Answers

Applied Skills, LW – IRL

Corporate and Business Law – Irish (LW – IRL) December 2019 Answers

Section A

1 Warranty
Breach of a warranty does not allow the injured party to repudiate the contract.

2 €1 million
The minimum threshold for transferring a case to the Commercial Court is €1 million.

3 Fixed chargeholders
Under Companies Act 2014, fixed chargeholders should be paid before the other creditors, in a compulsory liquidation.

4 He owes a duty to those he could reasonably foresee would rely on the report
Where a negligent misstatement results in pure economic loss, the defendant may be liable where it was reasonably foreseeable that
the plaintiff would rely on the statement.

5 They may be issued at a discount

Under s.71 Companies Act 2014, a company may not issue shares at a discount.

6 Estoppel
If a principal allows a third party to believe that a person is acting as their agent, the principal is estopped or prevented from denying
that an agency relationship exists.

7 The petition can be heard in the High Court only

This is not true as in some cases a petition for examinership can be heard in the Circuit Court, depending on the size of the company.

8 High Court
A ‘case stated’ appeal from the District Court will be heard in the High Court.

9 7 days
In general, the minimum period of notice for an extraordinary general meeting is 7 days.

10 Sale of goods
A contract for the sale of goods does not need to be evidenced in writing.

11 Reckless trading
The definition of reckless trading in s.610 Companies Act 2014 refers specifically to officers of the company.

12 Bye-laws
Bye-laws are made by local authorities or professional bodies where the authority to do so has been delegated by the Oireachtas.

13 All partners have joint and several liability for the debts of the firm
General partners are jointly and severally liable for the debts of the firm, which means that each partner can be pursued by creditors
for the full debts of the firm.

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14 When it is received by the offeree
A letter of revocation does not take effect until it is received by the offeree – Byrne v Van Tienhoven (1818).

15 Court of Justice of the European Union

The Court of Justice of the European Union has sole jurisdiction to hear references for a preliminary ruling on matters of European
Law.

16 Contributory negligence
Voluntary assumption of risk and limitation of actions are complete defences. Contributory negligence is a partial defence in the tort
of negligence.

17 Constructive dismissal
Both summary and wrongful dismissal involve termination by the employer. Termination by the employee may constitute a
constructive dismissal.

18 They may participate in the management of the firm

Under the Limited Partnership Act 1907, a limited partner cannot participate in the management of the firm.

19 Unissued capital
The €60,000 is regarded as issued capital, therefore, the remaining €40,000 is unissued capital.

20 Damage which was reasonably foreseeable

The test for remoteness of damage is based on what is reasonably foreseeable (The Wagonmound (No.1) (1961)).

21 A promise to pay for services already performed

A promise to pay for services already performed would constitute past consideration. Past consideration is generally not regarded as
valid consideration.

22 One week
In the absence of a term in the contract of employment, an employee with at least 13 weeks service is required to give notice of one
week.

23 Neither party is contractually bound

In commercial contracts it is generally presumed that the parties intended to create legal relations but this presumption can be
rebutted where there is clear evidence to the contrary, such as the use of words such as ‘binding in honour only’ as in Rose and
Frank v Crompton (1923).

24 Company limited by guarantee

A company limited by guarantee does not have shares or shareholders. The members act as guarantors of the company’s debts in
the event of liquidation.

25 Submission of a tender
The display of goods, or the supply of a price list, would generally be regarded as an invitation to treat. Submission of a tender is
regarded as a contractual offer.

26 The Supreme Court

The President may refer a Bill to the Supreme Court for a ruling as to whether the Bill is compatible with the Constitution.

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27 Two years
To qualify for redundancy, an employee must have a minimum of two years continuous service.

28 10
The maximum number of employees in a micro company is 10.

29 Knowledge or reckless disregard

The state of mind required to establish liability for money laundering can be shown by evidence of knowledge, honest belief or
recklessness.

30 When the party was misled as to the effect of the exclusion clause
Where one party signs a written contract which contains an exclusion clause, the clause will thereby be incorporated into the
contract. However, if the party who has signed was misled as to the effect or meaning of the exclusion clause, it may be disregarded
and therefore not take effect – as in Curtis v Chemical Cleaning (1951).

31 Court approval
An alteration to the articles of association requires a special resolution. The alteration must not conflict with the memorandum and
it must be notified to the Companies Registration Office. However, court approval is not a requirement.

32 A commercial agreement
There is a presumption that commercial agreements are intended to be legally binding.

33 Members’ voluntary liquidation

Under s.579 Companies Act 2014, the summary approval procedure may be used to effect a members’ voluntary liquidation.

34 Involvement of the employee in litigation against the employer

Involvement of the employee in litigation against the employer is a potentially unfair ground for dismissal.

35 Injunction
An injunction is a court order which can be used to order one party to do something or not to do something. An injunction can
therefore be used to order one party not to breach a contract.

