F4-Corporate and Business Law (Global)-Revision Kit

Time Page number MarksallocationMins Question Answer Part H: Corporate governance and ethical issues relating to business Planning your question practice Our guidance from page xxiii

P R A C T I C E

&

R E V I S I O N

K I T

PAPER F4

CORPORATE AND BUSINESS LAW

(GLOBAL)

In this January 2010 edition

x We discuss the best strategies for revising and taking your ACCA exams

x We show you how to be wwell prepared for your exam

x We give you lots of great guidance on tackling questions

x We show you how you can build your own exams

x We provide you with three mock exams including the DDecember 2009 exam

x We provide the AACCA examiner's answers as well as our own to the June and December

2009 exams as an additional revision aid

Ouri-Pass product also supports this paper

FOR EXAMS IN 2010

First edition 2007

Fourth edition January 2010

ISBN 9780 7517 8051 2

(previous ISBN 9780 7517 4681 5)

British Library Cataloguing-in-Publication Data

A catalogue record for this book

is available from the British Library

Printed in the United Kingdom

Your learning materials, published by BPP Learning

Media Ltd, are printed on paper sourced from

sustainable, managed forests

All our rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of BPP Learning Media Ltd

We are grateful to the Association of Chartered Certified Accountants for permission to reproduce past examination questions The suggested solutions in the exam answer bank have been prepared by BPP Learning Media Ltd, except where otherwise stated

©BPP Learning Media Ltd 2010

Page

Finding questions

Question index iv

Topic index x

Using your BPP Learning Media Practice and Revision Kit xii

Revising F4 General exam support from BPP Learning Media xiii

Topics to revise xiii

Question practice xiii

Passing the F4 exam xiv

Exam information xvii

Analysis of past papers xxi

Useful websites xxii

Planning your question practice BPP Learning Media’s question plan xxiii

Build your own exams xxviii

Questions and answers Questions 3

Answers 37

Exam practice Mock exam 1 x Questions 213

x Plan of attack 217

x Answers 219

Mock exam 2 x Questions 233

x Plan of attack 237

x Answers 239

Mock exam 3 (December 2009) x Questions 253

x Plan of attack 259

x Answers 261

ACCA examiner's answers x June 2009 279

x December 2009 291

Review form & free prize draw

Question index

The headings in this checklist/index indicate the main topics of questions, but questions often cover several

different topics

Questions set under the old syllabus Corporate and Business Law (2.2) paper are included because their style and

content are similar to those which appear in the F4 exam The questions have been amended to reflect the current

exam format

Time Page number Marks

allocationMins Question Answer

Part A: Essential elements of legal systems

Separation of powers

Legal systems

Courts and arbitration

Time Page number Marks

allocationMins Question Answer

Part B: International business transactions

27 International offer, invitation to treat and counter-offer (6/08) 10 18 8 73

Time Page number Marks

allocationMins Question Answer

Part C: International Business forms

Agency

Partnership

Part D: Joint stock companies

Part E: Capital and financing of companies

Time Page number Marks

allocationMins Question Answer

Part F: Management, administration and regulation

of companies

97 Powers of chairman and MD, voting (2.2 Pilot Paper amended) 10 18 26 167

Time Page number Marks

allocationMins Question Answer

Part H: Corporate governance and ethical issues

relating to business

Planning your question practice

Our guidance from page xxiii shows you how to organise your question practice, either by attempting questions

from each syllabus area or by building your own exams – tackling questions as a series of practice exams

ACCA examiner's answers

The ACCA examiner's answers to questions marked 'Pilot paper', '12/07', ‘6/08’ and ‘12/08’ can be found on the

BPP website at the following link:

www.bpp.com/acca/examiner-solutions

Additional question guidance

Additional guidance to certain questions can be found on the BPP website at the following link:

www.bpp.com/acca/extra-question-guidance

Using your BPP Learning Media products

This Kit gives you the question practice and guidance you need in the exam Our other products can also help you pass:

x Learning to Learn Accountancy gives further valuable advice on revision

x Passcards provide you with clear topic summaries and exam tips

x Success CDs help you revise on the move

x i-Pass CDs offer tests of knowledge against the clock

You can purchase these products by visiting www.bpp.com/mybpp

You can view demonstrations of i-Learn and i-Pass products by visiting

www.bpp.com/acca/study-materials/#ilearn Scroll down the page until you find the sections for i-Learn and i-Pass and click on the

