Newsletter 100

Monday 18 August 2025

Your weekly SQE Prep Quiz has arrived

Dear Subscriber,

Today we are celebrating newsletter number 100! Our newsletter has been coming out for 100 weeks in a row! Thank you everyone so much for being subscribers and supporting this project!

Please see below for the question, the answer to the previous question and associated resources. This is the web version of this newsletter.

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This Week’s Question: A group of people decide to start a trading business. They agree to operate as a private company and want to benefit from limited liability. They submit the required application to Companies House but do not yet receive a certificate of incorporation. While waiting, one member signs a supply contract on behalf of the “company.” Later, the supplier demands payment, but the group argues the company is not liable because it had not yet been formally registered. What is the correct legal position?

A. The company is bound by the contract because it was intended for the business and signed in its name.

B. The company is bound by the contract because incorporation was already underway.

C. The individual who signed the contract is personally liable because the company did not yet exist.

D. Neither the company nor the individual is liable because the contract is void until incorporation is completed.

E. The supplier can only enforce the contract once the company has received its certificate of incorporation.

Dig Deeper: Learn more about company formation, by watching this video (incudes updates for 2025).

Last Week’s Question: A man is hired by a company to complete urgent building repairs for £20,000. Halfway through, he refuses to continue unless the company agrees to pay an extra £5,000, knowing the work must be completed quickly to avoid large financial losses for the company. Feeling they have no choice, the company agrees in writing and pays the extra sum. After the job is done, the company seeks to recover the £5,000.

Which of the following best reflects the likely legal position?

A. The company must pay the extra sum because they signed a written agreement to do so.
B. The company can recover the extra sum if their agreement to pay was made under improper pressure.
C. The company cannot recover the extra sum because they received the benefit of the completed work.
D. The company must pay the extra sum because the change in price was agreed before the work was finished.
E. The company cannot recover the extra sum unless they can show the work was defective.

✅ Correct Answer: B. The company can recover the extra sum if their agreement to pay was made under improper pressure.

In English contract law, a contract variation is only binding if supported by valid consideration and made free from illegitimate pressure. Here:

• The man demanded more money when the company was in a vulnerable commercial position and had no practical alternative but to agree.
• If a court finds that the company’s consent was obtained through illegitimate pressure that left them with no realistic choice, the agreement to pay the extra £5,000 can be set aside and the sum recovered.
• The fact that the agreement was in writing does not make it automatically enforceable.
• Receiving the benefit of the completed work does not bar recovery if the extra payment was agreed under improper pressure.

This aligns with principles established in cases such as Atlas Express Ltd v Kafco [1989] and The Siboen and The Sibotre [1976].

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All the best

Dr Ioannis Glinavos