BUSINESS L A W S TUDENT WORKBOOK MAZRIANA ASHARI POLITEKNIK METRO KUALA LUMPUR
Published by: POLITEKNIK METrO KUALA LUMPUR No. 2-14, Jalan Setiawangsa 10 Taman Setiawangsa10 Taman Setiawangsa 54200 Kuala Lumpur 03-42518000 Business Law Student Workbook First Published 2021 @ Politeknik METrO Kuala Lumpur 2021 All rights reserved. No part of this publication may be reproduced, stored in any retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without prior permission of the publisher. e ISBN 978-967-2623-95-3 business law student workbook
This ebook is a workbook for students studying Business Law at Polytechnic level. It mainly focuses on the basic foundation regarding legal aspects and conducts of business transactions in Malaysia. It is basically designed to help students in understanding the legal principles in Malaysia, basic principles of contracts, legal aspects of business entities, agency and sale of goods. The questions provided are designed to further enhance the students insight on the overall theory of Business Law. Since this ebook provides a variety of question covering overall viewpoint on the basic concepts and principles of business law in Malaysia. After going through this material, it is hoped that the students will be able to recognize appropriately the sources, legal aspects and conducts of business transactions under the Malaysian law. PREFACE business law student workbook
Canva The highest gratitude to Allah SWT because with His permission, Business Law Student Workbook was successfully published. This e-book is published to enhance to students' apprehension on topics learned in Business Law course at Malaysia Polytechnic. In preparing this e-book, various challenges and obstacles were faced in the making of the e-book. I would like to express my deepest gratitude to my family, the Polytechnic e-Learning Coordinator, and colleagues for their guidance and support in the production of this e-book. I would also like to thank the following for permission to reproduce copyright photos: I sincerely hope that this e-book would be of utmost advantageous to students as well as educators in Malaysia Polytechnic. Thank you. Mazriana binti Ashari October 2021 ACKNOWLEDGEMENT business law student workbook
TABLE OF CONTENTS business law student workbook INTRODUCTION TO MALAYSIAN LEGAL PRINCIPLES Multiple Choice Question Structure / Essay Question Introduction to the Malaysian legal principles, definition of law, types and functions of law, courts hierarchy and sources of Malaysian Law and interpretation of statutes. LAW OF CONTRACT Multiple Choice Question Structure / Essay Question Basis of contract, definition, formation of valid contract, terms of contract, types of contract, discharges of contract and remedies for breach of contract. LEGAL ASPECTS OF BUSINES ENTITIES Multiple Choice Question Structure / Essay Question Introduction, formation, management, liability and dissolution of sole proprietorship, partnership and company AGENCY Multiple Choice Question Structure / Essay Question Introduction, factors that lead to formation of agency, definition of agency, types of agency, relationship between principals and agents, and termination of agency agreement. SALE OF GOODS Multiple Choice Question Structure / Essay Question Introduction, definition of goods and contract of sale, implied terms, principles of caveat emptor, principles of nemo dat quod non habet and exceptions, performance of contract, remedies for sellers and buyers in case of breach of contract. 06 18 32 44 55
INTRODUCTION TO MALAYSIAN LEGAL PRINCIPLES Chapter 1 : business law student workbook
07 1. Public law consists of the following EXCEPT: A. Criminal law B. Administrative law C. Tort law D. Constitutional law 2. Law can be divided into TWO(2) categories, namely Public law and Private law. The followings are private laws, EXCEPT: A. Constitutional law B. Contract law C. Tort law D. Trust law 3. Which of the following is the definition of law? A. A set of rules enforced by individual B. A set of rules enforced by the Ruler C. A set of rules enforced by the citizen D. A set of rules enforced by the State 4. Sources of law in Malaysia consists of written and unwritten law. Following are the written law, EXCEPT : A. Judicial Precedent B. Act C. Enactment D. State Constitution 5. Which of the following is the main source of Malaysian Law? A. Federal Constitution B. Subsidiary Legislation C. State Legislation D. State Constitution business law student workbook Chapter 1 MULTIPLE CHOICE QUESTIONS. INTRODUCTION TO MALAYSIAN LEGAL PRINCIPLES
08 9. Identify the definition of law by Sir John Salmond: A. Law is a body of principles recognized and applied by a state and enforced by sanctions or punishments. B. Law is a body of principles recognized and applied by a state in the administration of justice. C. Law is a body of principles recognized and applied by a state in the form of custom exercised by the society. D. Law is a body of principles recognized and applied by a state set by a superior being to an inferior being. 8. Which of the following is TRUE about the classification of law? A. Public law, Constitutional law and Common law B. Public law, Private law and Criminal law C. Public law, Private law and International law D. Public law, Private law and Constitutional law 7. "Law that governs the relationship between individuals and the State". Which of the following law describe the above definition? A. Common law B. Private law C. Civil law D. Public law 6. Which of the following is FALSE about Federal Constitution? A. Law that is enacted by Sate Assembly and Parliament. B. Consists of laws which lays down the jurisdiction of federal and state government. C. Introduced by variety of ethnics in Malaysia. D. Any rights written can be changed by 2/3 majority vote of the total number of members in the Parliament. business law student workbook Chapter 1 INTRODUCTION TO MALAYSIAN LEGAL PRINCIPLES MULTIPLE CHOICE QUESTIONS.