appropriate 'View demo' button

Topic index

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

Administration 115-116

Alternative dispute resolution (arbitration) 15-22

Articles of Association 71, 78, 79, ME1:Q2

Bills of exchange 56-58, ME3: Q7

Compulsory liquidation 112, ME1:Q4

Formation of contract 23, 27-33

Fraudulent trading 126, ME3: Q10

ICC Incoterms 24, 25, 26, ME1:Q6

Insider dealing 125, 127-130; ME1:Q10

International legal regulation 10-22

International organisations 10, 11, 12, 13, 14, ME2:Q1

Syllabus topic Question numbers

Share capital 80-85, ME1:Q8, ME2:Q2

Sharia law system 5, 8, 9, ME3: Q1

Statutory records and returns 72

Types of business 67, 69, 70, ME3: Q5

UNCITRAL Model Law on Cross-Border Insolvency 113

UNCITRAL Model Law on International Commercial

Arbitration

16-22, ME1:Q7, ME3: Q2 United Nations Convention on Contracts for the

International Sale of Goods

23, 27-52, ME1:Q5, ME2:Q6, ME2:Q7, ME2:Q10, ME3: Q3, ME3: Q4, ME3: Q8

United Nations Convention on International Bills of

Exchange and International Promissory Notes

57, 58 Voluntary liquidation 111, 112

WTO 10

USING YOUR BPP LEARNING MEDIA PRACTICE AND REVISION KIT

Using your BPP Learning Media Practice and Revision Kit

Tackling revision and the exam

You can significantly improve your chances of passing by tackling revision and the exam in the right ways Our advice is based on feedback from ACCA examiners

x We look at the dos and don’ts of revising for, and taking, ACCA exams

x We focus on Paper F4; we discuss revising the syllabus, what to do (and what not to do) in the exam, how to approach different types of question and ways of obtaining easy marks

Selecting questions

We provide signposts to help you plan your revision

x A full question index

x A topic index listing all the questions that cover key topics, so that you can locate the questions that provide

practice on these topics, and see the different ways in which they might be examined

x BPP's question plan highlighting the most important questions and explaining why you should attempt

them

x Build your own exams, showing how you can practise questions in a series of exams

Making the most of question practice

At BPP Learning Media we realise that you need more than just questions and model answers to get the most from your question practice

x Our Top tips included for certain questions provide essential advice on tackling questions, presenting

answers and the key points that answers need to include

x 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

x We include marking guides to show you what the examiner rewards

x We include examiners’ comments to show you where students struggled or performed well in the actual

exam

x We refer to the2009 BPP Study Text (for exams in 2010) for detailed coverage of the topics covered in

questions

x In a bank at the end of this Kit we include the examiner's answers to the June and December 2009 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

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 2009 paper

Revising F4

General exam support from BPP Learning Media

BPP Learning Media is committed to giving you the best possible support in your quest for exam success With

this in mind, we have produced guidance on how to revise and techniques you can apply to improve your chances

of passing the exam This guidance can be found on the BPP Learning Media web site at the following link:

www.bpp.com/acca/examtips/Revising-for-ACCA-exams.doc

A paper copy of this guidance is available by e-mailing learningmedia@bpp.com

Topics to revise

Although the examiner, David Kelly, sets challenging questions, the style of question he uses are familiar because

he has been the ACCA law examiner for many years He has, under the old syllabus, provided very detailed

suggested answers, which show all the detail required to score very highly indeed

As with most examiners, David Kelly (who is also the F4 UK examiner) has warned against question-spotting and

trying to predict the topics that will be included in the exam He has on occasions examined the same topic in two

successive sittings He regards few areas as off-limits, and all of the major areas of the syllabus can and have been

tested

Paper F4 Global is a variant on the F4 Corporate and Business Law paper which is intended as a general law paper,

effective in relation to a number of legal jurisdictions Wherever possible the syllabus pays attention to international legal codes, which have direct application in different jurisdictions Where there is no internationally recognised

code or structure, UK law is taken as exemplar

The examiner expects you to show your basic knowledge in your knowledge-based answers, but you are also

rewarded for showing that you have thought about the way the law operates Marks can be given for critical insights into the way the law works in practice as opposed to regurgitating standard chunks of text Scenario questions are

generally an analysis of a legal problem and the application of law to it, to reach a conclusion

That said, there are certain topics that are examined particularly frequently and thoroughly:

x Share capital

x The duties, powers and role of Directors

x Formation of CISG, obligations, breach, remedies

x Incoterms

x Insider dealing and money laundering

Question practice

You should use the Passcards and any brief notes you have to revise the syllabus, but you mustn't spend all your

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 advice The question plan on page xx tells you what questions cover so that you can choose questions covering a variety of syllabus areas

Passing the F4 exam

Displaying the right qualities

The examiner will expect you to display the following qualities

Qualities required

Knowledge of the law 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!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 in 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 relationships between parties in the scenario will help you understand it

