2018 EXAMINATIONS

SUMMER

PART II (Second year), DEGREE OF BACHELOR OF LAW

LAW.237 Principles of Commercial Law (3 hours 10 minutes)

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IMPORTANT

The first ten minutes of the examination are for reading the examination paper.
Candidates may only write notes on the examination paper, not in the answer
booklets, during this period.

Candidates should attempt ALL questions in Section A and ONE question from
Section B.

PLEASE MARK YOUR ANSWERS TO SECTION A ON THIS PAPER BY

PLACING A RING AROUND THE LETTER (A, B, C,OR D) CORRESPONDING TO
THE ANSWER OF YOUR CHOICE.

Section A carries 50% of the marks for this paper and Section B carries 50% of the
marks for this paper.

Clean copies of commercially published statute books containing unannotated UK or

EU Statutory material are permitted in the exam.

Seat Number: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Library Card Number: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

THIS PAPER MUST NOT BE REMOVED FROM THE EXAMINATION ROOM AND
IT MUST BE HANDED IN AT THE END OF THE EXAMINATION.
Section B (Answer ONE question in this section)

41. Rick Grimes has for many years carried on business, on his own account, as a
farmer in Alexandria, England. Following the advice of his godfather, Hershel
Greene, Rick comes up with a plan to expand his business to other parts of
England. In order to do this, Rick decides to incorporate a limited liability
company under the name “Rick Grimes and Company Limited” for the purpose of
transferring his business to the new company. The shares in the new company
are held by Rick and his children, Carl and Judith. While Carl’s shares are fully
paid-up, Rick and Judith have only paid 1/3 of the value of the shares they hold in
the company.
Carol LLP, a long-standing customer of Rick’s farm produce, is a food business
with shops in many parts of England and is run by Carol and Daryl in equal
proportion. Carol is excited by the expansion of Rick’s business and wants to
enter into a new agreement with Rick for the purpose of supplying Carol LLP’s
stores in Hilltop and Kingdom, England. Daryl disagrees with Carol about this and
reminds her that the constitution of Carol LLP requires the Hilltop and Kingdom
shops to be used exclusively for genetically modified food products as opposed
to farm foods. Carol, without Daryl’s knowledge, enters into the agreement with
Rick. The agreement is documented to be between Carol LLP as purchaser and
Rick Grimes and Co Ltd as supplier for the supply of 100,000 crates of eggs to
Carol LLP’s Hilltop and Kingdom shops in 2018. Carol gives Rick a cheque of
£50,000 as first payment, with the final payment to be made after the first 6
months of the agreement. Carol was happy to do this because she had
convinced Negan Enterprises, a sole trading business, to order 50,000 crates of
eggs from the Hilltop store and pay £35,000 in advance.

Please turn over

Rick invested the £50,000 received from Carol LLP in renting a new farm
between Hilltop and Kingdom in order to breed “fast-laying” chickens. Due to a
“Zombie virus” affecting crops and animals in that region of England, the farm
fails miserably and all the chickens die. This has a negative impact on Rick
Grimes and Company Limited, which files for liquidation before any eggs were
delivered to Carol LLP. Carol LLP’s business in Hilltop and Kingdom also suffer
as a result of this virus. Due to non-performance by Carol LLP, Negan
Enterprises has since made a demand for repayment of the £35,000 advance
which Carol LLP is unable to afford because of the monies advanced to the now
insolvent Rick Grimes and Company Limited. Negan Am, the owner of Negan
Enterprises, has also been served with a tax notice for £20,000 in connection
with his business.

With the aid of statutory and judicial authorities, discuss the issues raised by this
question, with particular emphasis on the liabilities of the various businesses and
their proprietors (Rick, Carl, Judith, Carol, Daryl and Negan).
42. How can the apparent conflict between s.28 and s.10(1) Sale of Goods Act 1979
be resolved? Why do you think the two provisions have been made as they have
been?

43. Tyrion Lannister is an accountant at Targaryen Industries, a fire products

business. Tyrion is responsible for reviewing suppliers’ orders and invoices. The
invoices are always settled by cheques, which are signed by Targaryen
Industries’ CEO, Daenerys Targaryen, on Tyrion’s recommendation.
Due to financial difficulties in his private life, Tyrion is currently disgruntled with
life at Targaryen Industries and wants to take up employment at one of their
suppliers, Stark Industries. Tyrion creates a fictitious invoice and deceives
Daenerys into signing a cheque payable to ‘Arya Stark or order’. Arya Stark is not
a person within Stark Industries, being merely a figment of Tyrion’s wild
imagination.
Tyrion has since indorsed the cheque in Arya’s name and sold it to Ramsay
Bolton.
With the aid of statutory and judicial authorities critically evaluate the validity of
the transaction between Tyrion and Ramsay, highlighting the benefits and
disadvantages of cheques as a method of payment in commercial transactions.

44. The Hague-Visby Rules have satisfactorily reconciled the contemporary needs of
carriers and shippers in sea carriage documents.
Discuss.

45. Discuss the extent to which the differences in the liability of a bailee and the
liability of other types of tortfeasor in negligence are justified.

END OF PAPER