In terms of common law, it is impossible for any person to enter into a contract on behalf of a company that does not exist yet. However, there are other alternatives available under common law Jack could consider. They are;
(i) Cession and delegation
(ii) Nomination
(iii) Option
(iv) Contract ...
MRL 2601
ENTREPRENEURIAL LAW
2021 LATEST EXAM REVISION
PACK
THIS PACK IS THE LATEST PACK THAT HAS BEEN UPDATED WITH
THE LATEST MEMOS FOR BOTH SEMESTERS PORTFOLIO EXAMS OF 2020 AS
WELL .
QUESTIONS AND ANSWERS HAS BEEN TYPED OUT FOR YOU FOR EASY
REFERENCE. ANSWERS ARE DIRECTLY BELOW THE QUESTIONS, HENCE NO
NEED TO REFER BETWEEN SEPARATE QUESTION PAPERS AND ANSWERS.
DOCUMENT IS COMPLETELY QUICK SEARCHABLE WITH EASY SEARCH
OPTIONS ESPECIALLY FOR ONLINE EXAMS /PORTFOLIOS .
MEMOS - (2017 TO 2020) - 8 LATEST PAST EXAMS PAPERS COVERED +
ADDITIONAL QUESTIONS AND ANSWERS DOCUMENT BASED ON EACH
LEARNING UNIT AS PER PRESCRIBED TEXTBOOK TO COVER THE ENTIRE
MODULE
,CONTENTS
PAST YEAR EXAM QUESTIONS AND ANSWERS
OCTOBER / NOVEMBER 2020
MAY/ JUNE 2020
OCTOBER / NOVEMBER 2019
MAY/ JUNE 2019
OCTOBER / NOVEMBER 2018
MAY/ JUNE 2018
OCTOBER / NOVEMBER 2017
MAY/ JUNE 2017
ADDITIONAL QUESTIONS AND ANSWERS DOCUMENT BASED ON
EACH LEARNING UNIT AS PER PRESCRIBED TEXTBOOK TO COVER
THE ENTIRE MODULE
THIS PACK HAS BEEN SET OUT FOR EASY USE FOR THE STUDENT .
PASS WITH DISTINCTION
ALL THE BEST
, UNIVERSITY EXAMINATIONS
October/November 2020
MRL2601
Entrepreneurial Law
100 marks
24 hours (plus additional time for submission)
QUESTION 1
1.1 Ann, Jack and Sam are three friends who wish to start their own
publishing company. While driving one Sunday afternoon, Jack comes
across the perfect office building. He wishes to purchase this building
on behalf of the proposed company. Advise Jack what the
requirements are that would need to be adhered to in terms of the
Companies Act 71 of 2008 in order to conclude a valid and binding
contract on the company’s behalf before its incorporation. Also list the
different common law alternatives that Jack could consider instead.
(12)
In terms of section 21 of the Companies Act 71 of 2008, any person wishing
to establish a company can enter into a contract with a third party on behalf
of a company that is not yet formed. After that company has been formed,
then the entered contract will be transferred to the company. In this case, as
Jack wishes to purchase the building on behalf of the proposed company, he
can make use of this section.
In terms of section 21 of the Companies Act, the contract will be valid and
binding if:
➢ it is entered by a person wishing to start a company on behalf of a
company that does not exist yet. In this case Jack would be doing so.
➢ the contract is in writing.
➢ the board of the company approves and accepts the terms and conditions
of the contract within a period of three months after its formation.
, In terms of common law, it is impossible for any person to enter into a contract
on behalf of a company that does not exist yet. However, there are other
alternatives available under common law Jack could consider. They are;
(i) Cession and delegation
(ii) Nomination
(iii) Option
(iv) Contract for the benefit of a third party
1.2 Woodinn (Pty) Ltd has two shareholders, Tom and Sue who each hold
50% of the issued share capital. Tom, Sue and Jack are appointed as
the company’s directors.
The Memorandum of Incorporation determines that Woodinn (Pty) Ltd’s
main business is manufacturing furniture. In addition, it stipulates that Jack
may conclude contracts not
exceeding the value of R500 000 on the company’s behalf. For any contract
exceeding this amount, Jack is required to get prior permission from the
board of directors.
The company was registered early in 2018. No annual general meeting has
been held as yet.
Answer the following questions with reference to the Companies Act 71 of
2008 and the facts provided above:
1.2.1 Jack buys a load of timber to the value of R2 million from Xander. Jack
does not seek permission from the board of directors as required.
Xander does not take the trouble to find out what the company’s
Memorandum of Incorporation determines but does not suspect any
irregularity in the agreement. Is the company bound to the
transaction?
(5)
In terms of section 20(1)(a) of the Companies Act, even if the Memorandum
of Incorporation of a company may restrict some powers on the legal
capacity of the company, that will not invalidate any contracts concluded by
the directors of the company. This technically means that any contract that
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