09 13. Select the FALSE statement from the following in reference to sources of Malaysian Law. A. Federal Constitution is the supreme law of the land. B. Subsidiary legislation is categorized under the common law. C. Islamic law was the highest law of the land before colonization. D. Equity is considered as a source of law under English law. 12. The following statements describes the characteristic of the State Legislation, EXCEPT : A. It refers to laws made by a body which has the power to make laws. B. Laws made by State Legislative Assembly can only be applied to that particular state. C. It is the legislative branch of the state governments of 13 states. D. Laws under State Legislation is applicable throughout Malaysia. 11. Determine the definition of Private law. A. Governs the relationship between various offences committed by individuals. B. Governs the relationship between State and another State. C. Governs the relationship between individuals and the State. D. Deals with matters that affect rights and duties of individuals among themselves. business law student workbook Chapter 1 INTRODUCTION TO MALAYSIAN LEGAL PRINCIPLES 10. Which of the following is categorized under unwritten law? A. Federal Constitution and State Constitution B. State Constitution, Enactment and Federal Constitution C. English Law, Judicial Decisions or Precedent and Customs D. English Law, Federal Constitution and Enactment MULTIPLE CHOICE QUESTIONS.
10 17. Which of the following is categorized under Superior Courts in Malaysia? A. Federal Court, Court of Appeal, High Court and Session Court B. Juvenile court, Special Court and Native Court C. Federal Court, Court of Appeal and High Court D. Sessions Court and Magistrates' Court 16. Determine which of the following is the division of Separation of Powers in Malaysia. A. Executive, Parliament and Federation B. Executive, Judiciary and Nation C. Executive, Legislative and Federation D. Executive, Legislative and Judiciary 15. Identify the highest court among the subordinate courts in Malaysia. A. High Court B. Magistrates Court C. Court of Appeal D. Sessions Court business law student workbook Chapter 1 INTRODUCTION TO MALAYSIAN LEGAL PRINCIPLES 14. Which of the following is a type of law passed by the State Legislative Assembly? A. By-law B. Rules C. Enactment D. Act MULTIPLE CHOICE QUESTIONS.
11 business law student workbook Chapter 1 INTRODUCTION TO MALAYSIAN LEGAL PRINCIPLES 20. "It has the power to hear all criminal matters except for offences punishable wit death and all matters of which the claim exceeds RM100,000." Which of the following court has the above jurisdiction? A. Federal Court B. Sessions Court C. Magistrates' Court D. Court of Appeal 19. Determine the CORRECT order of hierarchy of courts in Malaysia. A. Federal Court, Court of Appeal, High Court and Sessions Court B. Court of Appeal, Sessions Court, Federal Court and High Court C. Federal Court, Court of Appeal, Magistrates' Court and High Court D. High Court, Sessions Court, Federal Court and Court of Appeal 18. "It has unlimited criminal and civil power in exercising its jurisdiction" The above statement refers to which of the following court? A. Sessions Court B. Court of Appeal C. High Court D. Federal Court MULTIPLE CHOICE QUESTIONS.
12 business law student workbook Chapter 1 INTRODUCTION TO MALAYSIAN LEGAL PRINCIPLES 24. "This court may hear civil and criminal actions. The jurisdiction of a civil suit is when the amount in dispute or he value of the subject matter exceed RM1,000,000." The above statement refers to A. Federal Court B. Court of Appeal C. High Court D. Sessions Court 23. The Court of Appeal may hear and determine any criminal appeal against any decision made by in the exercise of its original jurisdiction and appellate or revisionary jurisdiction.. A. Court of Appeal B. Federal Court C. High Court D. Syariah Court 22. The jurisdiction of High Court are as follows, EXCEPT : A. Appellate jurisdiction B. Supervisory jurisdiction C. Original jurisdiction D. Hear any disputes between any State and the Federal Government 21. Based on hierarchy of courts in Malaysia, determine the highest court in Malaysia. A. Court of Appeal B. Federal Court C. High Court D. Syariah Court MULTIPLE CHOICE QUESTIONS.
