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PAPER F4
CORPORATE AND BUSINESS LAW
(ENGLISH)
BPP Learning Media is the sole ACCA Platinum Approved Learning Partner – content
for the ACCA qualification. In this, the only Paper F4 Practice and Revision Kit to be

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©
BPP Learning Media Ltd
2013
Finding questions

iii

Contents
Page

 Plan of attack 321
 Answers 323
ACCA examiner's answers
 June 2012 343
 December 2012 355
Review Form
iv

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Marks
allocation
Mins

Question

Answer

Part A: Essential elements of the legal system 1 Types of law 10
18
3 37
2 Legal system and courts (12/07) 10
18
3 38
3 Criminal and civil law (6/11) 10
18
3 39
4 Civil courts (6/10) 10
18
3 41
5 Contemporary sources of law (12/08) 10
18
3 42
6 Precedent 10
18
16 Alvin (12/08) 10
18
6 61
17 Ann's art (2.2 12/01 amended) 10
18
6 63
18 Ali (12/07) 10
18
6 64
19 Offers, counter-offers and unilateral offers (6/10) 10
18
7 66
20 Offers and invitations to treat (6/08) 10
18
7 67
21 Invitation to treat and tenders (6/12) 10
18
7 69
22 Offer and termination of offer (6/11) 10
18
7 71
23 Acceptance and revocation of offer (2.2 6/03) 10
18
7 72
24 Ace Ltd (2.2 6/07 amended) 10
18
7 74
25 AI (Pilot Paper) 10

Time Page number Marks
allocation
Mins

Question

Answer
34 Ari, Bi, Cas and Dex (6/11) 10
18
10 91
35 Types of term I (Pilot Paper, 12/11) 10
18
10 93
36 Types of term II (6/09) 10
18
11 94
37 Exclusion clauses (2.2 6/02) 10
18
11 96
38 Bash Ltd (12/09) 10
18
11 98
39 Breach of contract (12/08) 10
18
11 100
40 Arti (6/09) 10
18

18
13
119
50 Principles of tort (12/10) 10
18
14
121
51 Remoteness of damage (12/07) 10
18
14
123
52 Roger and Lulu 10
18
14
124
53 Defences (12/08, 6/12) 10
18
14
125
54 Accountants4U 10
18
14
126

Part C: Employment law
55 Employed v self-employed (6/08) 10 18 15 127
56 Employment contracts (6/10) 10 18 15 129

Marks
allocation
Mins

Question

Answer
73 Termination of partnerships (2.2 12/02) 10 18 19 159
74 Geo, Ho and Lo (12/10) 10 18 19 160
75 Limited liability and types of company (12/09) 10 18 20 162
76 Promoters and pre-incorporation contracts (6/11) 10 18 20 163
77 Separate personality (6/08) 10 18 20 164
78 Mick (2.2 12/05 amended) 10 18 20 167
79 Doc (12/11) 10 18 20 169
80 Public companies (Pilot Paper, 6/10) 10 18 21 171
81 Company registers and accounting records (12/10) 10 18 21 173
82 Eden plc (2.2 6/05 amended) 10 18 21 174
83 Objects clause (2.2 6/05 amended) 10 18 21 176
84 Articles (2.2 6/04 amended) 10 18 22 177
85 Fred (12/08) 10 18 22 179
86 Company names (6/09) 10 18 22 180
87 Various terms (6/12) 10 18 22 182

Part E: Capital and the financing of companies 88 Discount and premium (6/11) 10 18 23 184
89 Capital terms I (2.2 12/03 amended) 10 18 23 186
90 Shares and debentures (6/08 amended, 6/12) 10 18 23 187
91 Capital terms II (12/08) 10 18 23 189
Marks
allocation
Mins

Question

Answer
112 Auditors (12/07) 10 18 28 222
113 Katch Ltd (12/07) 10 18 28 224
114 Goal Ltd (6/11) 10 18 29 226
115 Clean Ltd (6/09) 10 18 29 228
116 Ham, Ive, Ger and Kim (6/12) 10 18 29 230

Part G: Legal implications of companies in
difficulty or in crisis 117 Liquidation (2.2 12/04 amended) 10 18 30 232
118 Compulsory winding up (6/12) 10 18 30 234
119 Lazy Days 10 18 30 236
120 Compulsory winding up and administration (12/09) 10 18 30 237
121 Mat, Mary and Norm (6/11) 10 18 31 239
122 Earl (12/07) 10 18 31 241

