Troy University Nature of The Agency Relationship Business Case Study

School of BusinessBUSINESS LAW
MODULE 2BL – BU22001
APRIL / MAY 2020
TWO HOURS
ANSWER FOUR QUESTIONS,
AT LEAST ONE QUESTION FROM SECTION A AND
AT LEAST ONE QUESTION FROM SECTION B
SEPARATE ANSWER BOOKS SHOULD BE USED FOR
EACH SECTION
YOUR ANSWERS SHOULD MAKE USE OF APPROPRIATE
CASE LAW WHERE NECESSARY
Dictionaries are not permitted in this examination
BU22001
Page 1 of 5
SECTION A
ANSWER AT LEAST ONE QUESTION FROM THIS SECTION
1.
Rory has written to several of his customers informing them that he has appointed Thomas as
his agent. He has also advertised this fact in several newspapers. Gillian, believing Thomas
to be Rory’s agent, has negotiated with him and paid for a significant quantity of goods. Rory
delivers Gillian’s goods to Thomas but, before they have been delivered to Gillian, Thomas is
declared insolvent and his creditors obtain a court order to seize all goods on his premises.
Gillian contacts Rory demanding that he fulfil the contract but Rory denies the contract stating
that he is not liable.
Required:
(a)
(b)
(c)
2.
Explain the nature of the agency relationship.
(5)
Using appropriate case law, describe the different circumstances under which an
agency relationship might be constituted.
(15)
Using appropriate case law, advise Gillian on her legal position.
(5)
(25)
Cameron, Louise and Rhona have operated as a partnership for five years trading in
personalised housewarming gifts, such as cushions, prints, door mats, coasters, candles etc.
The business has been successful and the partners are now considering expanding the
business operation by starting to trade online. The partners are aware that the expansion will
require new business capital. They are considering the formation of a company rather than
continuing as a partnership.
Required:
(a)
(b)
3.
Explain to the partners what types of companies may be formed under the Companies
Act 2006 and which type of company would be suitable for their business.
(18)
Detail the procedures and the documentation required to register a company.
(7)
(25)
Jennifer has approached you to seek advice about an offer that she has received from her best
friend Jonathan. Jonathan has recently formed his own company and has told Jennifer that he
would like her to accept the position of Sales Director. Although, Jennifer has worked in sales
for 8 years, she is unsure of what responsibilities would come with the directorship.
Required:
(a)
(b)
BU22001
Explain the duties of a company director using case law where appropriate.
(20)
List and briefly explain the possible consequences of a breach of the duties explained
in part (a).
(5)
(25)
Page 2 of 5
4.
BrightFuture Ltd, a manufacturing company based in Dundee, has an issued share capital of
100,000 shares of £1 each and is in compulsory liquidation. The company has various creditors
as follows:
(a)
The liquidation costs, including the liquidator’s remuneration, amount to £6,400.
(b)
Credit Bank has a floating charge over all of the company’s assets, registered 20 years
ago, to secure a debt which currently stands at £15,000.
(c)
Supplier plc is owed £21,000 in respect of goods supplied to BrightFuture Ltd.
(d)
Careful Bank has a fix charge of £40,000 over BrightFuture Ltd’s factory building.
(e)
The members of the company have not been paid the £18,000 dividend declared in the
previous year’s annual general meeting.
(f)
Three months’ VAT, amounting to £3,000, is owed to HMRC.
(g)
The company’s employees have been paid, with the exception of £1,200 accrued
holiday pay.
The amount raised by the sale of the company’s assets, and available for distribution, is
£84,000.
Required:
(a)
(b)
(c)
Describe the role of a liquidator in an insolvency procedure.
(3)
In what order will the creditors of BrightFuture Ltd be paid and how much will each
creditor receive if the liquidation process finishes in March 2020?
(12)
“From 6 April 2020, when a business enters insolvency, more of the taxes paid in good
faith by its employees and customers, and temporarily held by the business, will go to
fund public services rather than being distributed to other creditors.”
(HMRC, Policy Paper, July 2019)
Critically discuss the possible impacts of the renewal of HMRC’s preferential creditor
status.
(10)
(25)
BU22001
Page 3 of 5
SECTION B
ANSWER AT LEAST ONE QUESTION FROM THIS SECTION
5.
(a)
With reference to case law outline and explain five essential features of a valid contract.
(10)
(b)
Describe the remedies available to the innocent party where there has been a breach
of contract.
(15)
(25)
6.
(a)
Outline an employer’s duties to an employee.
(5)
(b)
When might an employer be held liable for his/her employee’s delictual actions?
Illustrate your answer using relevant cases.
(20)
(25)
7.
(a)
Explain how a contract is formed under Scots Law.
(5)
(b)
In the construction of a contract, explain what is meant by express terms and implied
terms.
(8)
(c)
Ryan decides to go for a swim at his local leisure centre and receives a ticket when he
pays the entrance fee at the pool. While he is in the shower after his swim, he slips on
an empty shower gel bottle that has been carelessly discarded by another swimmer.
Ryan falls and breaks his leg. He writes a complaint to the manager of the leisure
centre who refers Ryan to the ticket he received when he arrived at the pool. A clause
on the ticket stated that the management of the leisure centre are excluded from liability
for injury resulting from the use of the centre’s facilities. Ryan did not notice the
condition as the writing was so small and was on the back of the ticket that he simply
regarded as a receipt for his payment. The manager then indicates the same clause
displayed on a notice board inside the leisure centre, beyond the payment desk.
What advice can you offer Ryan?
(12)
(25)
BU22001
Page 4 of 5
8.
Olivia Malone was cycling to college one day when she was knocked off her bicycle by Mr
Thomson who was driving while speaking on his mobile phone. Olivia was thrown over the
handle bars and four of her teeth were knocked out. She also broke her arm in the fall. A
gentleman, Mr Robertson, who had been diagnosed as suffering from a weak heart was waiting
at a nearby bus stop and witnessed the accident. Sadly, as a result of his shock he suffered a
heart attack and spent three weeks in intensive care. Coincidentally, Olivia’s mother, Julie
Malone, was in the car behind Mr Thomson and was shocked to see her injured daughter lying
in the road after seeing her at breakfast that morning. As a result she was unable to sleep and
was absent from work for four months.
Discuss the extent of Mr Thomson’s liability in this situation.
(25)
END OF PAPER
BU22001
Page 5 of 5