PAPER F4 CORPORATE AND BUSINESS LAW (GLOBAL) In this January 2010 edition x We discuss the best strategies for revising and taking your ACCA exams x We show you how to be well prepared for your exam x We give you lots of great guidance on tackling questions x We show you how you can build your own exams x We provide you with three mock exams including the December 2009 exam x We provide the ACCA examiner's answers as well as our own to the June and December 2009 exams as an additional revision aid Our i-Pass product also supports this paper FOR EXAMS IN 2010 P R A C T I C E & R E V I S I O N K I T First edition 2007 Fourth edition January 2010 ISBN 9780 7517 8051 (previous ISBN 9780 7517 4681 5) British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Published by BPP Learning Media Ltd BPP House, Aldine Place London W12 8AA www.bpp.com/learningmedia All our rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of BPP Learning Media Ltd We are grateful to the Association of Chartered Certified Accountants for permission to reproduce past examination questions The suggested solutions in the exam answer bank have been prepared by BPP Learning Media Ltd, except where otherwise stated Printed in the United Kingdom Your learning materials, published by BPP Learning Media Ltd, are printed on paper sourced from sustainable, managed forests ii © BPP Learning Media Ltd 2010 Contents Page Finding questions Question index iv Topic index x Using your BPP Learning Media Practice and Revision Kit xii Revising F4 General exam support from BPP Learning Media xiii Topics to revise xiii Question practice xiii Passing the F4 exam xiv Exam information xvii Analysis of past papers xxi Useful websites xxii Planning your question practice BPP Learning Media’s question plan xxiii Build your own exams .xxviii Questions and answers Questions Answers 37 Exam practice Mock exam x Questions 213 x Plan of attack .217 x Answers .219 Mock exam x Questions 233 x Plan of attack .237 x Answers .239 Mock exam (December 2009) x Questions 253 x Plan of attack .259 x Answers .261 ACCA examiner's answers x June 2009 279 x December 2009 291 Review form & free prize draw iii Question index The headings in this checklist/index indicate the main topics of questions, but questions often cover several different topics Questions set under the old syllabus Corporate and Business Law (2.2) paper are included because their style and content are similar to those which appear in the F4 exam The questions have been amended to reflect the current exam format Time Page number Marks allocation Mins Question Answer Part A: Essential elements of legal systems Separation of powers Economic and political systems 10 18 37 Legislature, executive, judiciary (2.2 12/04) 10 18 38 Legal systems Common law system 10 18 39 Civil law system 10 18 40 Sharia law system 10 18 41 Role of judges (2.2 12/05) 10 18 43 Sources of law Sources of law (1) (2.2 6/04) 10 18 44 Precedent (6/09) 10 18 45 Sources of law (2) (12/08) 10 18 47 10 International organisations (1) (Pilot Paper) 10 18 48 11 International organisations (2) (2.2 12/06) 10 18 49 12 International organisations (3) (6/08) 10 18 51 13 United Nations 10 18 53 14 International court system (2.2 6/06) 10 18 54 15 Criminal law, civil law and arbitration (12/07) 10 18 56 16 Arbitration (1) (6/09) 10 18 58 17 Court proceedings and arbitration (2.2 12/05) 10 18 60 18 Arbitration (2) 10 18 62 19 Tom (2.2 Pilot Paper amended) 10 18 63 20 Challenging an arbitration (1) (Pilot Paper) 10 18 64 21 Recourse against arbitration award (12/08) 10 18 65 22 Challenging an arbitration (2) 10 18 66 Courts and arbitration iv Finding questions Time Page number Marks allocation Mins Question