Part H: Governance and ethical issues relating to
business
Listed below are the key Paper F4 syllabus topics and the numbers of the questions in this Kit covering those
topics.
If you need to concentrate your practice and revision on certain topics or if you want to attempt all available
questions that refer to a particular subject, you will find this index useful.
Syllabus topic Question numbers
Agency law 67, 113, 114
Breach of contract and remedies 39-45
Capital maintenance and dividend law 94, 99,100
Company directors 106-111, 123-125
Company formations 75, 76, 80, 81-87
Company meetings and resolutions 102, 103
Content of contracts 35-38
Contract of employment 55-57
Corporate governance 123-126
Corporations and legal personality 75-79
Court structure 2, 4, 8
Criminal behaviour 127-133
Dismissal and redundancy 58-66
Formation of content 16-34
Human rights 15
Insolvency 117-122
Law of torts 46-54
Loan capital 101
Other company officers 104, 105, 112-116
Partnership 68-74
Professional negligence 47, 54
Share capital 88-98
Sources of law 1, 3, 5-15
At BPP Learning Media we realise that you need more than just questions and model answers to get the most from
your question practice.
 Our Top tips included for certain questions provide essential advice on tackling questions, presenting
answers and the key points that answers need to include
 We show you how you can pick up Easy marks on some questions, as we know that picking up all readily
available marks often can make the difference between passing and failing
 We include marking guides to show you what the examiner rewards
 We include examiners’ comments to show you where students struggled or performed well in the actual
exam
 We refer to the 2012 BPP Study Text (for exams up to June 2014) for detailed coverage of the topics
covered in questions
 In a bank at the end of this Kit we include the examiner's answers to the June and December 2012 papers.
Used in conjunction with our answers they provide an indication of all possible points that could be made,
issues that could be covered and approaches to adopt.
Using your BPP Learning Media Practice and Revision Kit

xi

Attempting mock exams
There are three mock exams that provide practice at coping with the pressures of the exam day. We strongly
recommend that you attempt them under exam conditions. Mock exams 1 and 2 reflect the question styles and
syllabus coverage of the exam; Mock exam 3 is the December 2012 paper. xii

Using your BPP Learning Media Practice and Revision Kit

revision time passively reading. Question practice is vital; doing as many questions as you can in full will help
develop your ability to analyse scenarios and produce relevant discussion and recommendations. The question plan
on page xxvii tells you what questions to cover so that you can choose questions covering a variety of syllabus
areas. Revising F4

xiii

Passing the F4 exam
Displaying the right qualities
The examiner will expect you to display the following qualities.
Qualities required
Read and answer the question
set
If, for instance, the question asks you to set out the ways in which agency can
be formed, do not waste time describing the different types of authority that an
agent has, or the rights of the agent. You'll score nothing. In fact, as time goes
on, ACCA law questions are becoming more and more focused – so watch out!
Knowledge of the law
70% of the marks available in this paper are for showing that you have
knowledge of the relevant law. All knowledge-based questions ask for basic
knowledge of very specific topics.
Application of the law
30% of the marks are available for the scenario questions. These require
application of law to the analysis of scenarios. This sounds more complicated
than it is. Usually the scenario relates directly to the law and is generally quite
easy to answer. Sketching the relationship between parties in the scenario will
help you understand it.

How you use this time is up to you, but here are some possible options:
 Speed read through the question paper, jotting down any ideas that come to you about any of the questions
 Decide the order which you're likely to tackle questions (see below)
 Spend the remainder of reading time reading the question(s) you'll do first in detail, analysing scenarios,
jotting down plans (any plans written on the question paper should be reproduced in the answer booklet)
 When you start writing, get straight on with the questions you've planned in detail
Choosing the order to tackle the questions
As all ten questions are compulsory, it is important for you to decide which order to attempt them. Since each
question carries equal marks you may prefer to attempt the questions that you are more confident about first. This
means you will build up marks early on giving you a solid base to tackle the harder questions later. However do not
spend too long on the questions you are confident about as you need to spend an equal amount of time on them all.
You cannot pass the exam answering three or four questions well and the rest poorly.
An alternative strategy is to answer all questions in strict order. You could use the time saved choosing the order by
starting to plan your answers. You may prefer to use this method if you find yourself spending too long on your
favourite questions as it forces you to spend an equal time on each before moving on.
Tackling questions
You'll improve your chances by following a step-by-step approach to answering questions such as the following.

