REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW

MCQs 1 MALAYSIAN LEGAL SYSTEM

1.1 Which of the following statements about the aim of the criminal law is accurate?

A. It is to regulate behavior within society by the threat of punishment

B. It is to provide a means whereby injured persons may obtain compensation
C. It is to ensure that the will of the majority is imposed upon the minority

1.2 Which of the following is associated with private law?

A. Constitution law
B. Criminal law
C. Insolvency law

1.3 Which rule of interpretation requires the interpretation in the ordinary sense of words unless that
would lead to some absurdity?

A. The golden rule

B. The literal rule
C. The mischief rule

1.4 Which of the following describes a statement that is made obiter dicta?

A. It is binding in certain courts hearing similar disputes

B. It is not binding unless made by the Federal Court
C. It is a principle of law which relate to the facts of the dispute upon which the decision is
based
D. It is not binding on any later court determining a similar dispute but may be regarded as
judicial authority

1.5 Which of the following terms is used to describe the reasoning behind a judicial decision?

A. Per incuriam
B. Obiter dicta
C. Ratio decidendi

1.6 Which of the following terms is used to describe the person against whom a case is brought?

A. Prosecution
B. Defendant
C. Plaintiff

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW

1.7 When does a Parliamentary Bill become an Act of Parliament?

A. When it passes through the committee stage

B. On receiving its third reading
C. On receiving the Royal Assent

1.8 Which rule of interpretation involves an examination of the former law in an attempt to deduce
Parliament’s intention?

A. The golden rule

B. The literal rule
C. The mischief rule

1.9 What does “overruling” mean?

A. A lower court disagrees with the original decision made by a higher court
B. A higher court overturns the original decision of a lower court
C. A higher court agrees with the original decision of a lower court in the same case

1.10 What is the normal standard of proof placed upon the prosecution in a CRIMINAL case?

A. Balance of probabilities
B. Beyond every reasonable doubt
C. Beyond reasonable doubt

1.11 Which of the following statements is the ratio decidendi?

A. The legal reasoning behind the decision

B. Something said in a dissenting judgement
C. Speculation on the outcome of the case if the facts had been different

MCQs 2 TORT LAW

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2.1 What is the standard of care applied to professionals with a special skill or expertise?

A. That of the reasonable person with the same skill or expertise

B. That of the reasonable person in the same general profession
C. That of the reasonable person
D. That of the reasonable person with the same level of experience in that skill or expertise

2.2 In accordance with Caparo Industries v Dickman (1990), which of the following must be considered
by the court to establish whether a duty of care exists?

A. Reasonable foresight of harm and sufficient proximity of relationship

B. Any harm, reasonable proximity of relationship and that it is just, fair and reasonable to
impose a duty
C. Reasonable foresight of harm, reasonable proximity of relationship and that it is just, fair
and reasonable to impose a duty
D. Reasonable foresight of harm, sufficient proximity of relationship and that it is just, fair
and reasonable to impose a duty

2.3 Which of the following factors must be present for res ipsa loquitur (things speak for itself) to be
available to assist a claimant?

(1) The claimant must have suffered physical injury

(2) The thing causing the damage is under the control of the defendant or someone for whose
negligence the defendant is responsible
(3) The accident is such as would not normally occur without negligence
(4) The cause of the accident is unknown

A. 1, 2 and 3
B. 1, 2 and 4
C. 1, 3 and 4
D. 2, 3 and 4

2.4 When do acts of nature break the chain of causation?

A. Always
B. Where they are unforeseeable but linked to the original negligent act or omission
C. Where they are unforeseeable and separate from the original negligent act or omission

2.5 What does the “eggshell skull” rule mean?

A. That defendants are not liable if their victims have head injuries
B. That defendants must take their victims as they find them
C. That defendants are only liable for the injuries that a reasonably fit person would suffer

2.6 When is economic loss recoverable in tort?

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW
A. When it is purely economic loss
B. Whenever economic loss is suffered
C. When it is caused by the acquisition of defective goods or property
D. When it is caused by damage to property

2.7 Which of the following relationships may give rise to vicarious liability?

(1) Vehicle owners and delegated drivers

(2) Employer and employee
(3) Teachers and pupils in their care during school hours

A. 1 and 2
B. 1 and 3
C. 2 and 3

2.8 Which TWO statements have the meaning of the defence volenti non fit injuria?

(1) There is a voluntary assumption of risk

(2) There can be no injury to one who consents
(3) A person who causes injury must be held liable
(4) Punishment should fit the violence of the injury caused

A. 1 and 2
B. 1 and 4
C. 2 and 3
D. 3 and 4

2.9 Aaron bought a bottle of a soft drink. He noticed a jagged piece of glass at the top of the bottle. Aaron
decided to use a glass cutter to remove the jagged piece of glass and cut himself very badly.

Damages awarded to him may be reduced because of which of the following?

A. Volenti non fit injuria

B. Res ipsa loquitur
C. Contributory negligence
D. Breach of duty of care

2.10 Which TWO of the following statements regarding the defence of consent are true?

(1) A defence of volenti no fit injuria will fail if the claimant had no choice other than to
consent to the risk
(2) A person who gets into a car with a drunken or inexperienced driver consents to the risk
of injury during the journey
(3) A fireman injured as a result of a broken ladder during a fire rescue will not be viewed as
giving free consent
(4) Consent and contributory negligence have so much in common that they are essentially
the same defence and have the same effect if argued successfully by the defendant

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW
A. 1 and 2
B. 1 and 3
C. 2 and 4
D. 3 and 4

2.11 What is the effect of a successful claim of contributory negligence?

A. The claimant is found to be responsible for his own injuries so his claim is dismissed
B. The claimant is partially responsible for his own injuries thus his level of damages is
reduced
C. The defendant is found to be the only cause of the claimant’s injuries and will therefore
have to pay compensation
D. The claimant is found to be responsible for his own injuries and must therefore
compensate the defendant for bringing the action against him

2.12 In which of the following situations will a defendant be liable for his negligence?

A. If the loss would have occurred regardless of the defendant’s negligence

B. If but for his negligence the loss or damage would not have occurred
C. If there is novus actus interveniens

2.13 Michael visited the Seaview Marine Centre. While looking at the sea-lions’ pool, he saw a little
girl drop her teddy bear over the barrier and into the water. Michael crossed the barrier, ignored a
warning sign and reached into the water to rescue the bear but was badly bitten on his arm by two
sea-lions. He wishes to claim damages.

What is the legal position?

A. The Marine Centre will have no liability to Michael as there was no immediate danger
and he was under no legal or moral pressure to rescue the bear
B. The Marine Centre will be liable to pay damages to Michael as he was not adequately
warned of the danger of the sea-lions
C. The Marine Centre will be liable to pay damages to Michael as he was compelled to
rescue the bear
D. The Marine Centre will have no liability to Michael as the incident was an inevitable
accident

2.14 What forms the basis of the existence of a legal duty of care in negligence for misstatements
resulting in economic loss to the plaintiff?

(1) Proximity between the parties

(2) Reasonable foreseeability of damage

A. 1 only
B. 2 only
C. Neither 1 nor 2
D. Both 1 and 2

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2.15 Gerry drove his car negligently and mounted the pavement causing injury to Tom, a pedestrian.
Although Tom’s injuries were not serious they resulted in his being off work for six months
because he suffered from a genetic blood disorder. Tom was a high-flying merchant banker and
claims for loss of earnings of RM350,000. Gerry disputes this claim as excessive.

In relation to the law of negligence, what is Gerry’s liability?

A. Gerry is only liable for normal damages; Tom’s disease is a novus actus interveniens and
could not be foreseen
B. Gerry is liable for the full damages since he must take his victim as he finds him
C. Gerry will not be liable for the full damage; under the “eggshell skull ride” the presence
of the serious blood disease could not even have been foreseen
D. Gerry will only will only be liable for the damage which could have been foreseen;
Tom’s loss of earnings were special damages

2.16 While taking driving lessons John drove negligently and injured his instructor.

What is John’s duty of care in this case?

A. The same as that owed by every driver

B. That of any unqualified learner driver
C. That which might reasonably be expected of a similarly inexperienced driver

2.17 If the plaintiff was contributorily negligent, what effect does this have on a claim for
damages for negligence?

A. The defendant is not liable to pay damages

B. The amount of damages payable by the defendant is reduced
C. It has no effect on the award of damages
D. Both the plaintiff and the defendant must pay damages to each other

2.18 In relation to the law of contract, to whom does an auditor appointed under the provisions
of the Companies Act 2016 owe a duty?

A. The company only

B. The company and the directors
C. The company and the shareholders

2.19 What does a claimant need to show to establish liability in a negligence claim?

(1) That they have suffered loss or injury

(2) That they were owed a duty of care by the defendant
(3) That the defendant caused them loss or injury

A. 1 and 2 only
B. 1 and 3 only
C. 2 and 3 only

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D. All of the above

MCQs 3 ELEMENTS OF CONTRACT LAW

3.1 Rosemary offered by letter to sell Mary her motorbike for RM5,000. Mary wrote back saying she
accepted the offer and would pay in two installments at the end of the following months.