Communication of knowledge There are few if any numbers in law exams, and this is a problem for some

students It shouldn't be Being an accountant is as much about knowledge and the communication of knowledge as it is about numbers and what they represent If you're nervous about not having the comfort blanket of numbers

in the exam, it's particularly important that you practise:

x Reading law questions so that you identify exactly what it is the examiner is seeking

x Planning law answers so that you get all your points into them, in a logical order (this helps you to be accurate and comprehensive)

x Writing law answers so that you feel confident that you can get your knowledge across effectively Get someone else to read your answers and then give you feedback on whether the answers are communicating clearly

Avoiding weaknesses

Our experience of, and examiner feedback from, other exams enables us to predict a number of weaknesses that are likely to occur in many students’ answers You will enhance your chances significantly if you ensure you avoid these

mistakes:

x Failing to provide what the question verbs require (discussion, evaluation, recommendation) or to

write about the topics specified in the question requirements

x Repeating the same material in different parts of answers

x Stating theories and concepts rather than applying them

x Quoting chunks of detail from the question that don't add any value

x Forcing irrelevancies into answers, for example irrelevant definitions or theories, or examples that

don't relate to the scenario

x Giving long lists or writing down all you know about a broad subject area, and not caring whether

it's relevant or not

x Focusing too narrowly on one area – for example only covering legislation when case law is also

important

x Letting your personal views prevent you from answering the question – the question may require

you to construct an argument with which you personally don’t agree

x Making unrealistic or impractical recommendations

x Failing to plan and prepare your answer, properly taking into account the mark allocation between

the various parts of a question This failing reflects poor time management

Using the reading time

The ACCA allows you 15 minutes reading time in Fundamentals papers F4-F9 and all Professional level papers How you use this time is up to you, but here are some possible options:

x Speed read through the question paper, jotting down any ideas that come to you about any of the questions

x Decide the order which you're likely to tackle questions (probably easiest questions first, most difficult

questions last)

x 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)

x When you start writing, get straight on the questions you've planned in detail

Choosing which questions to answer first

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

Scenario questions

You'll improve your chances by following a step-by-step approach to scenarios along the following lines

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 may be defined as: 'make clear and intelligible' or 'state the meaning of' In scenario questions you will often be asked to 'analyse' (which means examine in detail the structure of') and the '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 Read scenarios carefully

Identify which information is relevant to each part Read the scenario and jot down key points on the page: who's who, the key issues at stake, the alternatives open to the parties for resolving any dispute (eg damages, rectification etc), and conclusion

Step 4 Plan your answer

Consider the number and priority of points you will make Use the ISAC approach when answering scenario questions

x Identify the legal issues

x State the relevant law

x Apply the law

x Conclude with justification

Step 5 Write your answer

Stick carefully to the time allocation for each question, and for each part of each question

Gaining the easy marks

Most marks in this paper are available for setting out the legal rules that apply to each topic These are 'easy marks' – if you know the rules! In the scenario questions, there are often easy marks available for identifying who is who, stating the key issues and reaching a reasoned conclusion

To get these 'easy' marks:

x Read the question carefully and think about the most important points and issues are

x State the law clearly, in as simple language as you can (you're not a lawyer standing up in a courtroom: you need to impress the examiner with your knowledge of the law, not with fancy 'legalese') Learn as many basic definitions as you can

Exam information

The exam paper

Number of marks

10 compulsory questions of 10 marks each 100

Three questions will involve a short scenario

100Time allowed: 3 hours

The examination will comprise of questions drawn across all syllabus areas Knowledge-based questions will

require definitions and explanations of specific areas of law The scenario questions will normally require you to

analyse a situation from a legal point of view and give advice

December 2009

1 Role of judges

2 Challenging an arbitrator’s appointment

3 Obligations of a buyer under contract law

4 Remedies for breach of contract

5 Companies and limited liability

6 Compulsory winding up and administration

7 Bills of lading and exchange

8 Passage of risk

9 Director liability

10 Fraudulent and wrongful trading

This exam is included in this kit as Mock Exam 3

June 2009

Question in this kit

Examiner's comments

As usual, this paper was made up of ten compulsory questions, each of ten marks, although many of them were subdivided into distinct parts This format seems to have settled down and to meet with candidates’ approval from the way they tackle it However, it is a matter of some concern that a significant number of candidates are not completing, or even attempting, all ten questions This does not appear to be an issue of time-management but lack

of knowledge, which might reflect a failed effort of candidates to question spot This point has been made in the past, but it clearly has to be repeated for every session: if you do not do all the questions you greatly reduce your chances of passing the exam The syllabus is wide, but you have to cover it all; question/area spotting is a

dangerous game to play All questions were done very well by a number of candidates across the board; although the reverse of that is equally true in that all questions were done very inadequately by a number of candidates across the board