Step 1
Read the requirement
Identify the knowledge areas being tested and see precisely what the examiner wants you to do. This
will help you focus on what's important, especially if there is a scenario. Identify and make sure you
understand the action verbs in the requirement. These are mostly 'explain', (which means: make clear
and intelligible or state the meaning of). In scenario questions you may be asked to 'analyse' (which
means examine in detail the structure of) or 'advise' (which means: to 'inform' or 'notify').
Step 2
Check the mark allocation
This shows the depth of answer anticipated and you should use it to allocate time across parts of the
question and decide where to slot in knowledge to avoid repeating yourself.
Step 3

basic definitions as you can.
xvi

Revising F4

Exam information
The exam paper
Format of the exam

Number ofmarks

10 compulsory questions of 10 marks each

100

Three questions will involve a short scenario

100

Time allowed: 3 hours
The examination will comprise of questions drawn across all syllabus areas. The scenario questions will normally
require you to analyse a situation from a legal point of view and give advice.
December 2012
1 English legal system

As in the recent past, the questions tended to be subdivided into smaller subsections and it is thought that this may
have helped candidates to structure their answers. Although this structure may have had the consequence that
candidates wrote more than necessary to gain the marks available it is felt, nonetheless, that the structure was
advantageous on the whole. The first seven questions were essentially knowledge based, while the latter three were
problem-based scenarios requiring both legal analysis and application of the appropriate law. The fact that the
scenario questions potentially covered a lot of material, enhanced the need for candidates to analyse the situation
presented, rather than merely to regurgitate all they knew about general legal topics.
The number of candidates who did not attempt all of the questions remains lower than when the current syllabus
and structure were initially introduced. Where candidates failed to attempt all of the questions, this appeared to be
as a result of a general lack of knowledge in relation to particular questions, rather than based on any time pressure
or structural difficulties in the questions. This would appear to support the conclusion that candidates and teaching
providers are coming to terms with the width of the syllabus. The tort question in this paper was easily the best
answered question in this area since the topic was introduced. That being said it is still a fact that the last three
problem scenario based questions continue to provide grounds for concern. Too many candidates were let down by
their performance in those questions, which continues to suggest a general lack of analysis and application skills if
not general knowledge.
It also still remains the case that that some, although a greatly reduced number of, candidates are still engaging in
question spotting and as a result produce prepared, but inappropriate, answers to some questions. However, it has
to be said that this recurring failure was less of a problem in this exam, perhaps as a result of the structure of the
paper, in that it was more apparent what questions were about, or rather what questions could not possibly be
about.
Question in this kit
December 2011
1 Case law and legislation 11
2 Contents of a contract 35
3 An auditor's duty of care 47
4 Agent authority 67
5 Share capital 92
6 Corporate governance and directors 124
7 Redundancy 58

2 Offer 22
3 Standard of care and contributory negligence 49
4 Promoters and pre-incorporation contracts 76
5 Capital maintenance 88
6 Corporate governance 125
7 Types of dismissal 62
8 Recovering contractual debt 34
9 Authority of a chief executive 114
10 Repaying creditors in a winding up 121
Revising F4

xix

Examiner's comments
The structure of the examination paper, as usual, consisted of ten compulsory questions, each carrying ten marks.
Each of the first seven questions was subdivided into smaller subsections and it is thought that this may have
helped candidates to structure their answers. Although this structure may have had the consequence that
candidates wrote more than necessary to gain the marks available it is felt, nonetheless, that the structure was
advantageous on the whole. These first seven questions were essentially knowledge based, while the latter three
were problem-based scenarios requiring both legal analysis and application of the appropriate law.
The number of candidates who did not attempt all of the questions remains lower than when the current syllabus and
structure were initially introduced. This would appear to support the conclusion that candidates and teaching providers
are coming to terms with the width of the syllabus. Regretfully, however, it has to be sated that the topic of tort remains a
major weakness for candidates, especially given the readiness with which they approach contract questions.
Where candidates failed to attempt all of the questions, this appeared to be as a result of a general lack of knowledge in
relation to particular questions, rather than based on any time pressure or structural difficulties in the questions. That
being said it is still a fact that the last three problem scenario based questions continue to provide grounds for concern.

an easy question for people doing an accountancy question. In the event I was wrong and it was done inadequately
as it has been again. However, it is on the syllabus and has to be examined over time. Moreover I still maintain it is
not only relevant, but important for students to be aware of the interface between law and other more obviously
accountancy based modules.
Even if question 5 was not expected, it should equally be noted that both questions 2 and 6 were extremely
generous in the breadth of approach they allowed candidates. These questions could have been much narrower, but
were deliberately written to afford candidates as much scope as possible to answer them.
This paper was far more accountancy focussed than previous papers and gave candidates the opportunity to use
their core basic accountancy knowledge. Questions 4, 5 and 9 should have been done extremely well but answers
varied considerably. Candidates seemed to completely forget anything else and did not have the ability to draw on
brought forward knowledge to answer the questions. Candidates do not seem able to recognise how the various
different topics from their studies fit together.