Answer 23 Application of the UN Convention (2.2 6/04 amended) 10 18 68 24 Incoterms (1) (2.2 6/04) 10 18 69 25 Incoterms (2) (2.2 6/06) 10 18 70 26 Incoterms (3) (6/08) 10 18 72 27 International offer, invitation to treat and counter-offer (6/08) 10 18 73 28 Withdrawal, revocation, rejection of offer (2.2 12/03, 6/06) 10 18 74 29 Acceptance (1) (Pilot Paper) 10 18 75 30 Acceptance (2) (2.2 6/04) 10 18 77 31 Formation of contract 10 18 78 32 Ax and Bo (12/07) 10 18 80 33 Ari (12/08) 10 18 10 82 34 Quality (1) (12/07) 10 18 10 83 35 Quality (2) 10 18 10 84 36 Quality (3) 10 18 11 85 37 Axel and Beni (6/08) 10 18 11 87 38 Buyer's remedies 10 18 11 88 39 Art (Pilot Paper) 10 18 12 90 40 Price (6/09) 10 18 12 91 41 Preservation of goods (1) (Pilot Paper) 10 18 12 92 42 Preservation of goods (2) 10 18 12 93 43 Impediment (2.2 6/05) 10 18 12 95 44 Breach and mitigation (2.2 Pilot paper, 6/06) 10 18 12 96 45 Passage of risk (6/08) 10 18 13 97 46 Anticipatory breach (12/08) 10 18 13 99 47 Breach (12/07) 10 18 13 100 48 Arti (6/09) 10 18 13 101 49 Avoidance (2.2 6/05 amended) 10 18 13 102 50 Risk (1) 10 18 14 104 51 Risk (2) (2.2 12/06 amended) 10 18 14 105 52 Bill of lading 10 18 14 106 53 Bill of lading: letter of credit (2.2 12/06) 10 18 15 107 54 Letters of credit (1) (2.2 6/05) 10 18 15 108 55 Letters of comfort and credit (12/08) 10 18 15 110 56 Bills of exchange (1) (2.2 12/05 amended) 10 18 15 111 57 Bills of exchange (2) (12/07) 10 18 15 112 58 Bills of exchange (3) (6/09) 10 18 15 113 59 Letters of credit (2) (2.2 12/05 amended) 10 18 16 115 Part B: International business transactions Finding questions v Time Marks Page number allocation Mins Question Answer Part C: International Business forms Agency 60 Creating an agency relationship (2.2 12/04) 10 18 17 116 61 Authority of the agent (Pilot Paper) 10 18 17 117 62 Types of partnership (2.2 6/05) 10 18 17 119 63 Traditional, limited and limited liability partnerships 10 18 17 120 64 Clare, Dan and Eve (6/08) 10 18 17 121 65 Ham, Sam and Tam (12/08) 10 18 18 122 66 Titles 10 18 19 123 67 Advantages of incorporation 10 18 19 124 68 Separate personality (6/08) 10 18 19 126 69 Public and private companies 10 18 19 128 70 Forms of business (2.2 12/04 amended) 10 18 19 129 71 Company formation 10 18 20 131 72 Statutory registers and records 10 18 20 132 73 Company names (6/09) 10 18 20 133 74 Promoters and pre-incorporation contracts (2.2 12/04) 10 18 20 134 75 Tom's company 10 18 20 135 76 Eden Plc (2.2 6/05 amended) 10 18 21 137 77 Objects clause (2.2 6/05 amended) 10 18 21 138 78 Articles (2.2 6/04 amended) 10 18 21 139 79 Fred (12/08) 10 18 21 141 80 Shares and debentures (6/08) 10 18 22 142 81 Capital terms (12/08) 10 18 22 144 82 Payment for shares (2.2 12/04) 10 18 22 145 83 Class rights (2.2 12/05) 10 18 22 147 84 Flop Ltd (Pilot Paper) 10 18 23 148 85 Potential liability 10 18 23 149 86 Registration of charges 10 18 23 150 87 Fixed and floating charges (2.2 6/06) 10 18 23 151 88 Payment of secured debts (2.2 12/06 amended) 10 18 24 153 89 Dividends (12/07) 10 18 24 154 90 Capital maintenance and reducing share capital (6/09) 10 18 24 156 Partnership Part D: Joint stock companies Part E: Capital and financing of companies vi Finding questions Time Page number Marks allocation Mins Question Answer Directors (6/08) 10 18 25 158 92 Appointment and removal (2.2 6/06) 10 18 25 160 93 Statutory grounds for disqualifying directors (6/09) 10 18 25 161 94 Powers and duties of directors (2.2 6/03) 10 18 25 163 95 Directors binding company (1) (2.2 12/04 amended) 10 18 25 165 96 Directors binding company (2) (2.2 12/06) 10 18 26 166 97 Powers of chairman and MD, voting (2.2 Pilot Paper amended) 10 18 26 167 98 