5 Ordinary, special and written resolutions 106

6 Duty to promote the success of the company 100

be aware of the existence of the 2006 Act, repeatedly referring to the provisions of the Companies Act 1985 The really surprising, not to say disappointing thing is that this was the second F4 Global in which the 2006 Act has been the basic legislation

June 2008

Question in this kit

2 Offer, invitation to treat and counter offer 27

Question in this kit

1 Criminal law, civil law and arbitration 15

3 Damages for breach of contract under UN CISG 47

4 Memorandum of association

– Not included in this Kit as not relevant under the Companies Act 2006

7 Qualifications, powers and duties of company auditors 108

9 Insolvency and amounts owed to creditors 117

10 Agency and director’s authority to bind a company 110

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

Unfortunately it still remains a fact that in spite of the syllabus change some candidates are still trying to answer the Global syllabus questions using English law as their paradigm and it does not work; the legal regulations are

different

Pilot paper

Question in this kit

2 Challenging an international arbitration panel 20

Analysis of past papers

The table below provides details of when each element of the syllabus has been examined and the question number

and section in which each element appeared

Covered

in Text

chapter

Dec 2009

June 2009

Dec 2008

June 2008

Dec 2007

Pilot Paper

ESSENTIAL ELEMENTS OF LEGAL SYSTEMS

1 Economic, political and legal systems 1 1 1 1

INTERNATIONAL BUSINESS TRANSACTIONS

4 Contracts for the international sale of goods 8 2 2, 3, 8 3, 8

5 Obligations and risk in contracts for international sales 3,4,8 3,8 3 3,8 2,3 4, 8

INTERNATIONAL BUSINESS FORMS

7 Agency

JOINT STOCK COMPANIES

10 Company formation

CAPITAL AND FINANCING OF COMPANIES

MANAGEMENT, ADMINISTRATION AND REGULATION OF

COMPANIES

15 Company directors and other company officers 9 6,9 6 6 7, 10 5

LEGAL IMPLICATIONS RELATING TO COMPANIES IN

DIFFICULTY OR IN CRISIS

GOVERNANCE AND ETHICAL ISSUES RELATING TO

BUSINESS

Useful websites

The websites below provide additional sources of information of relevance to your studies for Corporate and

Business Law

x www.accaglobal.com

ACCA's website The students’ section of the website is invaluable for detailed information about the

qualification, past issues of Student Accountant (including technical articles) and even interviews with the examiners

The website of the BBC carries general business information as well as programme-related content

x Law Society www.lawsociety.org.uk

x UK Government www.direct.gov.uk

x The Incorporated Council of Law Reporting www.lawreports.co.uk

x Law Rights www.lawrights.co.uk

The Supreme Court for the United Kingdom

TheConstitutional Reform Act 2005 which received royal assent on 24 March 2005 has severed the link between

the legislative and judicial functions of the House of Lords

ASupreme Court for the United Kingdom has been established and opened for business at the start of the legal

year in October 2009 It consists of 12 Judges known as 'Justices of the Supreme Court' and its members include a

president and a deputy president.

Itsrole is to take over the House of Lord's appellate function – in other words to hear civil and criminal case

appeals However, the House of Lords continues with its existing legislative role.

To avoid confusion in answers to questions in this kit, the House of Lords is referred to where that institution decided a case Future decisions made by the Supreme Court will be noted as such

Planning your question practice

We have already stressed that question practice should be right at the centre of your revision Whilst you will spend

some time looking at your notes and Paper F4 Passcards, you should spend the majority of your revision time

practising questions

We recommend two ways in which you can practise questions

x Use BPP Learning Media's question plan to work systematically through the syllabus and attempt key and

other questions on a section-by-section basis

x Build your own exams – attempt questions as a series of practice exams

These ways are suggestions and simply following them is no guarantee of success You or your college may prefer

an alternative but equally valid approach

BPP Learning Media's question plan

The BPP Learning Media plan below requires you to devote a minimum of 26 hours to revision of Paper F4 Any

time you can spend over and above this should only increase your chances of success

Step 1 Review your notes and the chapter summaries in the Paper F4 Passcards for each section of the

syllabus

Step 2 Answer the key questions for that section These questions have boxes round the question number

in the table below and you should answer them in full Even if you are short of time you must attempt

these questions if you want to pass the exam You should complete your answers without referring to

our solutions

Step 3 Attempt the other questions in that section For some questions we have suggested that you prepare

answer plans or do the calculations rather than full solutions Planning an answer means that you

should spend about 40% of the time allowance for the questions brainstorming the question and

drawing up a list of points to be included in the answer

Step 4 Attempt Mock exams 1, 2 and 3 under strict exam conditions

Syllabus section

2009Passcardschapters

International

organisations

2 10, 11, 14 The international court system, and other bodies have a

key role in law-making and its application

Courts and

alternative dispute

resolution

3 15,16,18,21 You must be able to explain the differences between the

types of law Arbitration is a key method of resolving international disputes and should be considered a key revision area

