Intermediate Economic Law common mistakes
Intermediate Economic Law · Understand the traps and how to avoid them.
Treating the general partnership's liability rule as if limited partners were shielded in all respects, so the candidate answers that a limited partner who merely signs a contract on the firm's behalf still enjoys limited liability.
Candidates memorize 'limited partners are liable only up to their capital contribution' and never learn the exception that a limited partner who conducts partnership business and causes a third party to believe they are a general partner bears unlimited liability for that transaction. The exam tests exactly this edge.
What to do instead
Build a two-column table for each partnership type: who may manage, who bears unlimited liability, and which acts strip limited liability. Drill the specific trigger (conducting business and creating reasonable reliance) rather than the general rule. When a fact pattern names a limited partner doing an act, ask 'did this act create reliance?' before choosing an answer.
Applying the shareholders' meeting voting thresholds loosely, e.g., treating an ordinary resolution (simple majority of voting rights present) and a special resolution (two-thirds of voting rights present) as interchangeable, or forgetting that amending the articles, increasing/reducing capital, merger, division, dissolution, or change of form require a special resolution.
The percentages are memorized as bare numbers without anchoring them to the specific list of matters. Under time pressure candidates default to 'majority' for everything, and the distractors are built around the two-thirds figure.
What to do instead
Memorize the closed list of special-resolution matters as a single chant, then practice by classifying 20 hypothetical resolutions into ordinary vs special. Also note that the denominator is voting rights present at the meeting, not total issued shares, and that the company law allows the articles to raise but not lower the threshold.
Confusing the bankruptcy revocation window and the individual repayment (preference) window, so the candidate revokes a repayment made 8 months before acceptance as a preference, or fails to revoke a transfer made 10 months before acceptance that was made when the debtor was already insolvent.
Two different look-back periods (6 months for individual repayments to unsecured creditors; 1 year for transfers at unreasonable price and for providing security for previously unsecured debts) are studied together and blur. Candidates also forget the preference rule requires the debtor was already insolvent at the time.
What to do instead
Draw a timeline with the acceptance date at zero and place each avoidable act at its correct negative offset with its own conditions. For preferences, always check three elements: insolvent debtor, repayment of due debt, and the creditor received more than it would in liquidation. Practice with dates only, no narrative, until the offsets are automatic.
Answering guarantee questions by declaring a general guarantee or a joint-and-several guarantee without checking the default rule, and missing that where the form of guarantee is unclear the law presumes joint-and-several liability (or, under the Civil Code, a general guarantee) depending on the applicable provision, and that the guarantee period defaults to six months from the due date of the principal debt.
The default rules changed across legislation and candidates carry over an older default. They also conflate the guarantee period with the limitation period and forget that a general guarantor may raise the defense of 'sue the debtor first'.
What to do instead
Write the current default rule once, in your own words, with its article reference, and check it against the question's facts every time. Separately memorize: no agreed period means six months; a general guarantor has the right of first-claim defense; a joint-and-several guarantor does not. Sort every practice question into these three boxes before reading the options.
Computing VAT output tax on the full amount received without separating out non-taxable items or applying the correct treatment of discounts, advances, and mixed sales, and forgetting that the tax-exclusive price is derived by dividing by (1 + applicable rate) when the price is tax-inclusive.
Candidates learn 'output tax = sales amount × rate' and skip the base-definition step. Exam items deliberately quote tax-inclusive prices and discounts on the same invoice, and the arithmetic error cascades into input-tax credit and payable amounts.
What to do instead
Adopt a fixed three-step routine for every VAT item: (1) convert to tax-exclusive base, (2) determine whether the item is taxable and at which rate, (3) apply. Do ten drills where the only task is converting a tax-inclusive figure and identifying the base, before doing full computations. Track discounts and sales returns as adjustments to the base, not as separate deductions.
Treating the arbitration agreement and jurisdiction as if a court can hear a dispute where a valid arbitration clause exists, or failing to notice that the arbitration clause's scope does not cover the claim (e.g., tort claims versus contract claims) and that a party's first appearance before the court without objecting waives the arbitration defense.
Candidates know 'arbitration excludes litigation' as a slogan and never test the clause's validity, scope, and the timing of the objection. The exam's fact patterns hinge on these conditions, not on the slogan.
What to do instead
For every dispute-resolution question, run a checklist: Is there a clause? Is it valid (designated commission, subject matter arbitrable)? Does the claim fall within its scope? Has either party already submitted the dispute to a court or appeared without objection? Answer only after the checklist, and write the checklist out in practice so it becomes automatic.
Mixing up the corporate income tax treatment of items that look similar, e.g., deducting business entertainment expenses without applying the 60%-of-actual and 0.5%-of-sales-revenue cap (whichever is lower), or deducting advertising expenses beyond the 15%-of-revenue limit without tracking the carry-forward.
The caps are memorized as isolated numbers and never linked to the 'lower of' or 'carry forward' mechanic. Candidates also forget that some expenses are permanently non-deductible (fines, penalties, sponsorship) while others are timing differences.
What to do instead
Make a one-page schedule of deduction limits with three columns: item, cap formula, carry-forward allowed yes/no. Practice by computing each limit for a single company's figures and comparing to actual spend, choosing the smaller. Separate permanent differences from temporary differences explicitly in your notes.
Answering administrative-law questions by treating administrative penalty, administrative compulsion, and administrative license as interchangeable, and missing procedural requirements such as the hearing right before a major penalty or the requirement to inform of the right to statement and defense.
The categories share vocabulary and candidates study them as definitions rather than as procedures with distinct triggers and consequences. Procedural defects are the most tested point and the easiest to overlook.
What to do instead
For each administrative act type, record: definition, typical examples, procedural steps, and remedies. Then practice spotting the procedural defect in a narrative (no hearing offered, no reasons given, wrong authority). Treat 'who had authority and did they follow the steps' as the first question for every administrative scenario.
Confusing the property-law rules on creation and perfection of security interests, e.g., assuming a mortgage over immovable property is effective upon signing the contract rather than upon registration, or assuming a pledge of movables is effective without delivery of possession.
Candidates collapse the contract's validity with the security interest's creation. The exam separates 'when did the contract bind' from 'when did the security interest arise' and 'when can it be asserted against third parties'.
What to do instead
For each security device, fill a row: contract effective on formation; security interest created on registration or delivery; opposability to third parties on registration. Then answer questions in two stages: creation, then priority. Never merge the stages in one sentence.
In civil procedure questions, applying the wrong limitation period or the wrong rule on burden of proof, e.g., asserting a three-year limitation for every claim without checking the special periods, or placing the burden on the party who merely denies rather than the party asserting the fact.
The general three-year period is overlearned and special periods and the maximum protection period are forgotten. Burden of proof is treated as intuition rather than as a rule with exceptions (e.g., reversed burden in specified tort and product cases).
What to do instead
Keep a short list of limitation periods with their triggers and the maximum-protection rule, and a second list of situations where the burden is reversed by law. In every practice item, first identify who asserts the fact and whether a special rule applies, then answer. Review the list weekly until recall is instant.