Mercantile Law N5 — Document
November 2018 — N5 — Mercantile Law
N5
2018
Nated Business
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Q1— Section header —
1.1Choose an item/word from COLUMN B to match a description in COLUMN A. Write only the letter (A \next to the question number (1.1.1
1.1.10\in the ANSWER BOOK. COLUMN A COLUMN B
1.1.10Through acts of representation a legal relationship is established Positive non performance An implied right to retain property of another person
1.2Various options are given as possible answers to the following questions. Choose the answ er and write only the letter (A D\ next to the question number (1.2.1
1.25\n the ANSWER BOOK.
1.2.1Which ONE of the following parties is protected by the Turquand rule? The person concluding a contract or transacting with the company The company
1.2.2The term (duration\ of a partnership formed for a specific purpose expires all partners have made their respective contributions. its aims are reached. the
1.2.3Which ONE of the following statements below is NOT a common law rule that has something to do with the maintenance of capital?
1.2.4company Being cheaper and more flexible The fact that a CC is not a state
1.2.5insolvent relieved of every disability imposed on him/her by the act of insolvency. accord surrender sequestration
1.3Choose the correct word(s\ from those given in brackets. Write only the word(s\ next to the question number (1.3.1
1.3.10\ the ANSWER BOOK.
1.3.10In terms of the new Companies A ct 71 of 2008, the payment of dividends to any shareholder is regarded as a (distribution/ contribution\ Where more than just one company share a special relationship as
1.4Indicate whether the following statements are TRUE or FALSE. Choose the answer and write only true or false
1.4.10\the ANSWER BOOK.
1.4.2With the payment of proceeds of movable assets sold under insolvency, all creditors are treated as preference creditors and each has an equal claim. The South African Broadcasting Corporation (SABC\ as State
1.4.10Perpetual succession is an attribute that cannot be given to or associated with any type of company since not all companies are profit oriented. The consequences of a rehabilitation order on the insolvent means
Q2— Section header —
2.1Wolfgang has a friend, Pierre, who is a student. Pierre has approached ABC Bank for a student loan. The loan amount comes to R320 000. Bank ABC is willing to advance the money to Pierre, provided he (Pierre\can bring them
2.1.1Consider the following: Pierre approaches his friend, Wolfgang and explains to him (Wolfgang\that the bank is willing to lend him (Pierre\the money on condition he (Pierre\brings the bank someone (Wolfgang\who will sign an agreement with them to pay
2.1.2Should Pierre be the debtor in this scenario, who will Bank ABC and Wolfgang (other than being a friend to Pierre\ respectively? Write your a (2 2\ (4\
2.1.3Should Wolfgang decide that he alone cannot help his friend and will ask another friend to also help out should the situation arise that he (Pierre\cannot repay the loan. If this is acceptable to the bank, what will Wolfgang and the other friend, in terms
2.1.4Under the agreement between Wolfgang and his friend who agrees to assist in paying should Pierre not be in a position to do so and Bank ABC, it happens that when it was time for Pierre to pay back the lo
2.2If we want to know whether a certain act of representation or agency has any valid/legal claim, we usually would test whether such act reflects the true characteristics of representation or not. List FOUR characteristics that make it very clear that a st
2.3Thabo is married to Portia out of community of property. In adherence to legal requirements and in terms of a duly registered ante nuptial contract, he (Thabo\donated a house to his wife, Portia. Thabo
2.4Consider the duties of partners in the following scenario and answer the questions X and Y, an estate agency, buying and selling property also operates as partnership. The following transactions are concluded by partner X:
2.4.1As a result of heavy rains and a flood that occurred on 1 July, X is forced to sell a piece of ground (erf\for R90 000. He purchased the erf for R145 000 on 1 March the same year. However, the net profit
2.4.2Partner X buys two stands for R100 000 each at an auction. She sells these stands for R300 000 each. She declares the purchase and sale of only one of the stands to Y. Y hears of X secret profit. Advise Y accordingly. (3
2.4.3After an office party where Y had had too much to drink, he sold a certain property (stand 123\for R200 000 thinking that it was another erf (stand 321\As a result of Y s negligence, the partnership suffered damage of R40 000.
Q3— Section header —
3.1Nomawabo owns a small printing and stationery business. She supplies stationery and other materials to college students in her community. As a result of the recent slow growth of the economy and decline in the value of the Rand,
3.2Discuss the liability of members in a CC in respect of:
3.2.1Authorised Act
3.2.2Unauthorised Act
3.2.3Acts not state d in the founding statement (3 2\ (6\
3.3Debentures and shares, as present in a company s financial make up, are not the same. With reference to debentures and shares of any company, analyse both terms and then write short explanatory notes on the sub
3.3.5\ listed below as to make the differences that exist between debentures an d shares in each sub heading, clear: HINT: Debentures and shares must feature as part of each answer in (3.3.1
3.3.5\ below.