Is there a contract?

A. No – because Mary is trying to amend the contractual terms, Rosemary can be assumed
to have revoked the offer
B. Yes – there has been an offer and acceptance and a binding contract exists
C. No – Mary’s response constitutes a counter-offer and is effectively a rejection of
Rosemary’s offer
D. Yes – Mary’s response is merely a clarification of contractual terms

3.2 Tee Sdn Bhd placed some computers in its shop window with a notice which read: “Special offer.
Internet-ready computers for sale at RM400”.

Which of the following is correct?

(1) The notice amounts to an invitation to treat

(2) When Anne called in to the shop and offered RM350 for one of the computers, she had
made a counter-offer
(3) Tee Sdn Bhd is legally obliged to sell a computer to anyone who can pay the price

A. 1 only
B. 1 and 2 only
C. 1 and 3 only
D. All of the above

3.3 An offer was made by letter posted on 21 July and delivered on 27 July. A reply accepting the offer was
e-mailed on 29 July and the acceptor received a delivery receipt on 30 July. The offeror read the
reply on 4 August.

On which date was the contract made?

A. 27 July
B. 29 July
C. 30 July
D. 4 August

3.4 Peter owed Kate RM1,000. Peter’s father, James, agreed with Kate, in writing, to pay her RM550 if she
took it “in full settlement”. Kate took the RM550 on this basis and the demanded RM450 from
Peter. Peter refused to pay.

In the context of contract law what is Peter’s position?

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW
A. Peter is a liable – part payment of a debt is not consideration for a promise to discharge
the debt
B. Peter is not liable – part payment of a debt by a third party is good consideration for a
promise not to sue for the balance
C. Peter will be liable – James, as his father, is not a third party
D. Peter will not be liable – the agreement between Kate and James was in writing

3.5 Special Books Sdn Bhd sent Rose an offer for her to purchase a rare book. The offer had to be accepted
within five days of the date on the letter. Rose intended to accept the offer and purchase the book.

Which of the following statements is true?

A. Rose may have a legitimate claim if she faxed acceptance of the offer on the fifth day but
it was not received by Special Books Sdn Bhd until two days later
B. Rose may have a legitimate claim if she posted a letter of acceptance on the third day but,
because she used the wrong address, Special Books Sdn Bhd did not receive it for another
week
C. Special Books Sdn Bhd may sell the book immediately to another customer if an
acceptance is not received from Rose within the time period specified
D. Special Books Sdn Bhd did not specify a method by which Rose should communicate
acceptance because specifying a method of acceptance is not allowed by law

3.6 Sue offered to sell her hamster on the1 May. John received the offer on 2 May. On 4 May he went to see
her to accept the offer. He left the letter accepting the offer with her personal assistant. On 3 May,
unknown to John, Sue had written to John revoking the offer.

What is the present status of Sue’s offer?

A. The offer has been accepted, if the personal assistant is Sue’s agent
B. The offer was withdrawn by Sue’s letter of revocation
C. The offer will be revoked when John receives the letter from Sue
D. The offer will be accepted when the personal assistant shows Sue John’s letter of
acceptance

3.7 What presumption about the intention to create legal relations does the law make in relation to
social and domestic dealings?

A. It presumes that the parties did intend to create a legally binding contract
B. It presumes that the parties did not intend to create a legally binding contract
C. It does not make any presumptions about the intention of the parties

3.8 Felix goes into a shop and sees a price tag for RM250 on a compact disc player. He goes to the cash desk
to pay for the CD player but is told by the sales assistant that the tag has been wrongly printed
and should read RM520. Felix maintains that he only has to pay RM250.

How should the price on the price tag be regarded in terms of contract law?

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A. As an invitation to treat
B. As a tender
C. As an offer
D. As an acceptance

3.9 On 1 December Donna offered to sell her car to Tim for RM1,500 but in reply to her offer he merely
asked how many owners it had previously has and whether it had a full service history. Donna
provided the information on 2 December and stated that she would leave the offer open until 10
December. On 7 December Tim said he would take the car for RM1,250. On 8 December Sophia
bought the car from Donna for RM1,500. On 10 December, when Tim told Donna he would buy
the car for RM1,500, he was told that it had been sold.

What is the current state of legal relations between Tim and Donna?

A. There is a contract to sell at RM1,250, so Tim may recover the car from Sophia as his
property
B. Donna has terminated a contract to sell at RM1,500 by having sold the car to Sophia
C. There is an offer from Donna to sell for RM1,500 which is still open to Tim to accept
D. There is an offer from Tim to buy at RM1,500 which Donna cannot accept

3.10 In relation to contract law which of the following statements about an agreement is/are
correct?

(1) If an agreement is stated to be “binding in honour only”, the parties have decided that
agreement is not legally enforceable
(2) If an agreement is not in writing, the parties are presumed to have intended that it should
not be legally enforceable

A. 1 only
B. 2 only
C. Neither 1 nor 2
D. Both 1 and 2

3.11 The vast majority of contracts are “simple”.

What is the meaning of the word “simple” in this context?

A. The terms of the contract are set out in writing

B. The contract does not need to be in any particular form to be binding
C. The contract is not supported by consideration

3.12 Charles recently purchased some goods at an auction sale.

Which of the following is correct?

(1) The contract was concluded by the fall of the Auctioneer’s hammer

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(2) The Auctioneer’s call for bids was an invitation to treat
(3) Once the bidding had started, the Auctioneer was unable to withdraw the goods from the
sale

A. 1 only
B. 1 and 2 only
C. 2 and 3 only

D. All of the above

3.13 In which of the following is there a presumption that legal relations are intended?

A. A promise by a father to make a gift to his son

B. A commercial transaction
C. A domestic arrangement

3.14 On 1 August Daniel sent a letter to Martin offering to sell Martin some steel. On 8 August Daniel
sent a further letter revoking the offer. Martin received the original letter of offer on 11 August
and immediately posted his letter of acceptance. On 12 August Martin received the letter of
revocation.

Is there a contract?

A. Yes – Martin has accepted prior to receiving notice of the revocation

B. No – the revocation is effective from the date of posting
C. No – Martin’s acceptance is not valid until it reaches Daniel, after Daniel’s revocation
D. Yes – revocation of offers cannot be done by post

3.15 In the context of the law of contract, what is a letter of comfort?

A. A binding promise
B. A legally-binding guarantee
C. A non-binding letter of intent

MCQs 4 CONTRACT LAW – TERMS

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4.1 Additional services performed by an innocent party can be stopped if which of the following is
broken under a contract agreement?

A. Warranty terms
B. Condition terms
C. Innominate terms

4.2 Which of the following statements is/are correct?

(1) A contractual term which attempts to exclude liability for damage to property caused by
negligence is void unless it is reasonable
(2) A contractual term which attempts to exclude liability for death or personal injury is void

A. 1 only
B. 2 only
C. Neither 1 nor 2
D. Both 1 and 2

4.3 Which of the following statements about contract terms is/are correct?

(1) A condition is a term which the parties intended to be of fundamental importance

(2) A warranty is a term which the parties did not intend to be of fundamental importance
(3) If an innominate term is broken the innocent party has the option whether or not to
terminate the contract

A. 1 only
B. 1 and 2 only
C. 2 and 3 only
D. 1,2 and 3

4.4 Any ambiguity in an exclusion clause of a contract is construed in the favour of which of the
following?

A. Consumer
B. Seller
C. Neither the consumer nor the seller

4.5 A contract which lacks some legally required formality is best described as which of the following?

A. Unenforceable
B. Void
C. Voidable

4.6 Susan goes to see a play at the theatre. At the box office a notice is displayed which states that the
proprietors accept no liability for loss or injury caused, by whatever means, to patrons or their
property. On leaving the theatre Susan trips over a poorly-fitted carpet and injures herself. She
now wishes to sue the proprietors of the theatre.

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What is the validity of the exclusion clause?

A. It is invalid because it is prohibited by statute

B. It is invalid because it was not drawn to Susan’s attention
C. It is invalid because it did not constitute a term of the contract
D. It is valid and Susan’s claim will fail

4.7 Breach of what of the following terms does not permit the innocent party to repudiate a contract?

A. A condition
B. An innominate term
C. A warranty

4.8 In the context of contract law, which of the following statements about a condition in a contract is
true?

A. It is a minor term, breach of which entitles the innocent party to claim damages
B. It is a term, breach of which entitles the innocent party to repudiate the contract if the
effects of the breach are serious
C. It is a major term, breach of which entitles the innocent party to repudiate the contract if
he wishes and/or claim damages

4.9 A term will NOT be implied into a contract by which of the following?

A. By statute
B. By a court because it is customary

C. By a court to make the contract more equitable

D. By a court on the ground of business efficacy

4.10 Which of the following statements about contract terms is INCORRECT?

A. A condition is intended to be of fundamental importance

B. A warranty is not intended to be of fundamental importance
C. If a condition is breached the contract must be terminated
D. If a warranty is breached the innocent party cannot terminate the contract

4.11 DE Sdn Bhd contracted to deliver a quantity of goods to F Sdn Bhd to the value of RM5,000. The
goods were delivered and DE Sdn Bhd submitted an invoice to F Sdn Bhd for the amount due
which contained a number of new terms.

