Business Law and Company Law Essentials
Business law governs contracts; company law governs incorporated entities. The exam tests essentials of a valid contract, offer and acceptance, consideration, capacity, free consent, and company features, types, constitution and directors.
Contract essentials
- Offer, acceptance, consideration, capacity, free consent and lawful object.
- Offer must be communicated; acceptance must be absolute and unqualified.
- Consideration must be real, not necessarily adequate.
- A minor's agreement is void ab initio.
- Consent is free without coercion, undue influence, fraud, misrepresentation or mistake.
Company law
- Company: separate legal entity, perpetual succession, limited liability, transferable shares and capacity to own property.
- Private company: minimum two members, maximum 200; public company: minimum seven, no maximum.
- MOA states name, registered office, objects, liability and capital; AOA contains internal rules.
- Directors: minimum three in a public company, two in private, one in OPC; DIN required.
Worked example
A 17-year-old buys office furniture on credit and later refuses to pay. Reasoning: a minor lacks contractual capacity, so the agreement is void ab initio. The supplier cannot enforce payment of the price. If the goods are traceable, restitution may be possible, but damages for breach are not.
Traps that cost marks
- Saying every agreement is a contract.
- Insisting consideration must be adequate.
- Confusing MOA and AOA.
- Giving a private company unlimited members.