3.3.1Specific rights that each are afforded the holder thereof.
3.3.2Liability of holding a debenture against liability of owning shares
3.3.3Receipt of interest or dividend as pay out for each.
3.3.4Return of capital to the investor.
3.3.5Extent to which each is secured by a charge on company assets or not (5 2\ (10\ (13030105\ 10
3.4Name the following documents connected with the registration of a company:
3.4.5List of names and addresses of all persons who hold shares in the company. A document which invites the public to buy shares in the company. The document which regulates the internal affairs and management
3.5Four college students, A, B, C and D decided to begin a business, preparing books of accounting for small to medium sized businesses in their community. Their partnership contract is silent as to how profits will be divided between
3.5.1A and D each contributed R20 000, B and C gave R10 000 and R50 000 respectively (i.e. a total amount of R100 000\ (3 2\ (6\
3.5.2It cannot be determined in which proportion the four partners respectively contributed to the partnership. (2 2\ (4\
3.6Tony and Peter are good friends. Peter is an estate agent. Tony has always indicated to Peter and other friends that he wishes to buy a townhouse in a certain suburb where he (Tony\ is currently renting a house. One day Peter
3.6.1Correctly identify the phenomenon that has presented itself here with reference to agency (representation\. (2\
Q3— Section header —
Q4— Section header —
4.1Discuss the Ultra Vires doctrine and its application to companies under common law provisions of the Companies Act. (2 2\ (4\
4.2The Companies Act 71 of 2008 makes provision for the formation of two types of companies, i.e. profit and non profit companies. Other than personal liability companies, list any TWO other profit companies
4.3Since the introduction of the Companies Act 71 of 2008, it has become the norm for professional people such as lawyers, auditors, accountants and so on to form personal liability companies (PLC\ in their own right.
4.4Like a partnership whom has partners, a close corporation has members who act for and on its behalf. Where individual partners have contracted for the partnership business without the necessary authority, such actions could be
4.5Briefly describe the following kinds of agents:
4.5.1
4.5.2
4.6Indicate, in each of the following cases, which of the assets mentioned (whether it belonged to the insolvent at the time of sequestration or it was acquired after sequestration\ do NOT generally form part of the insolvent estate:
4.6.6The car of the insolvent which he owned at the time of sequestration. Income earned by the insolvent after sequestration but which the insolvent requires for the maintenance of himself and his dependants.
Q5— Section header —
5.1Write notes on the founding statement of a close corporation with specific reference to any FOUR particulars this statement must contain. (4 2\ (8\
5.2In agency or representation, both agent and principal have reciprocal duties and responsibilities towards one another. State THREE duties of the agent towards his/her principal. (3
5.3Discuss insolvency under the following headings:
5.3.1The aim of the sequestration proc ess. (2\
5.3.2Who can apply at the court for the sequestration of a debtor s estate that is insolvent or where a deed o f insolvency has be en committed?
5.4Discuss briefly the effect sequestration has for all the parties involved on each of the following contracts:
5.4.2Contracts of service (employment\ Movable goods bought on credit by the insolvent (2 2\ (4\
5.5Briefly distinguish between an anonymous partner and a partner en commandite in terms of their contributions and liability for partnership debts. HINT: Make a suitable heading for each type of partner and write your
5.6It often happens that, when visiting a company, whilst waiting at the reception area for whatever business you are there for, you will notice magazines etc. on the coffee table or elsewhere in the vicinity. You might also spot a
5.7You have spare cash to invest and decided to buy shares in Company XYZ. However before you do, you decided to be wise and do some research about the company you want to invest in. You managed to find recent financial
5.6Copy the table below (without the example\ into your ANSWER BOOK and write the answers in the required spaces as indicated. Key issues relevant to companies Provisions of Companies Act 71 of 2008 Example:
5.8.2Non Number of Directors 5.
8.3Personal Liability Company: Remedial or preventative action taken before sequestration of ailing company Validity status (value\ of shares transferred after the liquidation of a company
5.8.550
Topics Identified
3
Forms of OwnershipLeadershipBusiness Plan
Mark Allocation
Total150 marks
Sections50 + 50 + 50 + 50 + 50 = 250 marks
Paper information
TitleDocument
SubjectMercantile Law
LevelN5
Document typeQuestion paper
Year2018
MonthNovember
Pages14
Downloads3
Examination context
Decade2010s
Years ago8y
SeasonSpring (SH)
Start dayThursday
Exam periodNovember 2018
Days since exam2,900
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