36 Directives
EU Treaties and Regulations are directly applicable and require no implementation by the member states. Directives must be
transposed by the passing of a national law.

37 They are sometimes categorised as employees

The status of the agency worker will depend on the facts of the individual case.

38 A voidable contract
A contract which may be rejected or affirmed by the injured party, for example, when there has been a breach of a condition, is a
voidable contract.

39 The consent of the director in writing

Under s.144 Companies Act 2014, directors should consent in writing to their appointment.

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40 Seán can act as a director of a well-capitalised company
A restriction order is not a complete ban as the restricted person can act as a director for a company which meets the minimum
capital requirements set out in the Companies Act 2014.

41 It is a subsidiary term of a contract

While a condition is an important term in the contract, a warranty is a subsidiary or less important term.

42 Degree of control exercised by the employer

The control test is one of the tests which may be applied to determine if the worker is an employee or independent contractor.

43 Only the parties to the contract can sue

According to Tweddle v Atkinson (1861) and subject to some exceptions, only those who are parties to the contract can sue.

44 This is reversing
The court is not over-ruling the precedent but applying the precedent to reach a different outcome in the case.

45 The award may be reduced

In an unfair dismissal case, the employee is expected to mitigate their losses and therefore the award may be reduced if the
employee has not done so.

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Section B

46 (a) An offer is a definite expression of willingness to be bound on certain terms and conditions which, if accepted, will form the
basis of a legally binding contract.
Acceptance is an unqualified acceptance of the terms of the offer which is communicated to the offeree with the intention of
forming a legally binding contract.

(b) In this case, the initial statement of price is an invitation to treat. The statement of price would not constitute an offer as it is not
a definite expression of willingness to be bound. When Seán communicates with Big Property Ltd on 1 February, he is making
an offer as this is a definite expression of willingness to be bound. The communication from Big Property Ltd on 3 February
is an unqualified acceptance of the offer and according to the postal rule, it takes effect as soon as it is posted on 3 February.
The agreement is therefore reached on 3 February and the parties are contractually and legally bound from this point.

(c) If Big Property Ltd refuses to proceed with this transaction, this would constitute a breach of contract. Possible remedies could
include damages to compensate Seán for the money he has already spent (reliance loss) in relation to the plans to redesign
the premises. He could also seek an order for specific performance on the basis that this contract involves a unique subject
matter and a damages award will not provide an adequate remedy in the circumstances. He could also apply for an injunction
to prevent Big Property Ltd from breaching the contract by renting the premises to someone else.

47 (a) The certificate of incorporation means that the company is registered under the Companies Act 2014. The company is a
separate legal person from the date the certificate of incorporation is issued. Once the certificate has been issued, a private
company limited by shares can commence business. The content of the certificate of incorporation includes:
– Company name and registration number;
– Date of incorporation;
– Statement as to liability;
– Statement as to whether the company is public or private;
– Signature of the Registrar and official seal of the Companies Registration Office.

(b) The promoter is someone who ‘undertakes the formation of a company’ – Twycross v Grant (1877). Typically, the promoter will
engage in activities such as seeking investment from potential shareholders, finding suitable persons to act as directors and
liaising with the Companies Registration Office in relation to the incorporation process.
In this case, Ann is engaging in tasks associated with ‘undertaking the formation of a company’ and, therefore, it is likely that
a court would identify her as the promoter.

(c) If Ann enters into the contract before the incorporation of the company, she would be making a pre-incorporation contract. As
the company does not yet exist as a separate legal person, it cannot make a contract in its own name. Therefore, Ann would
be personally liable for this contract until the company is formed and a decision is taken by the company to ratify the contract,
at which point it would become a company contract.

48 (a) In order to effect a reduction of capital using the summary approval procedure (SAP), the following steps must be completed:
1. A declaration of solvency by the board of directors;
2. A special resolution of the members in a general meeting;
3. A report of an independent person (qualified auditor) supporting the declaration of solvency;
4. A copy of the declaration and resolution sent to the Registrar.
There are two potential issues which might prevent the SAP being completed in this case. If there is an issue relating to
the solvency of the company, it might not be possible for the declaration to be made with the support of the report by the
independent person. Also, if the majority shareholder opposes the reduction, it might not be possible to secure the majority
needed for the special resolution at a general meeting (75%).

(b) There are a number of methods which can be utilised by the company to reduce its capital:
– Extinguish liability on partly-paid shares;
– Buy back shares from shareholders;
– Cancel fully paid-up shares.

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49 (a) The managing director (MD) is a director appointed to have overall responsibility for the running of the company. The MD can
usually exercise all of the powers of the board of directors and has full authority to enter into contracts on behalf of the company.