business law student workbook Chapter 1 INTRODUCTION TO MALAYSIAN LEGAL PRINCIPLES MULTIPLE CHOICE QUESTIONS. 25. Law function as : i. a guideline to maintain order ii. a guideline is establishing an acceptable behavior standards iii. a guideline in resolving disputes iv. a tool to create absolute power A. i and ii only B. i, ii and iii only C. i, ii and iv only D. ii, iii and iv only 26. Identify the high Court monetary jurisdiction for civil matters. A. Amount exceeding RM1,000,000 B. Amount exceeding RM250,000 C. Amount exceeding RM100,000 D. Amount exceeding RM10,000 27. The party who is being charged in a criminal case is known as: A. Prosecutor B. Plaintiff C. Accused D. Defendant 28. Identify the term use for a person who brings a claim in a civil case. A. A prosecutor B. A respondent C. A plaintiff D. An appellant 13
business law student workbook Chapter 1 INTRODUCTION TO MALAYSIAN LEGAL PRINCIPLES MULTIPLE CHOICE QUESTIONS. 29. Laws made by the Sarawak State Legislative Assembly is know as : A. An ordinance B. An enactment C. An act D. A subsidiary legislation 14 30. Identify the highest court among the subordinate courts in Malaysia. A. High Court B. Magistrates Court C. Court of Appeal D. Sessions Court
15 business law student workbook Chapter 1 Question 1 Distinguish the following : (a) Public law and Private law (b) Statutes and Common law (c) Written law and Unwritten law (d) Federal jurisdiction and State jurisdiction Question 2 Elaborate the following terminologies: (a) Defendant (b) Prosecutor (c) Plaintiff (d) Solicitor (e) Legislation (f) Enactment (g) Statute (h) Subsidiary legislation Question 3 There are various sources of Malaysian Law. Describe at least THREE (3) main sources of Malaysian Law. STRUCTURED / ESSAY QUESTIONS. INTRODUCTION TO MALAYSIAN LEGAL PRINCIPLES Question 4 Under the common law system, as practised in Malaysia, law has been classified into THREE (3) broad division. Discuss the classification of law available in Malaysia Legal System.
STRUCTURED / ESSAY QUESTIONS. 16 business law student workbook INTRODUCTION TO MALAYSIAN LEGAL PRINCIPLES Chapter 1 Question 5 English common law and the rules of equity form part of the law in Malaysia. Discuss to what extent the common law of England is applicable in Malaysia today. Question 6 The role of courts is are concerned with the administration of the law. The courts have both criminal and civil jurisdiction. Illustrate the hierarchy of court in Malaysia judicial system. (Draw a diagram/chart) Question 7 Differentiate the jurisdiction between High Court and Sessions Court of Malaysia. Question 8 Amy drove recklessly and injured Hadi. He suffered a broken leg and spent 2 weeks in the hospital. His medical expenses amounted to RM50,000 so far. Hadi intends to sue Amy. Discuss the following matters : (a) Determine which court should Hadi commence his action. (b) Explain the jurisdiction of the court stated in (a).
STRUCTURED / ESSAY QUESTIONS. 17 business law student workbook INTRODUCTION TO MALAYSIAN LEGAL PRINCIPLES Chapter 1 Question 9 In 2020, Chris was granted RM550,000 housing loan facility by Bank Maju Bhd to finance the purchase of a house in Shah Alam. The facility is secured by a charge over the land (under Registry Title) on which the house is built. Chris is now in arrears of four (4) monthly instalments. Bank Maju Bhd wants to apply order for sale of the land. Discuss the following matters : (a) Determine which court is empowered to hear such application. (b) Explain the jurisdiction of the court stated in (a). Question 10 Under the system of binding precedents, judges normally follow earlier precedents or earlier judgments of binding authority. Discuss the term 'judicial precedent' and describe ONE(1) case which explains the application of judicial precedent.
business law student workbook LAW OF CONTRACT Chapter2:
5. It is presumed that the parties do not intend to create legal relations in A. Business agreements B. All agreements C. Social and domestic agreements D. Commercial agreements business law student workbook LAW OF CONTRACT Chapter 2 4. Which of the following is an element of a contract? A. Legal representation B. Invitation to treat C. Legal capacity D. Counter offer 1. Identify the definition of 'contract' as stipulated under Section 2(h) of Contracts Act 1950 . A. An agreement is made without legal force or effect. B. An agreement enforceable by law, legally binding the parties. C. An agreement that is made with legal intention. D. An agreement made with vague intention. 2. The following are the elements of contract, EXCEPT : A. Consideration B. Capacity C. Certainty D. Invitation to treat 3. When does a contract becomes legally binding? A. The next day after an offer is made. B. On a date agreed by parties to the contract. C. When all elements of contract has been fulfilled. D. When there is an offer rather than an invitation to treat. 19 MULTIPLE CHOICE QUESTIONS.
