Monday 4 December 2023
Your weekly SQE Prep Quiz has arrived
Dear Subscriber,
Hope you had a great weekend. Please see below for the question, the answer to the previous question and associated resources. This is the web version of this newsletter.
Question:
Jonah and Myriam are partners in a consultancy firm, operating as a general partnership. Jonah, without Myriam’s knowledge or consent, signs a contract on behalf of the partnership to provide IT services to a client. The client, upon discovering that Jonah acted without Myriam’s authority, wants to hold the partnership liable. Which of the following statements is correct regarding the partnership’s liability?
- The partnership is not liable because Jonah acted without Myriam’s consent.
- The partnership is liable because Jonah is a partner and his actions are binding on the partnership.
- The partnership is only liable if the client can prove that Jonah had apparent authority to bind the partnership.
- The partnership is only liable if Myriam ratifies Jonah’s actions after the fact.
- The partnership is not liable because Jonah’s actions fall outside the scope of partnership business.
Top Tip: The more you practice MCQs, the better you get at it. You can find the newsletter questions in the form of short videos on this link.
Relevant Reading: Watch the video linked here for a presentation of the requirements for company formation. For relevant sections in a text see ReviseSQE Business Law and Practice, Chapter 3. You can obtain the text by following this link.
Something Fun: Looking for a fun gift for a friend who is battling the SQE? Get them some Law Exam Survivor merchandise for Xmas. Something to look back on fondly when all this studying is behind you.
Answer and feedback to last week’s question: The previous question was as follows: Acacia Ltd, a company engaged in manufacturing computer parts, has been found guilty of violating environmental regulations by discharging hazardous waste into the Thames close to Henley, in the vicinity of London. As a result, the company faces substantial fines from governmental authorities and potential legal action from affected parties in nearby towns. Which of the following statements is correct regarding the liability of the directors of Acacia Ltd?
- The directors cannot be held personally liable for the company’s environmental violations.
- The directors can only be held liable if they directly participated in the act of discharging hazardous waste.
- The directors are automatically liable for the company’s environmental violations, regardless of their involvement.
- The directors can avoid personal liability by demonstrating that they were unaware of the company’s environmental violations.
- The directors can be held personally liable if they failed to take reasonable steps to prevent the company’s environmental violations.
The correct answer is 5: “Directors can be held personally liable if they failed to take reasonable steps to prevent the company’s environmental violations”. Under certain circumstances, directors may be held accountable before criminal and civil courts for the actions or omissions of the company that result in environmental harm. It is their duty to ensure compliance with relevant regulations and take appropriate measures to prevent environmental violations. See Anderson v R. [2022] EWCA Crim 1465. This is an exception to the standard rules on the corporate veil, which normally protects company insiders (directors and shareholders) from liability arising from corporate activities.
Thank you for subscribing and let me know how you are getting on in your preparation through our Facebook Group. Feel free to forward this email to anyone you think will benefit.
You will hear from me again soon.
All the best
Dr Ioannis Glinavos
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