Which of the following statements is NOT correct?

A. The invoice is a contractual document and F Sdn Bhd is bound by the terms on the
invoice
B. F Sdn Bhd is only bound by the terms if it was given notice of them at or before the time
of contract

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C. F Sdn Bhd is only bound by the terms if there has been a sufficient course of dealing
between DE Sdn Bhd and F Sdn Bhd so that F Sdn Bhd is assumed to know of the terms
D. If F Sdn Bhd is unaware of the terms, it can only be bound by them if it agrees to be so

4.12 Which of the following describes a contract that is entered into as a result of the coercion of
one party by the other?

A. Unenforceable
B. Voidable at the option of the innocent party
C. Void

4.13 In relation to contractual terms, which of the following is the consequence of a term having
more than one meaning?

A. The term is assumed to be not binding

B. The interpretation most favourable to the consumer prevails
C. The term is not binding on the consumer unless he chooses to be bound by it

MCQs 5 CONTRACT LAW – BREACH

5.1 ABC Sdn Bhd has contracted with DEF Sdn Bhd.

If ABC Sdn Bhd acts in breach of a warranty, which of the following actions may DEF Sdn
Bhd take?

(1) DEF Sdn Bhd may terminate the contract and sue for damages
(2) DEF Sdn Bhd may sue for damages but may not terminate the contract
(3) DEF Sdn Bhd may ignore the breach and continue with the contract

A. 1 only
B. 1 and 3 only
C. 2 and 3 only
D. All of the above

5.2 Den, a publican, orders 12 crates of stout with 12 half litre bottles per crate. The correct number of bottles
are delivered but in six crates of 24 half litre bottles per crate. Den rejects the delivery of the
whole consignment.

What is Den’s liability in contract law?

A. There is no breach of condition or warranty as this is not a consumer sale, therefore Den
is liable for breach of contract
B. There has only been a breach of warranty, therefore Den must pay and claim damages
C. Den is in breach of contract by rejecting the goods and is liable to pay damages

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D. There has been a breach of condition that the goods match the description, therefore Den
is entitled to treat the contract as discharged

5.3 What does a breach of a condition entitle the injured party to do?

A. Claim damages only

B. Sue on a quantum meruit
C. Repudiate the contract and claim damages

5.4 Which of the following contracts could be enforceable by an order of specific performance?

A. A contract with a minor

B. A contract of employment
C. A contract for the loan of money
D. A contract for the purchase of land

5.5 Following a written private order for 50 cases of brown ale, with 12 one pint bottles per case, Mr
Ramsbottom finds that he has been sent the equivalent order in larger one litre bottles. His
rejection of the entire consignment incurs additional cost to the supplier who commences legal
action for breach of contract.

What is Mr. Ramsbottom’s liability in contract law?

A. He is liable for breach of contract as repudiation is not possible the supplier’s breach of
warranty
B. He is not liable as he was entitled to repudiate the contract for the breach of the condition
that the goods must match the description
C. He is not liable as his purchase was not a consumer sale
D. He is liable for breach of contract as any packaging of goods is only a warranty and he
did not have the right the repudiate it

5.6 To what extent are damages awarded for a breach of contract?

A. To put the innocent party in the position he would have been in if the contract had been
performed
B. To restore the position of the innocent party to what it would have been if the contract
had never been made
C. To put the innocent party in the position he would have been in had the contract been
performed plus an amount of compensation
D. To restore the position of the innocent to what it would have been if the contract had
never been made plus an amount of compensation

5.7 What does a claimant’s duty to mitigate his losses mean?

A. The claimant must take reasonable steps to ensure that his damages are kept to a
minimum

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B. The claimant must produce an itemized list of damages with supporting evidence
otherwise he will not be able to recover losses
C. The claimant cannot claim for losses that occur after the court hearing so he must not
expect to be compensated for future losses
D. The claimant must deduct the cost of his legal expenses from his claim for damages as
each party must pay his own legal bills in a civil claim

5.8 Which of the following contracts might be specifically enforceable?

A. Alan has contracted to sell his house to Bob but has changed his mind and no longer
wishes to sell it
B. Chris has contracted to buy a new Ford motor car but the garage is now refusing to
honour the contract
C. Diane has contracted to purchase a number of tins of fruit for her business, but the seller
has now stated that he no longer wishes to proceed with the contract
D. Eduardo has contracted to sing at a concert organized by Fernando, but Eduardo has
withdrawn as he has received a more lucrative offer from Giovanni (personal service)

5.9 In the event of a breach of contract, what is the purpose of damages?

(1) To punish the party in breach of the contract

(2) To compensate the innocent party
(3) To put the innocent party in the same position as if the contract had been carried out
correctly

A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. All of the above

5.10 Which of the following remedies for breach of contract must be awarded by the court if
there has been a breach of contract?( OTHER DISCRETION OF THE COURT)

A. An injunction (EQUITIBLE REMEDY)

B. Damages (COMMON LAW REMEDY)
C. Specific performance (EQUITABLE REMEDY)

5.11 Which of the following statements relating to a liquidated damages clause are correct?

(1) It will be void if it amounts to a penalty clause

(2) It will be valid if it is a genuine estimate of the likely loss foreseeable
(3) It cannot be valid if it is for an amount that exceeds the actual loss caused by the breach
of contract

A. 1 and 2 only
B. 1 and 3 only
C. 2 and 3 only
D. All of the above

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5.12 Which of the following entitles the innocent party to cancel the contract?

(1) A breach of a warranty

(2) A breach of a condition
(3) An express term authorizing termination of the contract

A. 1 only
B. 1 and 2 only
C. 2 and 3 only
D. All of the above

5.13 What is the equitable remedy of rescission?

A. An order that the parties terminate their actions under the contract
B. An order that forces the parties to respect their contractual obligations
C. A payment award to the parties for any reasonable act they have undertaken
D. An order that the parties be placed in their exact pre-contractual positions

5.14 One party to a contract announces, before the time for performance that he does not intend to
perform his obligations on the due date.

What is the term for this in contract law?

A. Affirmation
B. Anticipatory breach
C. Fundamental breach

5.15 Colin agreed to build a summer house for Terry at a price of RM4,000. When he has completed
the foundations he had an argument with Terry’s wife and, in a fit of anger, abandoned the job.
He sends Terry a bill for RM1,500, which is less than the cost of the work he has done. Terry
refuses to pay.

What grounds does Colin have for seeking payment from Terry?

A. In equity it is fair that Terry pays the RM1,500 as it is less than the cost of the work done
B. Colin has no grounds as he has not performed the contract and is not entitled
compensation since he has abandoned it
C. In equity Colin is entitled to a payment quantum merit for the value of the work done
D. As due to an unforeseen circumstance Colin cannot complete the contract he may sue
Terry for a reasonable price for the work done

5.16 Keith engaged Krafty Kitchens Sdn Bhd to install a new fitted kitchen in his home for RM10,000.
On completion of the work Keith discovered that one of the electrical appliances was not wired
properly and the work surfaces were incorrectly fitted. Keith engaged a local electrician and

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carpenter to remedy the defects at a cost of RM1,000. Krafty Kitchens Sdn Bhd is now pressing
for payment of RM10,000.

What is the legal position?

A. Keith is liable to pay the full RM10,000 as the contract is complete

B. Keith is liable to pay RM9,000 (i.e. the contract price less the cost of repairs) as
substantial performance has occurred
C. Keith is not liable to pay anything to Krafty Kitchens Sdn Bhd as it has not substantially
performed the contract and is in fact in breach of contract
D. Keith is liable to pay a reasonable sum only, which must be assessed by the court

5.17 Where there has been an anticipatory breach of contract, when is the earliest point at which
the injured party is entitled to sue?

A. After a reasonable time has elapsed

B. At the point when the other party indicates that he is not prepared to be bound
C. At the point when the other party actually fails to perform a contractual condition
D. When the injured party has completely fulfilled his obligations, but the other party
indicates that he does not intend to be bound

5.18 Askey agreed to build a supermarket complex for Hancock to be completed on 1 December. The
contract provided for a liquidated damages of RM1,000 per day from 1 December to date of
actual completion.

The building was 20 days late and as a result Hancock was able to prove that he has lost
RM200,000 of revenue and RM50,000 of profits in the Christmas shopping period.

What is the maximum amount he may recover from Askey?

A. Nil
B. RM20,000
C. RM50,000
D. RM200,000

5.19 Rose ordered a new Skoda Octavia estate car from her local Skoda car dealer. The price was
agreed at RM17,000 and Rose signed an order form. Subsequently she changed her mind and
refused to take delivery. The dealers sold the car to Sara for RM16,300 but sued Rose for not
taking delivery.

In contract law, what is Rose’s liability?