(b) Directors are recognised as having different types of authority to act on behalf of the company.
Actual authority is the authority explicitly granted to the director either in writing or verbally by the company, through the terms
of the company constitution, for example.
Implied authority is what would be inferred from the situation, i.e. what would be the usual authority of a director in the
situation.
Ostensible or apparent authority arises where there is no implied or actual authority in the specific situation but the company
has represented that the director in question has the authority to act. This will be the case where the requirements of Freeman
and Lockyer v Buckhurst Park Properties (1964) are satisfied.
As Mary has not been formally appointed as MD, she does not have actual or implied authority to make this contract.
In this case, it could be argued that in allowing Mary to act as MD, AD Ltd has represented that she has the authority to exercise
the full powers of the board and, therefore, it can be argued that she had ostensible or apparent authority to make this contract
which is therefore binding on AD Ltd.

50 (a) Money laundering involves the process by which the proceeds of crime are converted into assets in an attempt to disguise the
true origins of the money. In order to convict, the accused person must engage in the acts such as concealing, converting or
removing property with either honest belief or reckless disregard that the property is the proceeds of crime.

(b) When someone deals in goods for cash to the value of €10,000, that person is a designated person for the purposes of the
money laundering legislation. It would appear that Dave is a designated person and therefore must take steps to ascertain
Cillian’s identity and scrutinise the source of the money. He must also notify the Garda Siochána of any suspicions in relation
to money laundering.

(c) If Dave proceeds with the transaction with reckless disregard as to whether it is the proceeds of crime, he could be committing
the s.7 offence of money laundering under the Criminal Justice (Money Laundering and Financing Terrorism) Acts 2010 and
2018.
Alternatively, if he fails to report his suspicions regarding this transaction to the Garda Siochána, he may be found guilty of the
offence of failure to report.

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Applied Skills, LW – IRL
Corporate and Business Law – Irish (LW – IRL) December 2019 Marking Scheme

Section A

1–45 One or two marks per question as indicated; total marks 70

Section B

46 This question requires an explanation of the rules relating to the elements of agreement in a contract.

(a) 2 marks Good explanation of offer and acceptance.

1 mark Some explanation, but lacking in detail or application.
0 marks No knowledge whatsoever of the topic.

(b) 2 marks A good explanation of whether a binding agreement has been formed.
1 mark Some, but limited, explanation.
0 marks No knowledge or explanation.

(c) 2 marks A good explanation of potential remedies.

1 mark Some, but limited, explanation.
0 marks No knowledge or explanation.

47 This question requires an explanation of the rules relating the incorporation of a company and the role of the promoter.

(a) 2 marks Good analysis of effect and content of the certificate of incorporation.
1 mark Some explanation, but lacking in detail.
0 marks No knowledge whatsoever of the topic.

(b) 2 marks Good explanation and analysis of role of the promoter.

1 mark Some explanation, but lacking in detail or application.
0 marks No knowledge whatsoever of the topic.

(c) 2 marks Good explanation and analysis of pre-incorporation contracts.

1 mark Some explanation, but lacking in detail or application.
0 marks No knowledge whatsoever of the topic.

48 This question requires an explanation of the use of the summary approval procedure (SAP) and the reduction of capital.

(a) 3–4 marks Good explanation and analysis of SAP.

1–2 marks Some explanation, but lacking in detail or application.
0 marks No knowledge whatsoever of the topic.

(b) 2 marks State two methods of reducing capital.

1 mark Some, but limited, explanation.
0 marks No knowledge or explanation.

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49 This question requires a consideration of the role and authority of the managing director.

(a) 2 marks Good explanation of the role of a managing director.

1 mark Some explanation, but lacking in detail or application.
0 marks No knowledge whatsoever of the topic.

(b) 3–4 marks A good explanation and analysis of directors’ authority.

1–2 marks Some, but limited, explanation or application.
0 marks No knowledge or explanation.

50 This question requires a consideration of the rules relating to money laundering.

(a) 2 marks Good explanation of the acts which constitute money laundering.
1 mark Some explanation, but lacking in detail or application.
0 marks No knowledge whatsoever of the topic.

(b) 2 marks A good explanation/application of designated person.

1 marks Some, but limited, explanation or application.
0 marks No knowledge or explanation.

(c) 2 marks A good explanation/application of one offence.

1 mark Some, but limited, explanation/application.
0 marks No knowledge or explanation/application.

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Additional marking guide for section B Marks available Marks awarded

46 (a) Offer and acceptance 2

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(b) Formation 2
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(c) Remedies 2
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Total marks 6
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47 (a) Incorporation 2
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(b) Promoter 2
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(c) Pre-incorporation 2
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Total marks 6
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48 (a) Summary approval procedure 4

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(b) Reduction of capital 2

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Total marks 6
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49 (a) Role of managing director 2

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(b) Mary’s authority 4

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Total marks 6
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50 (a) Money laundering 2

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(b) Designated person 2

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(c) One offence 2

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Total marks 6
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