ACCA AS Corporate & Business Law (UK) 2 — Questions and Answers
Question 1: Which of the following correctly describes a 'fraudulent misrepresentation'?
- An untrue statement made honestly
- An untrue statement made without belief in its truth, or recklessly as to its truth (Correct answer)
- An untrue statement made carelessly
- A true statement that creates a false impression
Correct answer: An untrue statement made without belief in its truth, or recklessly as to its truth
Fraudulent misrepresentation (per Derry v Peek) is a false statement made knowingly, without belief in its truth, or recklessly as to whether it is true or false.
Question 2: Under employment law, an employee is entitled to a written statement of employment particulars within:
- One month of starting work
- Two months of starting work
- Six months of starting work
- On the first day of employment (Correct answer)
Correct answer: On the first day of employment
Since April 2020, employees and workers are entitled to a written statement of particulars from day one of employment (Employment Rights Act 1996 as amended).
Question 3: The 'lifting of the corporate veil' doctrine allows courts to:
- Ignore the separate legal personality of a company and hold members personally liable (Correct answer)
- Transfer shares without shareholder approval
- Invalidate a company's articles of association
- Appoint an administrator to a company
Correct answer: Ignore the separate legal personality of a company and hold members personally liable
Lifting the corporate veil is an exceptional remedy where courts disregard the company's separate legal personality to impose personal liability on shareholders or directors (e.g., in fraud cases).
Question 4: Which of the following is NOT a ground for compulsory winding up of a company by the court?
- The company is unable to pay its debts
- It is just and equitable to wind the company up
- The company has not traded for six months (Correct answer)
- The number of members falls below the minimum required
Correct answer: The company has not traded for six months
Failure to trade for six months is not a statutory ground for compulsory winding up. Inability to pay debts, just and equitable grounds, and member numbers falling below minimums are all grounds.
Question 5: An 'agency' relationship exists when:
- One person employs another under a contract of service
- One person (agent) is authorised to act on behalf of another (principal) in legal relations with third parties (Correct answer)
- Two companies form a joint venture
- A company appoints an independent contractor
Correct answer: One person (agent) is authorised to act on behalf of another (principal) in legal relations with third parties
Agency is the relationship where an agent has authority to create legal relations (e.g., contracts) between the principal and third parties on the principal's behalf.
Question 6: Which of the following describes 'apparent authority' of an agent?
- Authority expressly given in the agency agreement
- Authority arising from the agent's conduct being ratified by the principal
- Authority that a principal holds the agent out as having, though no actual authority exists (Correct answer)
- Authority arising automatically from the agent's position
Correct answer: Authority that a principal holds the agent out as having, though no actual authority exists
Apparent (ostensible) authority arises when the principal represents to a third party that the agent has authority, even if actual authority has been revoked or never given.
ACCA AS Corporate & Business Law (UK) 2
Which of the following correctly describes a 'fraudulent misrepresentation'?