It will be the directors who cause the company to enter contracts and sometimes there can be limits to their authority to commit the company. Major contracts should always be authorised by board resolution. If a director exceeds his or her powers then that director can incur personal liability, but can be relieved from this if the board subsequently ratifies (approves) his or her actions. If a director’s conduct amounts to negligence, breach of duty or breach of trust, the shareholders must ratify the director’s actions. 2018 Examinations Watch free CIMA BA4 lectures 67
OpenTuition . com Free CIMA notes • Free CIMA lectures • Free CIMA tests • Free tutor support • StudyBuddies • CIMA forums Tests Question 1 What are the four essential elements of a valid contract? Question 2 Which two of the following statements are true? A Consideration can be future B Consideration can be past C Consideration must be sufficient but need not be adequate D Consideration must be adequate but need not be sufficient Question 3 Which of the following is the more fundamental and vital to a contract? A Warranty B Condition Question 4 Are the following statements likely to be a misrepresentation? A “The car has been regularly serviced and has never been in an accident.” [In fact the car was rarely serviced and had been repaired after a serious accident] B “I think this model was one of the best made by Ford.” [In fact, most motoring journalists though this model was poor and unreliable] In both cases the buyers of the cars decided to buy because they were looking for a reliable vehicle. Question 5 Is there an enforceable contract in the following situation? 1/3/2018: Offer communicated to the buyer by telephone 5/3/2018: Buyer posts acceptance 5/3/2018: Seller revokes the offer by post 2018 Examinations Watch free CIMA BA4 lectures 68
OpenTuition . com Free CIMA notes • Free CIMA lectures • Free CIMA tests • Free tutor support • StudyBuddies • CIMA forums Chapter 9 EMPLOYMENT LAW 1 Employment An employer-employee relationship implies that there is a contract of service and the employer controls how, when and where the work is done. This has to be contrasted with a contract for services which is the relationship that exists between a self-employed person and whoever is paying him or her. There are mutual of obligations between employers and employees. For example, the employee is obliged to work and the employer is obliged to pay wages or a salary. The employee must perform the work personally and cannot sub-contract to someone else. 2 Employment contracts 2.1 Terms Contract terms could be: ๏ In a written contract, or similar document like a written statement of employment. ๏ Verbally agreed. ๏ In an employee handbook. ๏ In an offer letter from the employer. ๏ Required by law (eg an employer must pay employees at least the National Minimum Wage).
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