A. Rose is liable to the dealer for the loss of the profit it would have made on the sale to
Rose
B. Rose is not liable since the dealer has sold the car to Sara
C. Rose is liable to the dealer for RM700, being the reduction in the price to Sara

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW
D. Rose is not liable as the dealer should have mitigated the loss and sold the car to someone
other than Sara for RM17,000

5.20 The directors of Wimpish Construction discover a clause in a road-building contract for the
Bassetshire County Council whereby they will be liable to “the sum of RM1,000 per day” if they
are late with completion of the contract.

Can this clause be enforced against Wimpish?

A. No, penalty clauses will never be enforced by the courts

B. Yes, provided it is a custom of the trade
C. No, penalty clauses are an attempt to punish, not compensate
D. Yes, provided the sum is a genuine estimate of the likely loss where precise
quantification is difficult

5.21 Better Builders Sdn Bhd contracted to build new showroom for Magic Motors Sdn Bhd. The
contract provided that Better Builders would pay Magic Motors RM1,000 per week if completion
were to be delayed.

There was a delay of 17 weeks. Magic Motors sued for RM58,000, being RM40,000 normal
trading profits which were lost and RM18,000 relating to a special contract to hold a motor fair
on behalf of Park Lane Cars Berhad.

What level of damages will Magic Motors be able to claim?

A. RM17,000
B. RM18,000
C. RM40,000
D. RM58,000

MCQs 6 EMPLOYMENT LAW

6.1 Which TWO of the following are tests applied by the courts to distinguish an employee from an
independent contractor?

(1) Officious bystander test

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW
(2) Control test
(3) Economic reality test
(4) Fit and proper test

A. 1 and 2
B. 1 and 4
C. 2 and 3
D. 3 and 4

6.2 Which of the following is NOT a common law duty of care of employers towards employees?

A. Duty to provide safe premises

B. Duty to provide competent staff
C. Duty to provide a safe system of work
D. Duty to provide rest periods and breaks

6.3 Which of the following statements suggests that John is an independent contractor in relation to the
work he carries out for Zed Sdn Bhd?

(1) He is required to provide his own tools

(2) He is required to carry out his work personally and is not free to send a substitute
(3) He is paid gross rate without any deduction of income tax

A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3

6.4 Which of the following is normally implied into a contract of employment?

A. The employer’s duty to provide a reference

B. The employer’s duty to provide work
C. The employer’s duty to pay wages

6.5 An employer dismisses three employees on the following grounds:

(1) Andre, for his involvement in trade union activities

(2) Bertha, for having become pregnant
(3) Colin, for refusing to obey a reasonable instruction

Who has a valid claim for unfair dismissal?

A. Andre and Bertha only

B. Bertha and Colin only
C. Andre and Colin only
D. All three

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW

6.6 Which of the following is NOT a duty of an employer?

A. To provide an employee with a reference when he leaves employment

B. To allow Health and Safety representatives reasonable paid time off work to perform
their functions
C. To provide appropriate training

6.7 Which of the following remedies is NOT available for claims of unfair dismissal?

A. Compensation
B. Re-instatement
C. Re-engagement
D. Specific performance

6.8 Which of the following statements about the vicarious liability of an employer is/are correct?

(1) An employer is vicariously liable for the torts of employees committed in the course of
their employment
(2) An employer is vicariously liable for the torts of independent contractors, is they were
committed whilst carrying out work for the employer

A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2

6.9 In the tests applied by the Courts to determine an employment relationship, which test considers
how the individual is paid?

A. Control test
B. Integration test
C. Economic reality test

MCQs 7 AGENCY
7.1 Which of the following conditions is necessary in order for a principal to be able to ratify a contract
entered into by an agent?

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW
A. The principal need only have contractual capacity when the contract is ratified
B. The principal need only have contractual capacity when the contract was entered into
C. The agent must have contractual capacity when the contract was entered into
D. The principal must have contractual capacity when the contract was entered into and
when it is ratified

7.2 Barry is managing director of Soap Sdn Bhd. He enters into a contract to buy some property on behalf of
the company.

What is the legal position?

A. The contract is invalid and must be ratified by the members

B. The contract is valid as Barry has implied authority to act in this way
C. The contract is invalid as Barry has not acted out of necessity
D. The contract is invalid as the contract must be by deed

7.3 Benskin retired from the firm of Cropper & co in 20X2 yet still wanted to be involved in some capacity.
Cropper & Co continued to allow Benskin to negotiate contracts even though he had no appointed
authority to enter into contracts on behalf of the company.

On what basis could Cropper & Co be liable as a principal for contracts made in 20X3 on
behalf of Cropper & Co by Benskin?

A. By agency of necessity
B. By ratification by implication
C. Only if he expressly authorizes them
D. By apparent authority (by estoppel)

7.4 Arthur entered into a contract with Ted without disclosing that he was acting as an agent on the
instructions of Patricia.

What right does Ted have?

A. Ted may sue Arthur only, as he had no knowledge that he was an agent
B. Ted may sue Patricia only, because Arthur was in fact an agent
C. Ted may sue Patricia or Arthur, since Arthur was acting as an agent for an undisclosed
principal
D. Ted may sue Patricia and Arthur, since Patricia and Arthur are treated as principals

7.5 William, an adult, appointed Chelsea, who is aged 16, to act as his agent in running his business. Chelsea
appoints Hillary, who is 20, to act on her behalf in the acquisition of some non-essential items.

Which agent(s) has/have been validly appointed?

A. Chelsea only
B. Hillary only
C. Both Chelsea and Hillary

D. Neither Chelsea not Hillary

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW

7.6 A principal refuses to ratify a contract entered into by an agent in his own name on the principal’s behalf
but in excess of that agent’s authority.

Who may they third party concerned sue?

A. The principal only

B. The agent or the principal
C. The agent only
D. The agent and the principal

7.7 Which of the following events does NOT necessarily terminate agency?

A. The death of the principal

B. The death of the agent
C. The bankruptcy of the agent

7.8 Which of the following statements regarding ratification of contracts by the principal is NOT
correct?

A. The principal must tell the third party the agent is acting for him
B. The principal must ratify the contract within a reasonable time
C. The principal must have the capacity to contract

7.9 Alex instructed Patricia, his agent, to place a bet on a horse in a race, at a time when gambling had been
declared illegal. The horse won but Patricia had not placed the bet.

Can Alex recover the potential winnings from Patricia?

A. Yes, because Patricia did not obey his instruction

B. Yes, because Patricia has a duty to render accounts to principal whenever required
C. No, because Patricia acted in good faith
D. No, because Alex’s instruction was not lawful

7.10 Colin appointed Miles, an estate agent, as sole agent for the sale of his house. The agreed rate of
commission was 2%. Miles passed the details to another estate agent, Simon, who sent his own
client, Alec, to view it. Colin and Alec agreed a sale.

What commission can Miles claim from Colin on the successful completion of the sale?

A. The full commission, as a buyer has been found and the flat has been sold successfully
B. No commission, since Miles has not personally carried out the duties entrusted to him
C. No commission, since Miles has not exercised due skill and care in the performance of
his duties
D. The full commission, since it was reasonable for Miles to delegate to another estate agent
in this situation and it enable a buyer to be found

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW
7.11 A transport company was contracted to move the musical equipment for a group of
musicians. When the company arrived at the location of the concert, the building was
locked and nobody was there to receive the equipment. The company made a decision to
store the musical equipment in a storage facility overnight.

Which of the following describes the authority of the company to store the musical
equipment?

A. Express authority of an agent

B. Implied authority
C. Apparent authority
D. Agency by necessity

7.12 By virtue of his position as managing director of a company a person has implied authority to
bind the company by his acts.

Which of the following represents the full limit of this authority?

A. All commercial matters relating to the running of the business

B. All activities of the company whether commercial or not
C. Such commercial activities as are delegated to him by the board of directors
D. Such commercial activities as are directed by the company in general meeting
7.13 What is ostensible authority?

A. Actual authority
B. Apparent authority
C. Implied actual authority

7.14 Even in cases where there is no express words, authority may still arise through……….
Which words complete correctly complete this sentence?

A. Agreement by conduct
B. Implied actual authority
C. Authorised authority
D. Unspoken agreement

7.15 When does apparent authority arise?

A. When the agent implies that he has authority

B. When the principal and the third party make a contract
C. When the principal represents to a third party that the agent has authority

MCQs 8 PARTNERSHIP

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW
8.1 Adam, Ben and Carol have carried on business together in partnership since July. In September they
decided to enter into a formal partnership agreement. The partners agreed the terms of the
agreement in October and signed the completed agreement in November.

When did the partnership commence?

A. July
B. September
C. October
D. November

8.2 Partners in trading firms have implied authority:

(1) To receive payment of debts due to the firm

(2) To borrow money on the firm’s credit
(3) To sell goods belonging to the firm
(4) To engage employees for the business

What are implied authorities of partners of non-trading firms?