4 23 The UN Convention on International Sale of Goods is

very important, and this question examines its overall scope

Risk 5 50, 51 Risk is an extremely important issue It could feature in

a larger scenario question You must attempt these questions

Incoterms 4 24, 26 These incoterms are used widely in practice and are

important Ensure you are aware of the meanings of each

Quality 5 34, 35, 36 These are excellent questions, covering the subject of

quality comprehensibly

Obligations 5 40, 41, 49 These questions comprehensively cover the obligations

of buyers and sellers

Syllabus section

2009Passcardschapters

Questions

in this Kit Comments

Done

5International

payments

6 55, 57, 58 Methods of payment in international sales proved to be

of great interest to the examiner in the past so these questions are good to get to grips with

Revision period 4

Business forms

Agent’s authority 7 61 This is a good question to try on agency; it was on the

Pilot Paper and indicative of what to expect

Partnerships 8 62, 65 Partnership is a small but important syllabus area, so

do not forget it – practise it!

Revision period 5

Joint stock

companies

Incorporation 9 67, 70, 71, 74 You could easily be asked to advise on whether or not

an individual should set up a company, to explain the documents they are required to submit on formation, or

if they are liable as a promoter Produce full answers

Separate legal

personality

9 68 Separate legal personality is a fundamental principle of

company law This question is an excellent example of the type of question to expect on this topic area

Public limited

company

9, 10 69 This is excellent practice for questions requiring you to

demonstrate knowledge of the differences between private and public companies

Names and passing

off

11 73 There are not too many ways company names can be

examined This example from June 2009 indicates the likely approach by the examiner

12, 13 80, 81, 83 If questions like these come up, you should be looking

to score highly Work through them all as they comprehensively cover the topic

Payment for shares 12, 14 82 The practical and legal issues relating to paying for

shares are important in this syllabus So it is vital that you are familiar with them

88

You should be able to answer a knowledge-based question on legal charges Work carefully through these questions

Syllabus section

2009Passcardschapters

Questions

in this Kit Comments

Done

5Dividends 14 89 Dividends are an important issue that is likely to be

examined as a knowledge-based question, so work through this if you have time If not, draft an answer plan

Capital

maintenance

14 90 Capital maintenance can be a daunting area if it comes

up in the exam Work through this question as practice

Revision period 7

Corporate

management 1

Directors 15 91, 97 Question 91 will get you thinking about the types of

director The practical issues of the Chairman's and MD's relative powers, and of voting, could well come up so attempt Question 97 as well

Company secretary 15 104 The role and qualifications of a company secretary is an

area where you can score highly if you have sufficient knowledge, so this question is well worth doing

Auditors 15 107,108 You must understand the role of auditors These

questions are a good test of your knowledge of this area

Company meetings 16 105 This question from the Pilot Paper looks at three

different types of company meeting

Revision period 9

Insolvency

Voluntary winding

up

17 111 This question takes a practical look at the law on

winding up It is useful practice for you should an insolvency question come as a knowledge-based question

Syllabus section

2009Passcardschapters

Questions

in this Kit Comments

Done

5Administration 17 115

116

If the issue of insolvency is examined, the examiner may focus on the issue of the administration, as this is relatively new law in the UK and therefore highly topical

International

insolvency

17 113 You must understand the international implications of

insolvency and this question is comprehensive

15, 18 118, 119, 120 Auditors, directors and stakeholders are an important

part of good corporate governance Regard them as highly examinable

121 This basic question about insider dealing is excellent

practice for you

Insider dealing 19

122 This question about insider dealing requires you to

tackle the problem from a practical perspective

Money laundering 19 123

130

Money laundering is another important international issue Try this question which runs through the main issues

Produce an answer plan for the scenario question to test your application skills

Fraudulent trading 19 126 This question is useful practice on fraudulent trading If

you are struggling with this area, attempt it in full, otherwise produce a good answer plan

Illegal activities 19 125, 127

128, 129

Try this mixed bag of questions on illegal activities to consolidate your knowledge of this topic

Build your own exams

Having revised your notes and the BPP Passcards, you can attempt the questions in the Kit as a series of practice exams You can organise the questions in the following ways

x Either you can attempt complete past exam papers; recent papers are listed below:

