Free SQE Mock Test 5 — 20 Questions + Full Answers
Solicitors Qualifying Examination · Trainee solicitors · SQE1 sits: Jan & Jul
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Applaa SQE Mock Test 5
applaa-sqe-mock-5.pdf · 20 questions
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A director of Zenith Retail Ltd (a private company limited by shares) wants to allot new shares to a new investor (Nathan) to raise capital of £120,000. The company has only one class of ordinary shares. Under the Companies Act 2006, which of the following is correct regarding the director's authority to allot these shares?
- A.The director has automatic statutory authority to allot the shares without shareholder approval under Section 550, unless restricted by the articles.
- B.The director must always obtain authorization by ordinary resolution of the shareholders under Section 551.
- C.The director must obtain authorization by special resolution of the shareholders to allot any shares.
- D.The director requires the approval of the Board of Trade before alloting any class of shares.
- E.Authority is only required if the allotment would cause the company to exceed its authorised share capital as stated in the memorandum.
✓ Worked Explanation
Core Concept: Director's Authority to Allot Shares (Section 550 CA 2006) The Companies Act 2006 grants directors of private companies with a single class of shares a specific statutory power to allot shares of that class without requiring shareholder approval - unless the articles restrict this. Step-by-Step Resolution: 1. Identify Company Type: Zenith Retail Ltd is a *private* company limited by shares with *one* class of ordinary shares. 2. Apply Section 550: Directors of such a company have
A builder (Kate) contractually agreed to construct a wall for a customer (James) for £5,000. Halfway through the job, the builder states they cannot finish unless the customer pays an extra £1,000. The customer agrees. After completion, the customer refuses to pay the extra £1,000. Under Williams v Roffey Bros, is the promise to pay the extra £1,000 binding?
- A.No, because performing an existing contractual duty can never be good consideration.
- B.Yes, if the customer obtained a practical benefit (such as avoiding a penalty clause to a third party) and there was no economic duress.
- C.No, because a promise to pay more must be approved by the County Court under CPR regulations.
- D.Yes, because oral contracts are automatically binding regardless of consideration.
- E.No, because it violates Section 52 of the Law of Property Act 1925.
✓ Worked Explanation
Core Concept: Consideration and Practical Benefit (Williams v Roffey Bros) The traditional rule (Stilk v Myrick) held that performing an existing contractual duty cannot be good consideration. Williams v Roffey Bros [1990] modified this rule: performing an existing duty CAN be valid consideration if the promisee obtains a 'practical benefit'. Step-by-Step Resolution: 1. Traditional Rule: A builder promising to finish what they're already contractually bound to do provides nothing new - no consi
An environmental pressure group wishes to bring a judicial review application to challenge a government department's decision to construct a new airport runway. Under Section 31(3) of the Senior Courts Act 1981, what must the applicant show to be granted permission to bring the claim?
- A.They must have a direct financial interest in the outcome of the challenge.
- B.They must show they have 'sufficient interest' in the matter to which the application relates (standing).
- C.They must obtain a majority vote of the local residents in favor of the suit.
- D.They must have been directly physically injured by the government's action.
- E.They must deposit £500,000 as security for costs.
✓ Worked Explanation
Core Concept: Standing for Judicial Review (Section 31 Senior Courts Act 1981) Judicial review allows the courts to scrutinise the legality of public authority decisions. To bring a claim, the applicant must have *standing* - they must demonstrate 'sufficient interest' in the matter. Step-by-Step Resolution: 1. The 'Sufficient Interest' Test: Under Section 31(3) SCA 1981, the applicant must have sufficient interest in the matter. This is deliberately flexible and broad. 2. Public Interest Stand
Prior to the formal incorporation of Beacon Solutions LLP, a promoter (Georgia) signed a contract 'on behalf of the company' to purchase machinery from a supplier. The company is now incorporated. Which of the following best describes the liability of Georgia and the company on this pre-incorporation contract?
- A.The company is automatically bound by the contract upon incorporation, and the promoter is released.
- B.The contract is completely void and unenforceable by any party.
- C.The promoter is personally liable and entitled under the contract, subject to any agreement to the contrary, under Section 51 of the Companies Act 2006.
- D.The company and the promoter are jointly and severally liable automatically.
- E.The company can unilaterally ratify the contract without the supplier's agreement.
✓ Worked Explanation
Core Concept: Pre-Incorporation Contracts (Section 51 CA 2006) A company cannot be a party to a contract before it legally exists. When a promoter signs a contract 'on behalf of' an unformed company, Section 51 CA 2006 provides the default rule: the promoter is personally bound. Step-by-Step Resolution: 1. Legal Status Before Incorporation: Beacon Solutions LLP had no legal existence when Georgia signed the contract. There was no legal entity to be bound. 2. Apply Section 51: The contract takes
A shopkeeper (Bob) places a vintage watch in the shop window with a price tag of £15,000. A customer (Katelyn) enters the shop, places the cash on the counter, and demands to buy the item. The shopkeeper refuses to sell it. Is there a binding contract?
