WorksheetsPrinciples of Commercial Law
Total questions: 15
Worksheet time: 8mins
Which of the following two are non-possessory securities?
Lien and Pledge
Pledge and Mortgage
Mortgages and Charges
Lien and Mortgages
Which statement is INCORRECT?
A limited partnership requires two or more persons to do business.
An ordinary partnership requires two or more persons to do business.
A limited liability partnership requires two or more persons to do business.
None of the above
One of the following is true about the Pari Passu rule:
Effects a pro rata scheme of distribution among company creditors
Is not mandatory and hence, parties can avoid it.
Secured creditors are not affected by the operation of the pari passu principle.
None of the above.
Which of the following is not an insolvency principle:
Maximizing return to creditors
Providing a fair and equitable ranking of creditor claims
Termination of directors powers
Non-creation of a statutory trust
Which statement is the CORRECT one?
A partner in a limited liability partnership is an agent of the firm but is not an agent of the other partners.
Limited partnerships come with the twin benefit of separate legal personality and limited liability.
Sole proprietorships enjoy perpetual succession.
A company cannot be a member of a partnership.
Which statement is FALSE?
A general partner manages the business of a private fund limited partnership.
A limited partner may take action on the general nature of the private fund limited partnership’s business.
A limited partner may not take action on whether a person should become or cease to be a partner in a private fund limited partnership.
A general partner has unlimited liability in a private fund limited partnership
Which statement is INCORRECT?
A limited partnership requires two or more persons to do business
An ordinary partnership requires two or more persons to do business
A limited liability partnership requires two or more persons to do business
None of the above
Which option is CORRECT about Partnerships under the Partnership Act 1890?
Every partner in a firm is liable jointly with the other partners
Every partner lacks the benefit of limited liability
Every partner’s act may bind the firm and other partners
All of the above
Which of the following statements is TRUE of the limited liability company?
It is a business vehicle that was always recognised at common law.
It is a business vehicle that is recognised as the principal unit of commercial life.
It is a business vehicle that always enjoyed both separate legal personality and limited liability in English law.
It is a business vehicle that is exempt from tax regulations
Following the reasoning in Salomon v Salomon & Co [1897] AC 22, a limited liability company:
Will be deemed to be validly incorporated once there has been compliance with the statutory requirement for forming a valid company
Will not be deemed to be an agent of its shareholders
Will not be deemed to be a trustee or nominee of its directors’ estate
All of the above
Following the decision in Prest v Petrodel Resources [2013] UKSC 34
Separate personality could be disregarded if the company was interposed to evade contingent liability
Separate personality could be disregarded if the company was interposed to evade existing liability
Separate personality could be disregarded if the company was interposed to evade future liability
All of the above
Which statement is MOST accurate of Re Spectrum Plus [2005] UKHL 41?
Fixed charges over circulating assets is commercially inconvenient
Floating charges are the only form of security that can be taken over circulating assets
Fixed charges can be taken over circulating assets
A and C above
ONE of the following is NOT a valid reason for using debt over equity as a source of finance:
Cost of capital
Reputational reasons/Big-player syndrome
Contractual control
Gearing Ratio
Which of the following statements is NOT correct?
Guarantees must be evidenced in writing to be enforceable in English law
Guarantees and indemnities are essentially without legal difference in English law
Guarantees can be given by limited companies
A guarantor cannot be exposed to additional liability by the debtor without his consent
Which of the following claimants enjoys the HIGHEST PRIORITY in corporate insolvency?
Preferential Creditors
Prescribed part creditors
General unsecured creditors
Secured creditors holding a floating charge
