Business Law and Corporate Governance
What this domain tests
Business Law and Corporate Governance tests contract and company-law fundamentals and the governance structures that hold directors to account.
Core rules
- Contract formation: offer, acceptance (unqualified and communicated), consideration (sufficient, not necessarily adequate), intention to create legal relations, capacity. An invitation to treat - an advertisement, a shop window, a price list - is not an offer.
- Directors' duties: act within powers; promote the success of the company for members as a whole; exercise independent judgement; exercise reasonable care, skill and diligence; avoid conflicts; not accept benefits from third parties; declare interests in proposed transactions.
- Governance: separation of chair and chief executive, a majority-independent board with independent non-executive directors, an independent audit committee, and "comply or explain" disclosure rather than rigid rules.
Worked example
A retailer advertises a laptop at £500 "this week only". A customer demands the laptop at that price. The advertisement is an invitation to treat, so no contract exists; the customer's request is the offer, which the shop may decline. If instead the shop promises in writing "we will sell to the first ten customers at £500", that is a unilateral offer, and a customer who accepts by performing is entitled to the laptop.
Traps that cost marks
- Confusing an invitation to treat with an offer.
- Assuming consideration must be a fair or adequate price.
- Treating the governance code as statute: it operates through disclosure and explanation.