Pilot paper December 07 June 08 December 08 June 09 Question in kit Question in Kit Question in kit Question in kit Question in kit

Questions

ACCA examiner’s answers Remember that you can access the ACCA examiner’s solutions to questions marked ‘Pilot paper’, ‘12/07’,

‘6/08’ and ‘12/08’ on the BPP website using the following link:

www.bpp.com/acca/examiner-solutions

Additional question guidance Remember that you can find additional guidance to certain questions on the BPP website using the following link:

www.bpp.com/acca/extra-question-guidance

ESSENTIAL ELEMENTS OF LEGAL SYSTEMS

Questions 1 to 22 cover Essential Elements of Legal Systems, the subject of Part A of the BPP Study Text for Paper

F4 Global

(a) Describe the differences between market, planned and mixed economies (6 marks)

(b) Explain what is meant by the separation of powers, and the rule of law (4 marks)

(Total = 10 marks)

In relation to the creation and operation of law explain the role of the following institutions:

(Total = 10 marks)

In the context of English law, explain:

(a) The doctrine of judicial precedent (5 marks)

(b) The presumptions of statutory interpretation (5 marks)

(Total = 10 marks)

Outline two key principles of a civil law system and explain how the role of judges upholds those principles, giving

an example of how this operates in a national system (10 marks)

Outline the key principles of a Sharia law system and explain how the role of judges upholds those principles, giving

an example of how this operates in a national system (10 marks)

Examine the constitutional role of the judge in interpreting legal provisions produced under:

(Total = 10 marks)

7 Sources of law (1) (2.2 6/04) 18 mins

In relation to sources of law, explain the difference between:

(a) Case law

(b) Statute law

Explain the meaning and operation of the doctrine of precedent in relation to:

(b) ONE of the following:

(i) a civil law system;

OR

(Total = 10 marks)

Distinguish between the main sources of law in the following legal systems:

Explain the meaning and role of the following organisations:

(Total = 10 marks)

12 International organisations (3) (6/08) 18 mins Explain the meaning and role of the following organisations:

(Total = 10 marks)

Explain:

(b) The role of the United Nations with regard to international law (5 marks)

(c) The role of the International Court of Justice with regard to international law (2 marks)

(Total = 10 marks)

Explain the role of the following:

(a) The International Court of Justice (5 marks)

(b) The International Court of Arbitration (5 marks)

(Total = 10 marks)

15 Criminal law, civil law and arbitration (12/07) 18 mins

In relation to legal systems distinguish between the following:

(Total = 10 marks)

(a) Assess the relative advantages and disadvantages of arbitration as an alternative to court proceedings in

respect of international business transactions (5 marks)

(b) In relation to the UNCITRAL Model Law on International Commercial Arbitration, explain the meaning and

significance of statements of claim and statements of defence (5 marks)

(Total = 10 marks)

Explain the process of arbitration and assess its relative advantages and disadvantages as an alternative to court

proceedings in respect of international business transactions. (10 marks)

18 Arbitration (2) 18 mins

In relation to the UNCITRAL Model Law as arbitration explain:

(a) The rules relating to the arbitration agreement being in writing (3 marks)

(b) The rules relating to the person of the arbitrator (7 marks)

(Total = 10 marks)

Tom, the purchasing director of a large UK company, is currently reviewing the terms and conditions proposed to

him in respect of a large contract for the sale of goods from MacBride Trading Ltd, an Irish company The contract

contains a clause by which any disputes under the contract would be referred to arbitration according to the

UNCITRAL Model Law on arbitration Tom is not familiar with the Model Law

In relation to the UNCITRAL Model Law on arbitration, explain the following to Tom:

(Total = 10 marks)

Within the context of the UNCITRAL Model Law on International Commercial Arbitration, explain the grounds and

procedure for challenging a decision of an arbitration panel. (10 marks)

In relation to Article 34 of the UNCITRAL Model Law on International Commercial Arbitration, explain under what

circumstances a party may have recourse against an arbitration award. (10 marks)

A Kenyan company and a Zambian company have a clause in their contract for the sale of goods that any disputes

will be referred to arbitration in a third state according to the procedures set out in the Model law They are in

dispute

Fourteen days ago, the advisors of the Zambian company notified the Kenyan company of its intention to refer the

dispute to arbitration, indicated that they should like the case to be arbitrated in Zimbabwe, and nominated an

arbitrator They had not had a response to their notification until this morning, when they received a fax which

indicated the Kenyan company's intention to challenge the nominated arbitrator

Required

(a) Outline the procedure for challenging an arbitrator set out in the Model Law (6 marks)

(b) Advise the companies of their current position under the Model Law (4 marks)

