Q. Incorporation of a company provides which of the following benefits?
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A.
Limited liability for shareholders
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B.
Unlimited liability for directors
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C.
Tax exemptions for all income
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D.
No regulatory requirements
Solution
Incorporation provides limited liability for shareholders, protecting their personal assets from the company's debts.
Correct Answer:
A
— Limited liability for shareholders
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Q. What constitutes a breach of contract?
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A.
Failure to perform as specified in the contract
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B.
Negotiating a better deal
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C.
Changing the terms of the contract unilaterally
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D.
All of the above
Solution
A breach of contract occurs when a party fails to perform as specified in the contract.
Correct Answer:
A
— Failure to perform as specified in the contract
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Q. What is consideration in the context of contract formation?
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A.
A formal agreement between parties
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B.
Something of value exchanged between parties
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C.
The intention to enter into a contract
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D.
The legal capacity of the parties
Solution
Consideration refers to something of value exchanged between parties, which is essential for a contract to be enforceable.
Correct Answer:
B
— Something of value exchanged between parties
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Q. What is the primary document required for the incorporation of a company?
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A.
Memorandum of Association
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B.
Articles of Association
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C.
Shareholder Agreement
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D.
Bylaws
Solution
The Memorandum of Association is the primary document required for the incorporation of a company, outlining its structure and purpose.
Correct Answer:
A
— Memorandum of Association
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Q. What is the role of the Articles of Association in a company?
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A.
To outline the company's purpose
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B.
To govern the internal management of the company
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C.
To list the shareholders
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D.
To provide financial statements
Solution
The Articles of Association govern the internal management of the company, detailing the rules and procedures.
Correct Answer:
B
— To govern the internal management of the company
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Q. What is the significance of 'intention to create legal relations' in contract law?
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A.
It ensures that the contract is enforceable
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B.
It determines the validity of the offer
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C.
It specifies the terms of the contract
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D.
It outlines the remedies for breach
Solution
The intention to create legal relations is significant as it ensures that the parties intend for the agreement to be legally binding.
Correct Answer:
A
— It ensures that the contract is enforceable
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Q. Which of the following best describes 'performance' in contract law?
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A.
The act of fulfilling contractual obligations
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B.
The negotiation process before a contract is signed
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C.
The legal consequences of breaching a contract
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D.
The drafting of the contract terms
Solution
Performance refers to the act of fulfilling contractual obligations as agreed upon in the contract.
Correct Answer:
A
— The act of fulfilling contractual obligations
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Q. Which of the following is a requirement for a valid acceptance?
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A.
It must be communicated to the offeror
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B.
It must be in writing
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C.
It must be made within a reasonable time
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D.
All of the above
Solution
A valid acceptance must be communicated to the offeror, and while it is often in writing, it is not strictly required unless specified.
Correct Answer:
A
— It must be communicated to the offeror
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Q. Which of the following is NOT a requirement for a valid offer?
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A.
Intention to create legal relations
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B.
Certainty of terms
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C.
Communication to the offeree
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D.
Acceptance by a third party
Solution
Acceptance by a third party is not a requirement for a valid offer; the offer must be accepted by the offeree.
Correct Answer:
D
— Acceptance by a third party
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Q. Which remedy is typically sought for a breach of contract?
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A.
Injunction
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B.
Specific performance
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C.
Damages
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D.
Rescission
Solution
Damages are the most common remedy sought for a breach of contract, compensating the injured party for losses.
Correct Answer:
C
— Damages
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