A. 1, 2 and 3
B. 1, 2 and 4
C. 1, 3 and 4
D. 2, 3 and 4

8.3 What is the liability of partners for the tortious acts of each other carried out in the normal course
of business?

A. Joint
B. Several
C. Joint or several
D. Joint and several

8.4 For which of the following does a partner have no apparent authority, regardless of the nature of
the firm?

A. Receive payments of debts due and give receipts

B. Secure a loan to the firm by depositing title deeds with the lender
C. Employ a solicitor to defend the firm in a legal action
D. Compromise a debt by receiving something other than money in settlement

8.5 A partner who retires from his firm is required to place an advertisement to the effect in the Gazette.

To whom is this advertisement deemed to give notice?

A. Anyone who reads the advertisement

B. Anyone, whether they read the advertisement or not, who had not previously dealt with
the firm but who knew the person to be a partner

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW
C. Anyone who reads the advertisement who had not previously dealt with the firm but who
knew the individual to be a partner
D. Anyone, whether they read the advertisement or not, and regardless of their previous
relationship with the firm

8.6 Which of the following statements in relation to partnership law is NOT correct?

A. In Malaysia, a partnership has no existence separate from the partners

B. Each partner can bind the firm in contract if acting in the ordinary course of business
C. To be binding, a partnership agreement must be in writing

8.7 What is a partnership according to the Partnership Act 1961?

A. A relation which subsist between two people carrying on a business in common with a
view to profit
B. A relation which subsists between persons carrying on a business in common with a view
to profit or loss
C. A relation which subsists between persons carrying on a business in common with a view
to profit

8.8 A restaurant is owned by a partnership whose partners are Ted, Lauren, and Richard. Lauren and Richard
are actively involved in the business and run the restaurant on a daily basis. Ted initially
contributed money to form the partnership and shares in profits of the business but does not
participate in the operations of the restaurant.

Ted can be described as which of the following types of partners?

A. General partner
B. Fixed share partner
C. Sleeping partner

8.9 Dennis was a partner in Doolittle Solicitors. He retired from the partnership and the firm’s existing clients
were informed of this fact and the firm amended its stationery so that Dennis’s name no longer
appeared on it. Subsequently, Dennis, using old stationery on which his name is printed, ordered
goods and asked for the invoice to be sent to Doolittle Solicitors.

Which of the following statements is correct?

A. There is a binding contract between Dennis and the supplier of the goods
B. No binding contract has been created between the supplier and Doolittle Solicitors
because Dennis was not authorized to act on behalf of the firm
C. There is a binding contract between Doolittle Solicitors and the supplier of the goods
D. No binding contract has been created because the partnership shown on the stationery had
ceased to exist

8.10 Which of the following are statutory rights of a partner under the Partnership Act 1961?

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW
(1) To share in the capital, profits and losses of the business in proportion to their initial
capital contribution to the firm
(2) To have unfettered access to the firm’s books and accounts

A. 1 only
B. 2 only
C. Neither 1 nor 2
D. Both 1 and 2

8.11 Under the Limited Liability Partnerships Act 2012 certain requirements need to be met for a
limited liability partnership (LLP) to be legitimately formed.

Which of the following are among those requirements?

(1) One or more persons who are associated for the purposes of carrying on a lawful business
with a view to a profit must have subscribed their names to an incorporation document
(2) The incorporation document must state the name of the LLP which must end with the
words “Limited Liability Partnership” or the abbreviation “LLP”

A. 1 only
B. 2 only
C. Neither 1 nor 2
D. Both 1 and 2

8.12 In the absence of any agreement to the contrary, the rights of members of a limited liability
partnership include which of the following?

(1) An equal share in the capital and profits of the limited liability partnership
(2) Remuneration for acting in the business or management of the limited liability
partnership

A. 1 only
B. 2 only
C. Neither 1 nor 2
D. Both 1 and 2

MCQs 9 CORPORATIONS AND LEGAL PERSONALITY

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW
9.1 In relation to company law, which of the following statements is correct?

A. A company limited by shares is fully liable for all its debts

B. Shareholders are fully liable for the debts of the company
C. Directors are fully liable for the debts of the company

9.2 Quentin was employed by Bee Sdn Bhd as its senior design consultant. Quentin contracted with Bee Sdn
Bhd that when his employment with the company ceased, he would not act in competition with it
or solicit its customers. After Quentin left Bee Sdn Bhd, he registers a company called Cee Sdn
Bhd, which immediately began working in competition with Bee Sdn Bhd and soliciting its
customers.

Which of the following is correct?

A. Quentin is not in breach of the agreement with Bee Sdn Bhd because Cee Sdn Bhd is a
separate legal entity
B. Since Cee Sdn Bhd was formed to avoid the non-compete agreement the courts will “lift
the corporate veil” and enforce the agreement
C. Cee Sdn Bhd will be bound by the agreement because a company is always liable for the
actions of its shareholders
D. The non-compete agreement has no legal effect as it attempts to regulate Quentin’s
activities after he has left Bee Sdn Bhd’s employment

9.3 Which of the following statements about companies is correct?

A. The shares of all public limited companies are quoted on the Stock Exchange
B. The company secretary of a public limited company must be qualified by examination or
experience
C. A private limited company must have at least two shareholders

9.4 Which of the following statements about a company limited by shares are correct?

(1) A company is owned by its shareholders and managed by its directors

(2) A company is entitled to own property in its own name
(3) The shareholders can never incur personal liability over and above the amount due on
their shares even if the veil of incorporation is lifted

A. 1 and 2 only
B. 1 and 3 only
C. 2 and 3 only
D. All three statements

9.5 Which of the following is a consequence of corporate personality?

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW
(1) The company is fully liable for its own debts
(2) A shareholder has limited liability
(3) If a wrong is done to the company, the general rule is that only the company is entitled to
sue

A. 1 and 2 only
B. 1 and 3 only
C. 2 and 3 only
D. All of the above

9.6 What is the basis for the rule in Foss v Harbottle?

A. The separate legal personality of a company

B. The limited liability of members of a company
C. The common law right of a minority not to be prejudiced

9.7 Which of the following statements about a company is NOT true?

A. A company is a legal person

B. The shares of a public limited company must be quoted on the stock exchange
C. It is possible for a company to be convicted of a criminal offence

9.8 Mark incorporates his own manufacturing business, King Kilts, under the name King Kilts Sdn Bhd. He
lent King Kilts Sdn Bhd RM20,000 and owns 95% of its shares. He continued to insure the
company’s assets, including the factory, in his own name, as he has always done prior to
incorporation. On New Year’s Eve, the factory was destroyed by fire.

Can Mark claim on the insurance?

A. Yes, because King Kilts Sdn Bhd id essentially no different from the original business
B. Yes, because he has an insurable interest as a creditor of King Kilts Sdn Bhd
C. Yes, because he has an insurable interest as a member of King Kilts Sdn Bhd
D. No, because the insurance is not in the name of King Kilts Sdn Bhd and the company has
the insurable interest

MCQs 10 FORMATION OF A COMPANY

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW

10.1 Which of the following statements about company formation are correct?

(1) Purchasing a company “off the shelf” enables business to commence more quickly
(2) It is generally cheaper to purchase a company “off the shelf” than to arrange for a
solicitor or accountant to register a new company
(3) Incorporating a company by registration enables the company’s documents to be drafted
to the particular needs of the incorporations

A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3

10.2 Which of the following statements about a company limited by shares is correct?

(1) It is not possible to register a company limited by shares with the same name as a
company already on the register
(2) Once on the register, a company limited by shares cannot change its registered office

A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2

10.3 Frederick was the promoter of a limited company to be called Duke’s Wines Sdn Bhd. The
company was incorporated on 1 February 2016. In December 2015 Frederick bought wine to the
value of RM2,000 from Oliver and signed the contract “Frederick, as agent for Duke’s Wines Sdn
Bhd”. On 1 February Duke’s Wines Sdn Bhd ratified the contract made by Frederick and on 1
March 2016 went into liquidation without having paid Oliver.

Who is liable to Oliver for the debt?

A. Duke’s Wine Sdn Bhd alone, as principal, since the contract was entered into by
Frederick as agent for the company
B. Duke’s Wines Sdn Bhd alone since it ratified the contract made on its behalf by Frederick
C. Frederick is jointly liable with Duke’s Wines Sdn Bhd since he was not an agent when he
entered into the contract
D. Frederick only since ratification by the company was not possible

10.4 Which of the following statements relating to a company promoter are true?

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW

(1) A promoter does not have legal liability for pre-incorporation contracts
(2) A company can claim damages from a promoter who took a secret profit when promoting
the company
(3) A promoter is in a fiduciary position for the company he promotes

A. 1 only
B. 2 only
C. 1 and 3 only
D. 2 and 3 only

10.5 Which of the following relating to ultra vires is NOT correct?

A. If a company’s object is to carry on business as a “general commercial company”, the

company may carry on any trade or business whatsoever
B. If a company acts outside its objects clause, it has acted ultra vires and the transaction is
void
C. A company may change its object clause by the passing of the special resolution.

10.6 A company’s statutory books are usually kept at the company’s registered office.

Which of the following is a shareholder legally entitled to inspect?

A. The company’s books of account

B. Minutes of board meetings
C. The register of charges

MCQs 11 CONSTITUTION
11.1 A private company wishes to alter its constitution

What resolution must be passed by the shareholders?