(Total = 10 marks)

INTERNATIONAL BUSINESS TRANSACTIONS

Questions 23 to 59 cover International Business Transactions, the subject of Part B of the BPP Study Text for Paper F4 Global

23 Application of the UN Convention (2.2 6/04 amended)

18 mins(a) The United Nations Convention on Contracts for the International Sale of Goods operates only under certain circumstances and applies only to certain transactions

Required

Explain

(i) The sphere of application of the Convention (3 marks)

(ii) Those transactions that are expressly not covered by the convention (3 marks)

(b) Ahmed carries out a business manufacturing and selling leather bags in Baria, a country which is a signatory

to the UN convention Chic carries out a similar business in Damia, a country which is not a signatory to the convention and Eve has her place of business in Falia, which is a signatory to the convention

Ahmed entered into contracts with Chic and Eve to produce bags to his particular design

With regard to Chic, Ahmed agreed to purchase 1,000 bags The contract stated that the leather for the bags, which Chic had to provide, had to be of a specified high quality

Ahmed also agreed to purchase a similar quantity of bags from Eve However, because the quality of leather required was not available in Falia, the contract stated that Ahmed would supply the leather as well as the

design, and Eve would simply manufacture the bags

Both contracts state that the law of the supplier’s country shall apply and both have now given rise to

disputes

Required

Analyse the scenario and advise the parties whether the United Nations Convention on Contracts for the

International Sale of Goods will apply in each case (4 marks)

(Total = 10 marks)

(a) Explain the meaning and effect of Incoterms (4 marks)

(b) Explain the meaning of the following examples of Incoterms:

(Total = 10 marks)

25 Incoterms (2) (2.2 6/06) 18 mins

Explain the meaning of the following ICC Incoterms:

(Total = 10 marks)

Explain the meaning of the following International Chamber of Commerce Incoterms:

Within the context of the UN Convention on Contracts for the International Sale of Goods, explain:

(Total = 10 marks)

28 Withdrawal, revocation, rejection of offer (2.2 12/03, 6/06)

18 minsWithin the context of the UN Convention on Contracts for the International Sale of Goods, explain how the following

can bring an offer to an end:

(Total = 10 marks)

Within the context of the UN Convention on Contracts for the International Sale of Goods, explain the meaning of,

30 Acceptance (2) (2.2 6/04) 18 minsWithin the context of the UN Convention on Contracts for the International Sale of Goods, explain:

(b) When acceptance becomes effective (5 marks)

(Total = 10 marks)

Heinrich, an Austrian manufacturer, has been in negotiation with Jose, a Spanish wholesaler, for a contract to

supply table linens to a large department store chain Heinrich and Jose have had similar contracts before

However, in the past, Jose has had complaints about the quality of the thread used by Heinrich in production They have been engaged in negotiations to contract on similar terms, but for Jose to provide the thread for the contract, with a resulting reduction in the contract price

A week ago, Heinrich received the following email from Jose:

'Heinrich, 20,000 Tablecloths (Code TAB20RED)

10,000 Tablecloths (Code TAB20WHI)

80,000 Napkins (Code NAP07CRE)

For delivery in instalments, 5% discount on previous price for our thread.'

These terms were acceptable to Heinrich, and he ordered the factory to commence work on the order The first

batch was dispatched on completion It was not accepted as the warehouse had not been advised by Jose that an order was expected

Required

(a) Within the context of the UN Convention on Contracts for the International Sale of Goods, explain the

(b) Advise Heinrich as to whether a contract has been formed and what action he should take (6 marks)

(Total = 10 marks)

Ax, a Swedish manufacturer, contacted Bo, a German manufacturer, to enquire about Bo making special screws of a particularly high quality

Bo provided by return a list of prices and delivery periods

Ax then ordered 3,000 screws and also 3,000 specialised nuts and bolts, not mentioned before

Bo requested payment in advance or a letter of credit Ax, in turn, asked for a pro-forma invoice

When Bo sent the invoice it listed screws of a lower quality than the original specification with their respective

prices

Ax objected immediately and demanded delivery of the articles in the ‘ordered’ quality Bo agreed to delivery of

higher quality articles but insisted on a higher price than on the invoice Ax insisted on delivery of the higher-quality items but for the price listed in the invoice

Required

Advise the parties whether or not they have entered into a binding contractual agreement on the basis of the UN

Convention on Contracts for the International Sale of Goods (10 marks)

33 Ari (12/08) 18 mins

Ari is a metal broker who was in negotiations with three parties for the sale of a large consignment of copper he

was expecting to receive on 15 March

On 1 March he wrote to the three clients Bas, Cas and Das

He wrote to Bas offering to supply the copper at $6,000 per tonne for orders over 100 tonnes for delivery to be

made before 1 May Bas immediately wrote back ordering 75 tonnes for delivery on 30 April