Clean Ltd (6/09) 10 18 26 168 99 Statutory duties 10 18 26 170 100 Promoting success (12/08) 10 18 27 171 101 Helen (2.2 12/03 amended) 10 18 27 172 102 Wrongful trading and disqualification 10 18 27 173 103 Attending board meetings 10 18 27 174 Part F: Management, administration and regulation of companies 91 104 Company secretary (2.2 6/05) 10 18 27 175 105 Meetings (Pilot Paper amended) 10 18 28 176 106 Resolutions (12/08) 10 18 28 177 107 Auditors (1) (2.2 6/03) 10 18 28 178 108 Auditors (2) (12/07) 10 18 28 180 109 10 18 28 182 10 18 29 184 111 Voluntary winding up 10 18 30 185 112 Winding up (2.2 6/06) 10 18 30 186 113 Cross-border insolvency 10 18 30 188 114 Chapter 11 10 18 30 189 115 Administration (1) 10 18 30 190 116 Administration (2) 10 18 30 190 117 Earl (12/07) 10 18 31 191 Fran, Gill and Harry (2.2 Pilot Paper amended) 110 Katch Co (12/07) Part G: Legal implications of companies in difficulty or in crisis Finding questions vii Time Page number Marks allocation Mins Question Answer 118 Auditors and corporate governance 10 18 32 193 119 Directors and corporate governance (Pilot Paper) 10 18 32 193 120 Stakeholders 10 18 32 195 121 Insider dealing 10 18 32 196 122 Sid and Vic (6/08) 10 18 32 197 123 Money laundering (1) (2.2 12/05) 10 18 33 199 124 FATF recommendations 10 18 33 200 125 Greg (6/09) 10 18 33 201 126 Fraudulent trading (2.2 6/05 amended) 10 18 33 203 127 Huge plc (Pilot Paper) 10 18 34 204 128 Illegal activities 10 18 34 205 129 Criminal offence (2.2 6/06 amended) 10 18 34 206 130 Money laundering (2) (2.2 12/03 amended) 10 18 34 207 Part H: Corporate governance and ethical issues relating to business Mock exam Questions 131 to 140 Mock exam Questions 141 to 150 Mock exam (December 2009) Questions 151 to 160 Planning your question practice Our guidance from page xxiii shows you how to organise your question practice, either by attempting questions from each syllabus area or by building your own exams – tackling questions as a series of practice exams ACCA examiner's answers The ACCA examiner's answers to questions marked 'Pilot paper', '12/07', ‘6/08’ and ‘12/08’ can be found on the BPP website at the following link: www.bpp.com/acca/examiner-solutions Additional question guidance Additional guidance to certain questions can be found on the BPP website at the following link: www.bpp.com/acca/extra-question-guidance viii Finding questions Using your BPP Learning Media products This Kit gives you the question practice and guidance you need in the exam Our other products can also help you pass: x Learning to Learn Accountancy gives further valuable advice on revision x Passcards provide you with clear topic summaries and exam tips x Success CDs help you revise on the move x i-Pass CDs offer tests of knowledge against the clock You can purchase these products by visiting www.bpp.com/mybpp You can view demonstrations of i-Learn and i-Pass products by visiting www.bpp.com/acca/studymaterials/#ilearn Scroll down the page until you find the sections for i-Learn and i-Pass and click on the appropriate 'View demo' button Finding questions ix ... PRACTICE AND REVISION KIT Using your BPP Learning Media Practice and Revision Kit Tackling revision and the exam You can significantly improve your chances of passing by tackling revision and the... programme-related content x Law Society www.lawsociety.org.uk x UK Government www.direct.gov.uk x The Incorporated Council of Law Reporting www.lawreports.co.uk x Law Rights www.lawrights.co.uk The Supreme... the major areas of the syllabus can and have been tested Paper F4 Global is a variant on the F4 Corporate and Business Law paper which is intended as a general law paper, effective in relation to