Question in this kit
June 2010
1 Civil court system 4
2 Offer – terms 19
3 Duty of care 46
4 Registering a plc 80
5 Debentures and charges 101
6 Company secretary 104
7 Employee or self-employed 56
8 Consideration 32
9 Partnership 71
10 Share allotment and directors' duties 98 Revising F4

xxi


1 Interpreting statutes 12
2 Postal rule and privity of contract 28
3 Damages 44
4 Auditors’ duty of care 47
5 Companies and limited liability 75
6 Winding up and administration 120
7 Duties of employers and employees 57
8 Exclusion clauses 38
9 Directors’ liability 110
10 Fraudulent and wrongful trading 130
xxii

Revising F4

Examiner's comments
The structure, as usual, consisted of ten compulsory questions. The first seven questions were essentially
knowledge based, while the latter three were problem-based scenarios requiring both legal analysis and application
of the appropriate law. The firsts point to make about the general structure of answers is that far too many
candidates did not complete all ten questions, the result of which was to make it increasingly difficult, depending on
the number of questions not attempted, for the candidates in question to gain sufficient marks to pass overall.
However, it would seem from an analysis of the papers that this particular problem was the result of a lack of
knowledge in relation to particular questions, rather than based on any time pressure, a point emphasised by a
number of markers. A second related point to mention is that the questions that tended to be missed out were the
last three problem scenario based questions, which would suggest a lack of analysis and application skills if not
general knowledge.
It would appear that some candidates engaged in question spotting and as a result supplied prepared but
inappropriate answers to some questions. As will be mentioned further in relation particularly to questions 4, 5 and
8 many candidates did not read the question sufficiently closely and as a result either spent time providing
unnecessary material or even worse, completely irrelevant material.


Question in this kit
December 2008

1 Sources of law 5
2 Anticipatory breach of contract 39
3 Contributory negligence and volenti non fit injuria 53
4 Share capital 91
5 Ordinary, special and written resolutions 102
6 Duty to promote the success of the company 109
7 Fair and constructive dismissal 60
8 Contract formation 16
9 Amending articles of association 85
10 Partnership liability 69
Examiner's comments
This paper gave rise to the worst level of performance from candidates for a number of years. A couple of the
questions required a subtlety of approach that was beyond the ability of students at this level (question 9 being the
cited example), however there were many marks available for basic knowledge and indeed question 9 could have
been passed well, without the need for the subtly provided in the model answer. This was due to the lack of legal
knowledge exhibited by candidates. Even in question such as number eight, in which most candidates achieved a
reasonable mark, it was noticeable the extent to which candidates simply did not support their analysis with the
legal authority of, in this instance, cases. However markers commented that this lack of legal authority was a
shortcoming throughout the paper.

Question in this kit
June 2008

1 Common law and legislation 10
2 Offer and invitation to treat 20
3 Standard of care 48

Please note that question 4 is not included in this kit because the subject matter is now out of date.
Examiner's comments
This is the first report on an examination conducted under the new syllabus and format. The change in format
seems to have been less problematic than the change in syllabus with most candidates answering all of the
questions, although it has to be said with various degrees of success. Some candidates are treating the three
problem/application questions at the end of the paper in the same way as they dealt with the previous 20 mark
problem questions, with the effect that the candidates are spending too much time dealing with these questions to
the detriment of their general performance. This appears to be a particular concern with candidates who start their
papers with the problem questions. Candidates should be made aware that these questions are worth no more than
the other questions and they should be encouraged to manage their time better in making sure they have sufficient
time to deal with all the questions equally well. It is always surprising the extent to which students will pursue
marginal marks at the end of an answer rather than turn their attention to the easier marks to be had be answering a
new question.
As for the syllabus change, the introduction of tort law appears to have completely passed by the majority of
candidates, who insisted in answering the tort question as if it were a contract question.

Question in this kit
Pilot Paper
1 Delegated legislation 14
2 Terms, conditions, warranties and innominate terms 35
3 Duty of care 46
4 Registering a public limited company 80
5 Annual, general and class meetings 103
6 Corporate governance and executive/non-executive directors 123
7 Redundancy 58
8 Offer and acceptance 25
9 Shareholders' liability 96
10 Insider dealing 127