He wrote to Cas offering 100 tonnes of copper at $6,500 per tonne if he placed an order before 1 May Cas also

immediately wrote back ordering 150 tonnes at the agreed price for delivery on 30 April

He wrote to Das offering to supply him copper at $6,750 per tonne and Das immediately wrote back ordering 150

tonnes for delivery on 1 May

After he had sent the above letters and before he received the replies Ari discovered that he would not be able to

secure the delivery of the copper

Required

Advise Ari as to his potential liability to Bas, Cas and Das under the above situations, assuming that the United

Nations Convention on Contracts for the International Sale of Goods applies (10 marks)

Explain the seller’s obligations in respect of requirements as to the quality of goods supplied, under Article 35 of the

UN Convention on Contracts for the International Sale of Goods (10 marks)

Ari conducts a manufacturing business in Beria making specialist equipment He has discovered a new

manufacturing process, which uses computer technology in a highly innovative way In order for the process to

function it requires microchips of a highly specialised nature There are a number of specialist microchip

manufacturers in Ceria and in order to get the large number of chips he requires Ari negotiates the following

transactions:

(a) Ari tells Del, who makes a particular type of chip, that he will need the chips to operate his new system Del

assures him that the chips he will supply will be perfectly suitable for the task

(b) Ari knows that Eve makes chips to the same specification and quality as Del, so he orders chips from Eve,

on the assumption that they will do the task required

(c) Ari approaches Flo, who usually makes less specialist microchips, to see if he can make chips to the more

precise standard In order to demonstrate their ability, Flo manufactures a prototype chip, which Ari is

satisfied will work with his new process

Unfortunately when all of the chips are delivered to Ari, none of them are suitable for use within the new machinery

Both the chips provided by Del and Eve are simply not suitable for the task required of them, and the chips actually

provided by Flo are not as good as the original prototype

Required

Advise Ari whether he has any claim against the suppliers for lack of conformity with quality standards under the

UN Convention on Contracts for the International Sale of Goods You can assume that the Convention provisions

36 Quality (3) 18 mins

(a) Explain the seller's obligations in respect of requirements as to the quality of goods supplied, under Article

35 of the UN Convention on Contracts for the International Sale of Goods (6 marks)

(b) Art is a German food retailer who specialises in selling food from all around the world In January 2006 he

entered into the following arrangements

(i) a contract with Beni, an Italian olive oil grower, for the delivery of 100 cases of olive oil Art did not

examine the oil However, when the oil arrived in Germany it was seized and destroyed by the

German authorities, as it was found to be mixed with 10% water, contrary to domestic German law

relating to the constitution of olive oil

(ii) a contract with Don, a New Zealand mussel farmer, for the delivery of 100 packs of his pre-packed

mussels However, when the mussels were examined by the German authorities they were found to

contain a level of the metal cadmium, higher than that permitted in German law, although within

acceptable New Zealand standards Once again the product was destroyed by the German authorities

(iii) a contract with Ed, a Scottish mussel farmer, for the delivery of 100 packs of his pre-packed

mussels However, once again when the mussels were examined by the German authorities they

were found to contain a level of the metal cadmium, higher than that permitted under German law On

this occasion the level of cadmium in the mussels also contravened United Kingdom regulations,

which applied the same standard as to the permissible level of contaminants Once again the product

was destroyed by the German authorities

Required

Assuming that the UN Convention on Contracts for the International Sale of Goods applies, advise the parties

as to their rights and obligations in relation to the three contracts (4 marks)

(Total = 10 marks)

Axel, a German furniture manufacturer, ordered 2,000 metres (m) of a particularly high quality coloured cloth from

Beni, an Italian cloth manufacturer 1,000 m of the cloth was to be red and the other 1,000 m green When the cloth

was delivered Axel found that the green cloth had been replaced by blue cloth

In spite of the change in the colour Axel used all the cloth without informing Beni and managed to sell all the

furniture covered with it at its usual price However he refused to pay Beni the full contractual price for the blue

cloth as it was not what he had ordered

Required

Assuming that the UN Convention on Contracts for the International Sale of Goods applies, explain the rights and

Jean, a French manufacturer, has entered into a contract with Paul, a wholesaler from Cuba, to supply him with

three machines Several weeks after Jean began constructing the machines, Paul changed his mind about the

design specification and has notified Jean of his intention not to pay for the machines

Required

Advise Jean, with reference to the remedies for breach of contract by the seller available to the buyer under the UN

Convention for Contracts for the International Sale of Goods (10 marks)