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ICAEW Law exam Study Questions with 100% Correct Answers |Verifie
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ICAEW Law exam Study Questions with 100% Correct Answers |Verifie
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ICAEW Law exam Study Questions with 100%Correct Answers |Verified
Factors to consider in establishing whether a duty of care exists - ✔✔Purpose for which the
statement was made
Skill accorded to that professional
State of knowledge at the time
Any responsibility that the defendant had to the claimant
Size or class to which the claimant belongs
Extent to which the advice given was relied upon
If it was foreseeable that the advice given would be acted upon by the claimant
If it is fair and equitable to impose a duty of care
Companies Act 2006 liability for auditors - ✔✔Offence for an auditor to recklessly cause an
auditor's report to contain any matter that is misleading or false to a material extent
(punishable by fine) (S.507)
Any provision exempting auditors from or indemnifying them against liability for negligence is
void in relation to providing audited accounts (S.532)
A company may enter into a liability limitation agreement with an auditor, limiting his liability
for negligence in the course of auditing accounts (S.534)
Three main defences to a charge of negligence - ✔✔Contributory negligence
Volenti non fit injuria
Exclusion clauses
Contributory negligence - ✔✔Claimant is partly responsible for losses suffered - damages are
reduced
,Volenti non fit injuria - ✔✔Claimant freely consented to risk of harm - no damages awarded
Exclusion clauses - ✔✔Can limit/exclude liability
Must pass legal tests for exclusion clauses
Vicarious liability - ✔✔Liability imposed on a party for torts committed by another
Most important types of agency relationship - ✔✔Partner within a partnership is an agent of
the business
Director is an agent of a company
Creation of agency - ✔✔Agreement (consent)
Estoppel
Necessity
Ratification
Agency by estoppel - ✔✔Principal implies that there is an agency relationship
Estoppel arises - ✔✔Where the principal fails to notify third parties who have dealt with his
agent that the agent's authority has been terminated
Where the principal allows his agent to appear to have more authority than he actually has
How to create agency by estoppel - ✔✔There must be a representation by the principal
either expressly or impliedly to a third party who relies on it and believes that the agent has
authority to enter contracts of that type
Agency from necessity - ✔✔Must meet all of following:
,- Emergency situation
- Not possible for the agent to communicate with the principal
- Agent is acting in good faith in the best interests of the principal
Agency by ratification - ✔✔If a properly appointed agent exceeds his authority or a person
having no authority purports to act as an agent, the principal has no liability on that contract
unless the principal 'ratifies the contract'
Consequence of ratification - ✔✔- Principal becomes liable and entitles under the contract
- The ratification operates retrospectively and principal is bound from the date the contract was
actually made
- Agent is relieved from liability to principal for acting beyond his authority
- No authority is given for future acts
Conditions for ratification - ✔✔Principal is in existence at the time of the agent's act
Principle had the legal capacity to make the contract himself (at time of contract and of
ratification)
Agent named or otherwise sufficiently identified the principal at the time of the contract
Principal is made aware of all terms of the contract
To ratify the principal must - ✔✔Ratify the whole contract (a purported ratification of part
will operate as a ratification of the whole)
Ratify the contract within a reasonable time
Communicate a sufficiently clear intention of ratifying
(A void or illegal contract cannot be ratified)
Duties of the agent - ✔✔Accountability
Conflict of interest
, Performance
Obedience
Skill
Personal performance
Confidentiality
Effect of a breach of duty by an agent - ✔✔= breach of the agency agreement so agent is
liable to the principal for any loss
Where breach is serious principal may dismiss the agent and refuse to pay him any commission
Principal may recover any benefit obtained or profit made by the agent
Where a third party is fraudulently party to the breach the principal may avoid the contract
Rights of the agent (or duties of the principal) - ✔✔Indemnity
Remuneration
Lien
Indemnity - ✔✔Agent is entitled to be repaid expenses properly paid and to be indemnified
by his principal against losses and liabilities
Remuneration - ✔✔Entitled to be paid any agreed remuneration for his services by his
principal
Lien - ✔✔Agent has the right to exercise a lien over property owned by the principal (i.e. a
right to retain and hold goods pending payment of sums owed to him)
Types of authority - ✔✔Actual express
Actual implied
Apparent or Ostensible
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