A. A special resolution
B. An ordinary resolution
C. An extraordinary resolution

11.2 Which of the following statements relating to constitution is/are correct?

(1) The constitution of a company limited by shares contain the internal regulations of the
company
(2) The constitution form a contract between the shareholders and the company
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW

11.3 Which of the following clauses in the constitution of Dee Sdn Bhd would NOT be
enforceable against the company as a breach of contract?

A. Shareholders shall be paid dividends in cash

B. All shareholders are entitled to attend and vote at general meetings of the company
C. Tom (a shareholder) shall be the company’s managing director for life

11.4 In the context of the constitution which of the following statements is correct?

(1) They form a contract between the shareholders and the board of directors
(2) They form a contract between the shareholders and the company
(3) They form a contract between each shareholder and the other shareholders
(4) They are only contractual in respect of ordinary membership rights

A. 1, 2 and 3
B. 1, 2 and 4
C. 1, 3 and 4
D. 2, 3 and 4

11.5 Which of the following statements in relation to the constitution is/are correct?

(1) The constitution cannot constitute a contract between the company and a third party
(2) Relevant terms of the constitution may be implied into the contract

A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2

11.6 The constitution of Dee Sdn Bhd, a property development company, states that the company has
the power to further its objects and that the directors have authority to borrow up to RM200,000.

The board has resolved to purchase a plot of land for RM300,000. The Midwest Bank Berhad has
agreed to make a loan of RM250,000 to Dee Sdn Bhd to acquire the land.

Which of the following statements is correct?

A. The loan is void as Dee Sdn Bhd has acted ultra vires
B. As the directors have exceeded their authority, the bank cannot enforce repayment of the
loan against Dee Sdn Bhd
C. As the directors have resolved to obtain the loan, the transaction is lawful and binding on
the company but the company can sue the directors for exceeding their powers.

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW
D. The loan is ultra vires and the directors will be personally liable unless their actions are
ratified by the shareholders

MCQs 12 SHARES

12.1 Mr Wally buys a share in a company on 1 January

To whom Mr Wally become contractually bound?

A. The company only

B. The members as on 1 January
C. The company and the present members
D. The company and the members as on 1 January

12.2 Which of the following statements is correct in relation to company shares?

(1) All ordinary shares must be voting shares

(2) Preference shares never entitles the holder to a vote
(3) All preference shares carry cumulative rights

A. 1 only
B. 2 only
C. 3 only
D. None of the above

12.3 To which of the following does the term “subscribers” refer?

A. The founding members of a company

B. The ordinary shareholders of a company
C. All shareholders of a company

12.4 Which of the following describes a person who invest in both the shares and debentures of a
company?

A. A member
B. A creditor
C. A member and a creditor

12.5 Which of the following statements concerning shares in a company are correct?

(1) Shares are personal property of a shareholder

(2) A shareholder may hold a fraction of a share
(3) Two or more people may hold the shares jointly.

A. 1 and 2 only

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW
B. 1 and 3 only
C. 2 and 3 only
D. All of the above

12.6 What does issued share capital represent?

A. The extent of the company’s funding by its members

B. The market value of the company’s net assets
C. The amount of cash injected by the members

12.7 What type of share may give the right to cumulative dividends?

A. Ordinary share
B. Preference share
C. Treasury share

MCQs 13 CAPITAL MAINTENANCE

13.1 The directors of Pen Sdn Bhd are proposing a capital reduction. They have made a statutory
declaration and called a general meeting of members.

What kind of resolution is required to approve the capital reduction?

A. Ordinary resolution
B. Ordinary resolution with special notice
C. Extraordinary resolution
D. Special resolution

13.2 Simone is a member of YYY Sdn Bhd. She has received a letter from the company stating that the
company is unable to pay a dividend this year, but the company will be issuing members with
additional shares.

This is an example of which of the following?

A. A rights issue
B. Pre-emption rights
C. A bonus share issue
D. An issue of shares for zero consideration

13.3 What is a “scrip issue”?

A. An issue of bonus shares

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW
B. An issue of partly-paid shares
C. An issue of shares for non-cash consideration

13.4 Which of the following would be regarded as an issue of shares for an improper purpose?

(1) An issue of shares in return for a non-cash consideration

(2) An issue of shares to enable the directors to maintain control of the board
(3) An issue of shares to prevent a take-over bid

A. 1 and 2 only
B. 1 and 3 only
C. 2 and 3 only
D. All of the above

13.5 A private limited company’s accumulated profits and losses include a revaluation surplus on a non-
current asset.

When can the directors declare a dividend to be satisfied wholly or partly by the distribution of
the surplus?

A. Never as such a surplus is never realised and cannot be distributed

B. Only in a voluntary winding-up if there are surplus assets to pay to the members
C. At any time since a private company’s profits available for distribution includes unrealized
profits
D. Only when the surplus is realised

13.6 XXX Sdn Bhd wishes to reduce its capital, but the company’s constitution expressly forbid this.

Which of the following statements applies to XXX Sdn Bhd?

A. It may proceed with the reduction, irrespective of the content of the constitution
B. It may pass a special resolution to change the constitution and then proceed
C. It will require unanimous consent of the members to change the constitution
D. It will only require an ordinary resolution to sanction the reduction in capital

13.7 A company passes a resolution to reduce share capital which involves the repayment to a shareholder
of his paid-up share capital.

Who may object to the reduction?

(1) Members who did not vote in favour of the resolution

(2) Creditors of the company

A. 1 only
B. 2 only
C. Neither 1 nor 2
D. Both 1 and 2

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 REVISION QUESTION BANK MCQ – CORPORATE AND BUSINESS LAW

13.8 Who may incur a civil liability if a company pays an excessive dividend?

A. The directors of the company only

B. The members of the company only
C. Both the directors and the members (who were aware of the unlawful distribution)

MCQs 14 LOAN CAPITAL

14.1 Which of the following statements about company charges is correct?

A. A floating charge has priority over a fixed charge

B. Preferential creditors take priority over fixed charge-holders
C. A fixed charge has priority over a floating charge

14.2 Two fixed charges have been registered over the same property.

What is the position with regard to the competing claims of the charge-holders?

A. The first charge in time has priority

B. The two charges rank equally
C. The two charges rank equally unless the second charge-holder knew of the first charge

14.3 Which of the following statements about a floating charge is NOT correct?

A. It is a charge over a class of company assets which the company is unable to deal with freely
in the ordinary course of business
B. It must be registered with the Registrar of Companies within 30 days of its creation otherwise
the charge is void against the other creditors
C. It must be registered at the company’s registered office in the register of charges, but a failure
to do so does not affect the validity of the charge

14.4 Under the Companies Act 2016 a floating charge is void against the liquidator and any creditor of the
company unless particulars of it are registered with the Registrar of Companies.

Within how many days of its creation must a charge be registered?

A. 14 days
B. 21 days
C. 30 days

14.5 XXX Berhad as entered into both fixed and floating charge contracts.

Which of the following is correct?

A. All charges must be registered with the Registrar of Companies

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B. Only the fixed charges are required to be registered with the Registrar of Companies
C. The statutory duty to register the charges lies with the charge-holder
D. If the charges are not duly registered they become unenforceable in an insolvent winding-up

14.6 Four providers of long-term finance have advanced funds to ZZZ Berhad, secured by debentures.

Which of the following has the highest priority claim against the company in the event of
liquidation?

A. ABC Bank, whose floating charge was created on 1 April and registered on 10 April
B. DEF Finance, whose fixed charge was created on 5 April and registered on 9 April
C. PQR Trust, whose fixed charge was created on 6 April and registered on 8 April
D. XYZ Bank, whose floating charge was created on 30 March and registered on 7 April

14.7 TTT Berhad entered into a debenture secured by a floating charge on 3 June.

What is the latest date by which the charge must be registered?

A. 11 June
B. 14 June
C. 24 June
D. 2 July

14.8 On 10 September, solicitors representing BBB Bank Berhad and PQR Sdn Bhd confirmed that their
clients would enter into a fixed charge. The parties signed the contract on 12 September. On 14
September, PQR Sdn Bhd noted the debenture in the company registers, and the debenture was
finally registered at the Registrar of the Companies on 19 September.

Which date is relevant to confirming the priority of the bank’s charge against other creditors?

A. 10 September
B. 12 September
C. 14 September
D. 19 September

14.9 Which of the following is LEAST suitable as security for a fixed charge?

A. Plant and machinery

B. Undeveloped land
C. Stock-in-trade

14.10 Frank, a shareholder of YYY Sdn Bhd, wishes to inspect the company’s records to ascertain whether
the company has any major borrowings secured against its assets.

Which of the following is correct?

