Corporate and

Business Law
(South Africa)
Tuesday 2 December 2008

Time allowed
Reading and planning:
Writing:

15 minutes
3 hours

ALL TEN questions are compulsory and MUST be attempted.

Do NOT open this paper until instructed by the supervisor.

During reading and planning time only the question paper may
be annotated. You must NOT write in your answer booklet until
instructed by the supervisor.
This question paper must not be removed from the examination hall.

The Association of Chartered Certified Accountants

Paper F4 (ZAF)

Fundamentals Level Skills Module

ALL TEN questions are compulsory and MUST be attempted

1

In relation to the legal system, explain the impact of human rights law on statutory interpretation.
(10 marks)

In relation to the contents of a contract, explain the following:

(a) suspensive conditions;

(5 marks)

(b) resolutive conditions.

(5 marks)
(10 marks)

In relation to partnership law, explain the requirement that the business of the partnership must be carried on for
the joint benefit of all the partners.
(10 marks)

Explain how ratification can validate the acts of an unauthorised agent.

(10 marks)

In relation to close corporation law, discuss a members power to bind the close corporation in contract.
(10 marks)

In company law, indicate the nature of, and legal control over, insider dealing.
(10 marks)

In company law:
(a) explain and distinguish between shares and debentures;

(6 marks)

(b) explain the procedure for altering class rights.

(4 marks)
(10 marks)

Andrew is the owner of a coffee bar in Pretoria. He agreed to purchase a food vending machine from Ben and signed
the contract without reading its terms. The contract contained an exemption clause excluding liability for all kinds of
defects in the machine. The machine proved to be totally defective. Andrew purported to terminate the contract and
also maintains that the contract is in conflict with what he and Ben orally had agreed on.
Required:
Advise Andrew as to whether or not he would succeed.
(10 marks)

The memorandum of association of Continental (Pty) Ltd states that the main object of the company is to construct
buildings in Gauteng. Article 5 of the companys articles authorises the managing director to enter into all contracts
on behalf of the company. Article 6 provides that any contract involving an amount in excess of R400,000 requires
the prior consent of the shareholders in a general meeting. The managing director buys a truck in the name of the
company at a price of R600,000, without the prior consent of the shareholders in a general meeting as required by
Article 6. The seller of the truck admits that she has never read the articles of association of the company.
Required:
Discuss whether the contract is binding on the company.
(10 marks)

10 X & Co acts as the statutory auditors of Easy Ltd, a company that provides bridging finance in the building sector. The
directors of Easy Ltd appointed Frank as the companys financial manager. It subsequently came to light that Frank
had previously served a prison sentence for theft and embezzlement. During the past financial year Frank forged the
signature of one of the companys directors on several of the companys cheques and managed to steal a substantial
amount of the companys money. Although X & Co conducted its usual audit of Easy Ltds financial records, it failed
to discover the theft and forgery. The directors of Easy Ltd maintain that X & Co did not conduct the audit with
reasonable care.
Required:
Advise Easy Ltd on the feasibility of a claim against the companys auditors.
(10 marks)

End of Question Paper