- A.Yes, because placing the item in the window was a unilateral offer that was accepted by the customer's cash payment.
- B.No, because the display of goods in a shop window is an invitation to treat, not an offer. Refusing to sell does not breach any contract (Fisher v Bell).
- C.Yes, because consumer protection laws force retailers to sell all displayed items automatically.
- D.No, because contracts for sales in shops require a written signed document.
- E.Yes, because the shopkeeper was silent when the customer entered, constituting acceptance.
✓ Worked Explanation
Core Concept: Invitation to Treat vs. Offer A binding contract requires a valid *offer* and *acceptance*. The display of goods in a shop window or on a shelf is an invitation to treat - an invitation for customers to make offers. It is fundamentally different from a legal offer, which can be accepted to form a contract. Step-by-Step Resolution: 1. What is an Invitation to Treat?: A display of goods with a price tag is not an offer - it is merely an expression of willingness to deal on those ter
The directors of Titan Infrastructure plc wish to allot new ordinary shares for cash. The company's articles do not exclude pre-emption rights. Which of the following resolutions of the shareholders is required to disapply the statutory pre-emption rights under the Companies Act 2006?
- A.An ordinary resolution with a simple majority (over 50%).
- B.A special resolution with a 75% majority of votes cast.
- C.A written resolution signed by 100% of the shareholders.
- D.An extraordinary resolution requiring a 90% majority.
- E.No resolution is required; the directors can disapply pre-emption rights by a board resolution.
✓ Worked Explanation
Core Concept: Disapplying Pre-Emption Rights (Sections 570/571 CA 2006) Pre-emption rights protect existing shareholders from dilution by giving them the right to purchase newly allotted shares in proportion to their holdings. To *disapply* these statutory rights requires a special resolution (75% majority). Step-by-Step Resolution: 1. Understand Pre-Emption Rights: Under Section 561 CA 2006, when directors allot equity securities for cash, existing shareholders have a right of first refusal (p
A director of Alpha Trading Ltd (a private company limited by shares) wants to allot new shares to a new investor (Alice) to raise capital of £95,000. The company has only one class of ordinary shares. Under the Companies Act 2006, which of the following is correct regarding the director's authority to allot these shares?
- A.The director has automatic statutory authority to allot the shares without shareholder approval under Section 550, unless restricted by the articles.
- B.The director must always obtain authorization by ordinary resolution of the shareholders under Section 551.
- C.The director must obtain authorization by special resolution of the shareholders to allot any shares.
- D.The director requires the approval of the Board of Trade before alloting any class of shares.
- E.Authority is only required if the allotment would cause the company to exceed its authorised share capital as stated in the memorandum.
✓ Worked Explanation
Core Concept: Director's Authority to Allot Shares (Section 550 CA 2006) The Companies Act 2006 grants directors of private companies with a single class of shares a specific statutory power to allot shares of that class without requiring shareholder approval - unless the articles restrict this. Step-by-Step Resolution: 1. Identify Company Type: Alpha Trading Ltd is a *private* company limited by shares with *one* class of ordinary shares. 2. Apply Section 550: Directors of such a company have
A seller (Nora) negligently makes a false statement of fact regarding the turnover of a business to a buyer (Edward), inducing them to buy it. The buyer subsequently discovers the fraud. Which of the following describes the remedies available under the Misrepresentation Act 1967?
- A.The contract is automatically void, and the seller must be prosecuted criminally.
- B.Rescission of the contract and/or damages under Section 2(1) of the Act.
- C.The buyer can only recover damages and has no right to rescind the contract under any circumstances.
- D.The contract is binding, and no remedy is available since the buyer should have checked the accounts (caveat emptor).
- E.The seller is required to perform specific performance of the turnover projection.
✓ Worked Explanation
Core Concept: Misrepresentation Act 1967 - Remedies The Misrepresentation Act 1967 classifies misrepresentation into three types (fraudulent, negligent, innocent) and provides different remedies for each. A negligent misrepresentation under Section 2(1) is the most commonly tested in SQE. Step-by-Step Resolution: 1. Identify the Type: A *negligent* false statement of fact made by Nora to induce Edward to buy. 2. Remedy Under Section 2(1): The innocent party (Edward) may: - Rescind the contra
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Paper Info
- Exam
- SQE
- Mock number
- 5 of 250
- Questions
- 20
- Format
- Multiple Choice (MCQ)
- Sections
- 1
- Audience
- Trainee solicitors
- Timing
- SQE1 sits: Jan & Jul
- Copyright
- Applaa Proprietary
Sections Covered
- FLK1
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