A. Frank has no entitlement to inspect the company records

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B. Frank may obtain details of total secured borrowings by way of charges, but not the specify
details of individual charges
C. Frank may obtain details of all charges over the assets of the company, but the company may
ask for a fee for this service
D. Frank may obtain details of all charges over the assets of the company, and he is legally
entitled to do so free of charge

14.11 When does a floating charge attach to the assets of a debtor company, if at all?

A. Never
B. When created
C. On registration
D. In the event of default

14.12 RRR Bank Berhad holds a charge over the assets of VVV Sdn Bhd as security for its overdraft. The
agreement between the parties specifies that interest is fixed at 10% for the duration of the two-year
agreement and that amounts receivable from VVV Sdn Bhd’s major customers will be applied to
reduce the overdraft.

What type of charge is this?

A. A fixed charge as VVV Sdn Bhd must pay a fixed rate of interest
B. A fixed charge over the book debts of VVV Sdn Bhd
C. A floating charge over the book debts of VVV Sdn Bhd
D. A floating charge over all the current assets of VVV Sdn Bhd

14.13 Which of the following describes a debenture?

A. Any form of secured debt

B. A written acknowledgement of a debt
C. All fixed and floating charges

MCQs 15 DIRECTORS
15.1 Zed Berhad holds its board meetings on the fifteenth day of each month. At the meeting on 15 June,
the board discussed a potential contract with RST Sdn Bhd. On 1 st July, Lucy, a director of Zed
Berhad, bought shares in RST Sdn Bhd. On 25 July, Zed Berhad contracted with RST Sdn Bhd.

When should Lucy have declared her interest to the board of Zed Berhad?

A. 15 June
B. 1 July
C. 15 July
D. 15 August

15.2 Which of the following is required if the members of a company wish to remove director?

A. Ordinary resolution with ordinary notice

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B. Ordinary resolution with special notice
C. Special resolution with ordinary notice

15.3 Which of the following statements about company’s borrowing powers are correct?

(1) A board resolution to borrow money is binding on the company

(2) A decision by the managing director to borrow money is binding on the company
(3) The shareholders may veto any decision to borrow money by passing an ordinary resolution

A. 1 only
B. 1 and 2 only
C. 1 and 3 only
D. 2 and 3 only

15.4 On what basis is a company liable for contracts entered into on its behalf by the board of
directors?

A. Vicarious liability
B. The Companies Act 2016
C. The law of agency

15.5 Which of the following are correct?

(1) The first directors are appointed by a resolution of the members at the company’s first
Annual General Meeting
(2) A director is regarded in law as a person who occupies the position of director by whatever
title he is given
(3) A shadow director is a person in accordance with whose directions or instructions the
directors of the company are accustomed to act

A. 1 and 2 only
B. 1 and 3 only
C. 2 and 3 only
D. All three statements

15.6 Which of the following statements regarding the directors’ right to salary is correct?

(1) Directors may vote themselves such as salary payments as they think fit, irrespective of
anything in the company’s constitution
(2) Directors are only entitled to be paid a salary for their services if the constitution of the
company so provides
(3) All directors must be paid a salary

A. 1 only
B. 2 only
C. 1 and 2 only
D. 3 only

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15.7 Under the Companies Act 2016 who can enforce the general duties owed by a director?

(1) The majority shareholders

(2) The company
(3) Individual directors

A. 1 and 2 only
B. 2 only
C. 2 and 3 only
D. 3 only

15.8 Jack has acted in breach of his duty as a director of JK Sdn Bhd. The breach does not amount to fraud
on the minority.

Which of the following is correct?

A. The breach cannot be ratified by the members

B. The breach may be ratified by a written or ordinary resolution
C. The breach may be ratified by a resolution of the board of directors

15.9 To which of the following are directors’ duties owed?

(1) The company as a whole

(2) Current individual shareholders
(3) All the present and future individual shareholders

A. 1 only
B. 2 only
C. 1 and 2 only
D. All of the above

15.10 In which of the following circumstances can a director’s appointment be terminated?

A. Personal bankruptcy
B. Personal illness
C. Death of spouse

15.11 What is the minimum age, if any, from which an individual may serve as a company director?

A. There is no statutory minimum age

B. 16 years
C. 18 years

15.12 What is the minimum number of directors for private and public limited companies?

Private Public
A. One One
B. One Two

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C. Two Two
D. Two Three

15.13 Stavros was the chief executive officer (CEO) of TTT Sdn Bhd, but resigned in order to establish his
own company. Once the company was formed, he tendered successfully for a contract of which he
became aware when attending a confidential meeting on behalf of TTT Sdn Bhd in his capacity as
CEO in capacity as CEO. Stavros’ new company made a substantial profit.

Which of the following is a consequence of Stavros’ actions?

A. Any profit made by the new company can be claimed by TTT Sdn Bhd
B. Stavros was entitled to form the new company and accept the tender, so TTT Sdn Bhd has no
recourse
C. Stavros can be prosecuted for his use of confidential information after leaving TTT Sdn Bhd
D. Stavros has no liability as his company has a separate legal personality

15.14 Under the Companies Act 2016, which of the following is a correct statement about the position
of shadow directors?

A. It is illegal to act as a shadow director

B. Particulars of shadow directors must be registered with the Registrar of Companies
C. A shadow director has the same obligations as a de facto director of the company

MCQs 16 OTHER COMPANY OFFICERS

16.1 Which of the following statements about advice given by an auditor is correct?

(1) Auditors who provide negligent advice may be held liable for breach of contract by the
company which appointed them
(2) Auditors who provide negligent advice to the company which appointed them may be held
liable for breach of contract by the company and its individual shareholders
(3) Auditors who provide advice to an individual and know how the advice will be used may be
held liable if they are negligent in giving that advice

A. 1 only
B. 1 and 2 only
C. 1 and 3 only
D. 2 and 3 only

16.2 Who is legally obliged to maintain a company’s appropriate accounting records?

A. The auditor
B. The company secretary
C. The finance director
D. The directors

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16.3 Which of the following statements is INCORRECT in relation to company secretaries?

A. A company secretary must be a natural person

B. The company secretary cannot also be a director of the same company
C. All company secretaries must be qualified by examination or experience

16.4 Which of the following is a routine duty of a company secretary?

A. Maintaining order at general meetings

B. Setting the agenda for board meetings and general meetings
C. Liaison between the company and the Registrar of Companies

16.5 How can a company’s external auditor be removed by the members?

A. Ordinary resolution with ordinary notice

B. Ordinary resolution with special notice
C. Special resolution with ordinary notice

16.6 Dev is the company Secretary of LLL Berhad. He entered into a contract to rent cars for use by the
sales team. However, the directors of the company objected to what they considered to be an
excessive price and refused to pay.

Can the car rental company enforce the payment?

A. The car rental company will not be able to enforce the payment as the board of directors of
LLL Berhad have refused to sanction it
B. The car rental company can successfully claim that Dev had apparent authority to enter into
the contract as he showed his business card before signing it
C. The car rental company cannot enforce the contract because a company Secretary has no
authority to enter into contracts on behalf of the company
D. The car rental company can enforce the contract on the company as Dev had implied actual
authority arising from his position

16.7 Under the Companies Act 2016, which of the following is a duty of an auditor?

A. To prevent and detect fraud in the client company

B. To check all transactions of the client company
C. To report on the financial statements of the client company

16.8 Under the provisions of the Companies Act 2016, to be eligible to be an auditor, an individual
must be a member of which of the following?

A. A professional institute or association

B. A self-regulatory body
C. A recognized supervisory body

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16.9 Cabbit Sdn Bhd buys organic vegetables from farmers and resells them to retail outlets.

Which of the following accounting records must Cabbit Sdn Bhd maintain in order to comply
with the Companies Act 2016?

(1) A record of its assets and liabilities

(2) A statement of stock held at the end of each financial year
(3) Daily entries of income and expenditure

A. 1 and 2 only
B. 1 and 3 only
C. 2 and 3 only
D. All of the above

16.10 A properly appointed company secretary signs two contracts:

(1) An employment contract with a factory worker

(2) A contract to purchase a property on behalf of the company

Which of these contracts are binding?

A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2

MCQs 17 COMPANY MEETINGS AND RESOLUTIONS

17.1 Which of the following statements about a change of name of a company is true?

A. Change of name of a company requires special resolution

B. A resolution to change the name must be kept for at least 10 years
C. A name change can be passed by an ordinary resolution

17.2 At a recent shareholders’ meeting Pallas Sdn Bhd passed a special resolution to alter its class rights.
Alf, Bert, Chris and Don own respectively 5%, 3%, 6% and 10% of the nominal value of the
company’s shares. Chris voted in favour of the resolution at the meeting but has subsequently
changed his mind and, along with the others, wishes to object to the alteration.

Which of the following combinations of shareholders can apply to the court to have the
alteration set aside?

A. Alf, Bert and Chris

B. Chris and Don
C. Bert, Chris and Don
D. Alf and Don

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17.3 In relation to a written resolution, which of the following statements is correct?

A. A written resolution must be passed by all the members

B. A written resolution applies only to private companies
C. Members need at least 5% of total voting rights to propose a written resolution
D. Any resolution may be a written resolution

17.4 Bee Sdn Bhd has an issued share capital of 1,000 ordinary shares of RM1 each. Some of the
shareholders would like to pass a resolution to remove a director.

What is the minimum number of votes which must be cast in order to pass the resolution?

