Chapter 6 Self-test Questions

. Which one of the following is not a method by which a company can enter into a contract?

Where the members pass a resolution resolving that a company enters into a contract.

Where a person acting with authority to contract on behalf of the company contracts on the company's behalf.

Where the company affixes its common seal to a contract.

Where the contract is signed on behalf of the company by two authorized signatories.

. Is a company required to have an objects clause?

Yes.

No.

. In relation to a company's contractual capacity, has the ultra vires doctrine been abolished?

Yes

No

. What does s 39(1) of the Companies Act 2006 state?

An act that it outside the scope of the company's constitution is void.

The validity of an act shall not be called into question on the ground of lack of capacity by reason of anything in the company's constitution.

A member has the power to restrain a company from engaging in an ultra vires act, providing that no legal obligation has yet arisen.

A company incorporated under a prior Companies Act may remove its objects clause by passing a special resolution.

. Authority that has been bestowed by a company upon a director as a result of their dealings, circumstances or relationship is known as?

Express actual authority.

Implied actual authority.

Apparent authority.

Ostensible authority.

. Which one of the following is not needed to establish apparent authority?

The third party acted to his detriment.

Reliance on the representation.

An alteration of position.

A representation indicating that the agent has authority.

. What does s 40(1) of the Companies Act 2006 state?

A contract entered into with a company will be voidable if the director who entered into the contract on behalf of the company lacked the authority to do so.

A third party is deemed to have constructive notice of a company's constitution and any constitutional limitations placed upon the directors' authority.

A member may restrain an act that is beyond the power of the directors, providing that no legal obligation has yet arisen.

In favour of a person dealing with the company, the power of the directors to bind the company is deemed to be free of any limitation under the company's constitution.

. What is 'strict liability?'

Strict liability is where one person is responsible for the unlawful acts or omissions of another person.

A strict liability offence is one for which there is no defence.

A strict liability offence is one that does not require proof of mens rea.

A strict liability offence is one that can only be punished with imprisonment.

. Which one of the following is not needed to establish vicarious liability upon a company?

The employee must have committed a tort.

The tort must have been committed in the course of the employee's employment with the company.

There must be an employer/employee relationship between the company and the person who committed the tort.

The agent must have been acting within the scope of his authority.

. What is the ratio of Bilta (UK) Ltd v Nazie (No 2)?

Where a company is the victim of wrongdoing by one of its directors, that wrongdoing cannot be attributed to the company as a defence to a claim brought against the director in question.

A director's wrongdoing can never be attributed to the company.

Where a third party is suing the company based on a director's wrongdoing, the director's wrongdoing will not be attributed to the company.

Where the company is suing a third party, if the wrongdoing of one of the company's directors is relevant, that wrongdoing can be attributed to the company.

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