies House
- A partnership is a separate legal entity from its partners
Correct answer: Partners are jointly and severally liable for all firm debts
Under the Partnership Act 1890, partners in a general partnership are jointly and severally liable for all the debts and obligations of the firm.
Question 2: A contract term that excludes liability for negligence will be subject to which statutory test under UCTA 1977?
- The proportionality test
- The reasonableness test (Correct answer)
- The good faith test
- The transparency test
Correct answer: The reasonableness test
Under the Unfair Contract Terms Act 1977, clauses excluding liability for negligence (other than death or personal injury) must satisfy the reasonableness test to be enforceable.
Question 3: Under the Companies Act 2006, which document sets out the internal rules governing how a company is managed?
- Certificate of incorporation
- Memorandum of association
- Articles of association (Correct answer)
- Prospectus
Correct answer: Articles of association
The articles of association govern the internal management of a company, covering matters such as directors' powers, share rights, and decision-making procedures.
Question 4: In employment law, which test is primarily used to determine whether a worker is an employee rather than self-employed?
- The economic reality test only
- The control test only
- A multi-factor test including control, integration, and economic reality (Correct answer)
- The mutuality of obligation test alone
Correct answer: A multi-factor test including control, integration, and economic reality
Courts apply a multi-factor approach considering control, integration into the business, economic reality, and mutuality of obligation to determine employment status.
Question 5: Which remedy allows a court to set aside a contract as if it had never existed, restoring the parties to their pre-contractual position?
- Damages
- Specific performance
- Rescission (Correct answer)
- Injunction
Correct answer: Rescission
Rescission sets aside a voidable contract and restores both parties to their original positions, and is available for misrepresentation, undue influence, or duress.
Question 6: Under the Fraud Act 2006, which of the following is NOT a recognised way of committing fraud?
- Fraud by false representation
- Fraud by failing to disclose information
- Fraud by abuse of position
- Fraud by negligent misstatement (Correct answer)
Correct answer: Fraud by negligent misstatement
The Fraud Act 2006 creates three offences: false representation, failure to disclose information, and abuse of position — negligent misstatement is a civil tort, not a Fraud Act offence.
Question 7: A floating charge crystallises and becomes a fixed charge when which of the following events occurs?
- The company issues new shares
- The company appoints a new director
- The company goes into administration or liquidation (Correct answer)
- The company changes its registered office
Correct answer: The company goes into administration or liquidation
A floating charge crystallises — converting into a fixed charge over the assets held at that moment — on events such as the appointment of a receiver, administration, or liquidation.
ACA Business Law 2
Which of the following accurately describes a general partnership under the Partnership Act 1890?