Monday 6 May 2024
Your weekly SQE Prep Quiz has arrived
Dear Subscriber,
I hope you had a great weekend (and a fantastic Greek Easter for anyone celebrating). Please see below for the question, the answer to the previous question and associated resources. This is the web version of this newsletter.
Question: Alice and Bob are involved in a civil dispute over a breach of contract regarding the sale of a rare antique vase. Despite attempts at negotiation and mediation, they have been unable to reach a settlement. As a result, Alice decides to file a claim against Bob in the civil court to seek monetary compensation for the breach. What is the primary function of the civil court in resolving disputes like the one between Alice and Bob?
- To actively investigate and gather evidence on behalf of the parties involved
- To primarily rely on adversarial proceedings where the judge investigates and gathers evidence
- To resolve disputes through informal discussions and mediation
- To compel parties to accept settlement offers made by the opposing party
- To provide a fair and impartial forum for parties to present evidence and arguments, leading to a judgment
Live Event: Great News! I will be hosting a free LIVE SQE1 prep session today 6 May 2024 at 12.30 London time. Everyone is invited, looking forward to seeing you on our live event. Use link https://www.youtube.com/live/v7jHLxhsuAQ If you don’t make it live, you can access the recording via the same link.
Special Offer: We are celebrating reaching 200 subscribers by offering a special discount to Practice Works AI-led learning support for SQE1. Visit https://www.practiceworks.io/sqe-prep and use IOANNIS20 for 20% off any paid plan (available only for the first 30 people who use it!). Terms & Conditions apply.
Answer and feedback to last week’s question: Alice and Bob are both directors of a company that manufactures electronic gadgets. Alice proposes a new marketing strategy aimed at targeting a younger demographic, while Bob advocates for maintaining the company’s current marketing approach. During a heated board meeting, the disagreement between Alice and Bob escalates, with each director vehemently defending their position in front of the other directors. Ultimately, the board votes in favour of Alice’s proposal, and the new marketing strategy is implemented. However, Bob is dissatisfied with the decision and believes that Alice manipulated the other directors to secure the outcome in her favour as she has hired a marketing company to implement the new plan, in which she is a major shareholder. Bob thinks that the company should be taking legal action against Alice for breaching her duties as a director. Which of the following principles relevant to the duties of directors would be most suitable as a ground of challenge in this scenario?
- The duty to stay within conferred powers
- The duty to exercise reasonable care and skill
- The duty to act in good faith
- The duty to avoid conflicts of interest
- The duty to promote the success of the company
Correct Answer: 4. The duty to avoid conflicts of interest. Feedback: The duties of directors in a company include the duty to avoid conflicts of interest. Directors must act in the best interests of the company and avoid situations where their personal interests conflict with those of the company. In this scenario, Alice and Bob, as directors, are obligated to prioritize the company’s interests above their own and to act impartially in making decisions for the benefit of the company. If Bob believes that Alice manipulated the board to advance an agenda, because of a personal business relationship, he may argue that Alice breached her duty to avoid conflicts of interest by prioritizing her personal interests over those of the company. Therefore, the company may have grounds to challenge Alice’s actions if it can be demonstrated that she failed to fulfil her duty to avoid conflicts of interest in relation to this decision and any subsequent transaction with the marketing company.
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You will hear from me again soon.
All the best
Dr Ioannis Glinavos
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