A. 500
B. 501
C. 750
D. 751

17.5 By what resolution may a director of a private company be removed by shareholders?

A. Ordinary resolution
B. Special resolution
C. Written resolution

17.6 Some members of a public company wish to requisition a general meeting.

What proportion of the paid-up voting capital must they hold?

A. At least 5%
B. At least 10%
C. At least 25%
D. At least 50%

17.7 In relation to the Annual General Meeting of a public company which of the following
statements is correct?

A. The first AGM must be held within 15 months of its incorporation

B. The gap between AGMs must not exceed 13 months
C. At least 21 days’ notice must always be given to the members
D. The agenda is set by the shareholders

17.8 What is the required days of notice for a general shareholder meeting that is not an annual
meeting?

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A. 14 days
B. 21 days
C. None

17.9 How many members are required to demand a poll at a general meeting under the Companies
Act 2016?

A. One
B. Two
C. Three

17.10 Sarah, a member of XYZ Berhad, wishes to nominate Janis to attend the Annual General Meeting of
XYZ Berhad as her proxy.

Which of the following statements is correct?

A. Janis must also be a member of XYZ Berhad

B. Sarah can only nominate a proxy if the constitution allow this
C. Sarah will not be able to control how Janis votes
D. Only the chairman of the meeting may act as Sarah’s proxy

17.11 Which of the following matters would require a special resolution at a general meeting?

A. Change of name of the company

B. Removal of a director from the board
C. Increase in share capital of the company

17.12 Special notice of a general meeting is required for which of the following resolutions?

A. Removal of the auditor

B. Repurchase of shares
C. Change of registered office

17.13 Exactly 100 members attended the annual general meeting of JKL Berhad.

Assuming no postal votes were submitted, how many members would have been required to
support a resolution to remove a director of the company?

A. 50
B. 51
C. 75
D. 76

MCQs 18 INSOLVENCY

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18.1 Immediately before XY Sdn Bhd was placed in insolvent liquidation, Alex, the company’s sole
director, arranged for the company to make an early repayment of an unsecured loan of RM15,000
which he had provided to the company.

Which of the following is correct?

A. The repayment may have created a preference and Alex may have to return the RM15,000 to
XY Sdn Bhd
B. Alex may be fined
C. The repayment of the loan is valid so long as Alex was acting in good faith
D. XY Sdn Bhd and Alex may be guilty of fraud

18.2 A company carries on business at a time when the directors ought to have known that insolvency was
inevitable.

Who may be liable to contribute to the assets of the company?

(1) The current directors

(2) The shareholders of the company
(3) The former directors of the company

A. 1 only
B. 1 and 2 only
C. 1 and 3 only
D. All of the above

18.3 A registered company with current assets of RM5,000, trade creditors worth RM10,000 and an
unsecured bank overdraft of RM10,000 sought an increase in its overdraft facility to RM15,000. The
bank agreed on the condition that it was given a floating charge over all the company’s assets to
secure the overdraft. The overdraft was repayable on demand if requested. The company was wound
up three months later.

What sum is the bank entitled to as a secured creditor?

A. Nil
B. RM5,000
C. RM10,000
D. RM15,000

18.4 Neil has been allotted 500 RM1 ordinary shares in Rogers Sdn Bhd. He has paid-up 70 sen per share.

What is Neil’s liability in the event of Rogers Sdn Bhd being wound up?

A. RM150
B. RM350
C. RM500

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18.5 Who may nominate the liquidator in a creditors’ voluntary liquidation?

(1) The creditors

(2) The court
(3) The members

A. 1 only
B. 1 and 2 only
C. 1 and 3 only
D. All of the above

18.6 Who has immediate responsibility for dealing with the affairs of a company once a compulsory
winding up order has been granted?

A. The Official Receiver

B. The liquidator
C. An administrator

18.7 Which of the following could be a ground for “just and equitable winding up”?

A. All members agree that the company should pursue completely different objectives
B. One or more members are prevented from participating in operational decisions
C. The company has made no transactions for at least 12 consecutive months

18.8 Marcel is the majority shareholder in Cook Restaurant Sdn Bhd. He wishes to retire and close down
the business completely, as none of his family wish to succeed him. The company has creditors, but
Marcel knows that the business is solvent and that the net assets will meet all obligations.

Which of the following is most appropriate to bring the company’s existence to an end?

A. Creditors’ voluntary liquidation

B. Creditors’ compulsory liquidation
C. Members’ voluntary liquidation

18.9 In the event of liquidation the liquidator will distribute the company’s assets in accordance with the
priority determined by the law relating to insolvency.

Assuming there are surplus assets who ranks last in the priority?

A. Unsecured creditors
B. Ordinary shareholders
C. Floating charge-holders

18.10 What is the role of the Official Receiver?

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A. To appoint an insolvency practitioner to deal with a compulsory winding up order

B. To realise company assets for floating charge-holder
C. To rescue a company as a going concern
D. To liquidate the assets of an insolvent company

18.11 Who ranks first in the order of priority of creditors when a company is in insolvency
procedures?

A. The insolvency practitioner

B. Fixed charge-holders
C. Preferential debts
D. The “prescribed part”

18.12 TTT Bank Berhad has a fixed charge over the assets of FFF Company. The total amount due to the
bank is RM50,000, but the value of the asset offered as security has fallen to RM40,000.

What claim does TTT Bank Berhad have in the priority of creditors?

A. First priority for RM50,000

B. First priority for RM40,000 with no claim for the remainder
C. First priority for RM40,000 and a floating charge-holder claim for the remainder
D. First priority for RM40,000 with an unsecured creditor claim for the remainder

18.13 When is a declaration of solvency required?

A. In a members’ voluntary liquidation only

B. In a creditors’ voluntary liquidation and members’ voluntary liquidation
C. In a creditors’ voluntary liquidation only

18.14 Which of the following is a false statement about the liquidator’s position?

A. The liquidator is not treated as an officer of the company for liability purposes
B. The liquidator takes charge of and realizes the company’s assets
C. The liquidator pays creditors of the company in statutory order

MCQs 19 FRAUDULENT AND CRIMINAL BEHAVIOUR

19.1 When may directors be held liable to contribute to the assets of an insolvent company in respect
of “wrongful trading”?

A. When the directors have the intention of defrauding creditors

B. Whenever a company’s liabilities exceed its assets

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C. Whenever a company becomes insolvent
D. When the directors knew or ought to have known that insolvency was inevitable

19.2 On winding up a company it is discovered that it has been trading when the directors knew that
insolvent liquidation could not be avoided.

A. Wrongful trading
B. Fraudulent trading
C. Illegal dealing
D. Market abuse

19.3 A fund manager who has acquired some price sensitive information on a company takeover from a
stock market trader buys and sells shares on the basis of that information.

Is he guilty of insider dealing?

A. No, because the trader’s information will be widely available in the market
B. Yes, because the information is not widely available in the market
C. No, but the trader could be
D. Yes, unless he makes a loss on the transactions

19.4 Nathan works as an accountant in Moneyneeds Sdn Bhd, a financial services company. He is asked to
prepare some accounts which he strongly suspects are going to be used to enable the company to
evade some of its tax liability. He makes a report to the Money Laundering Reporting Officer
nominated by his employer but, in fear of losing his job, he also prepares the accounts as requried.

What offence has he committed ?

A. Money laundering only

B. Tipping off only
C. Money laundering and tipping off
D. He has not committed any offence

19.5 Marco runs a language training college. He deposits the proceed of his criminal activities alongside
the legitimate receipts of the college, and then disperses the funds through several overseas bank
accounts.

What offence is Marco committing?

A. Wrongful trading
B. Fraud
C. Money laundering
D. Fraudulent trading

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19.6 Frank acts as an agent for Marilyn, purchasing nightwear from a number of different suppliers.
Sometimes the suppliers pay a commission on orders placed with them by Frank on behalf of
Marilyn. Frank regards the commissions as a perk of the job and keeps them.

Which of the following best describes the legal position?

A. Marilyn may dismiss Frank and recover the amount of commissions retained by him
B. Commissions are customarily retained by and agent and so Frank has no liability in respect of
them
C. Marilyn can take action against the suppliers for directing the commissions to Frank instead
of her
D. The commissions are bribes and Marilyn should report Frank to the police

19.7 The Companies Act 2016 includes provisions relating to fraudulent trading.

Which of the following statements is/are correct?

(1) The Companies Act 2016 provisions only apply if a business was carried on with intent to
defraud or for any fraudulent purpose
(2) A company officer who obtains further borrowing for the company, when he suspects that the
company may not be able to repay it, may be convicted of fraudulent trading

A. 1 only
B. 2 only
C. Neither 1 nor 2
D. Both 1 and 2

19.8 In relation to the criminal offence of bribery, which of the following statements is/are correct?

(1) Offering favours to a person in public office in order to circumvent the ethical guidelines of
his professional body is an offence
(2) Bribery may be punished by a term of imprisonment or a fine

A. 1 only
B. 2 only
C. Neither 1 or 2
D. Both 1 and 2

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