ACCA AS Corporate and Business Law (LW)

Question 1

Which of the following is NOT a requirement for a valid simple contract under English law?

Accepted Answer

A written document signed by both parties

Answer

Under English law, a simple contract does not need to be in writing. The essential elements are offer, acceptance, consideration, intention to create legal relations, and capacity. Only certain contracts (e.g., land transfers) must be in writing.

Question 2

Under the Companies Act 2006, what is the minimum number of directors required for a public limited company?

Accepted Answer

Two

Answer

Section 154 of the Companies Act 2006 requires a public company to have at least two directors. A private company needs only one director.

Question 3

In the context of agency law, which of the following best describes 'apparent authority'?

Accepted Answer

Authority that arises from the conduct of the principal leading third parties to believe the agent has authority

Answer

Apparent (or ostensible) authority arises where the principal's conduct leads a reasonable third party to believe the agent has authority to act, even if no actual authority was granted. This was established in Freeman & Lockyer v Buckhurst Park Properties.

Question 4

Which remedy is available to a party for breach of a condition in a contract?

Accepted Answer

Either repudiation of the contract or damages, or both

Answer

A condition is a fundamental term of the contract. Breach of a condition entitles the innocent party to repudiate (terminate) the contract AND/OR claim damages. This gives the widest range of remedies compared to breach of a warranty.

Question 5

Under the Insolvency Act 1986, which of the following is the correct order of priority for distribution of assets in a compulsory liquidation?

Accepted Answer

Secured creditors (fixed charge), liquidator's costs, preferential creditors, unsecured creditors

Answer

The correct priority is: (1) fixed charge holders, (2) costs of liquidation, (3) preferential creditors (e.g., employee wages), (4) floating charge holders, (5) unsecured creditors, (6) shareholders. Fixed charge holders rank first as their security attaches to specific assets.

ACCA Applied Skills Practice Test

ACCA Applied Skills Practice Test

ACCA AS Corporate and Business Law (LW)