MULTIPLE CHOICE QUESTIONS. business law student workbook LAW OF CONTRACT Chapter 2 6. Which of the followings are examples of an invitation to treat? i. Auction ii. Catalogue iii. Advertisement of tenders and price lists iv. Display of goods in a self-service shop A. i and ii only B. i, ii and iii only C. i, ii and iv only D. All of the above 7. A minor can enter into valid contracts if they concern the following types of contracts EXCEPT contracts regarding : A. Necessaries B. Scholarships C. Hire-purchase of motor vehicles D. Insurance 8. "When a promise is made in return for the performance of an act." The above statement refers to A. Past consideration B. Exception C. Executory D. Executed 9. An item sold in an auction is an example of A. An invitation to treat B. Bilateral offer C. Counter offer D. Unilateral offer 20
MULTIPLE CHOICE QUESTIONS. business law student workbook LAW OF CONTRACT Chapter 2 10. "Marissa helped Mr. Rajes to carry along his load by using his lorry. The task was completed however, the act was done without the knowledge of Mr. Rajes. Later, Marissa claimed for payment.' The above statement does not amount to a binding contract as the offer was A. made without certainty B. lacking capacity C. not communicated D. not made in writing 21 11. A counter-offer is an alternative proposal made in response to a previous proposal that is regarded as unacceptable or unsatisfactory. Identify the case which laid down the principle of counter-offer. A. Carlil v Carbolic Smoke Ball Co. Ltd [1893] 1 QB 256 B. Hyde v Wrench [1840] 3 Beav 344-49 ER 132 C. Harrison v Nickerson [1873] LR8 QB 286 D. Felthouse v Bindley [1840] 3 Beav 344-49 ER 132 12. Determine which of the following statement does not describe discharge by frustration. A. Physical impossibility due to destruction of subject matter. B. Impossibility due to non-occurrence of event basic to contract. C. Change in the existing law renders the performance impossible to execute. D. Performance of the contract can be made by a third party.
MULTIPLE CHOICE QUESTIONS. business law student workbook LAW OF CONTRACT Chapter 2 22 13. "Pak Mahmud passed down a piece of land to his son without consideration." Based on the statement, there is a valid contract according to A. Section 26(a) of the Contracts Act 1950 B. Section 15(a) of the Contracts Act 1950 C. Section 6(a) of the Contracts Act 1950 D. Section 2(a) of the Contracts Act 1950 14. Determine which of the following refers to the way by which a contract is discharged. A. Coercion B. Frustration C. Fraud D. Misrepresentation 15. Based on the law of contract, a contract made by way of fraud is a A. Voidable contract B. Void contract C. Valid contract D. Breach of contract 16. Alex, a drunken 23 years old, sold his car to Myra for the price of RM1,250. The contract between them does not exist because A. the consideration was inadequate. B. Alex was of unsound mind. C. the original offer was rejected. D. there was no consideration.
MULTIPLE CHOICE QUESTIONS. business law student workbook LAW OF CONTRACT Chapter 2 23 17. Aminah agreed to sell her car to Maria after Maria threatened to injure her. Aminah may rescind the contract later if she wishes to do so. The contract is A. Unenforceable B. Voidable C. Valid D. Void 18. Danny, who is in the business of coconut oil, agrees to sell to Lana "one hundred tons of oil." The agreement between Danny and Lara is A. unenforceable B. valid C. voidable D. void 19. Revocation of a proposal may be made in any of the following ways : i. Communicating the notice of revocation by the proposer to the party to whom the proposal was made. ii. The failure of the promisee to fulfill a condition precedent to an acceptance. iii. The death or mental disorder of the promisor. iv. Breach of contract A. i, ii and iii B. i, ii and iv C. ii, iii and iv D. All of the above
MULTIPLE CHOICE QUESTIONS. business law student workbook LAW OF CONTRACT Chapter 2 24 20. Identify which of the following best describe the above statements. A. Revocation of an acceptance B. Revocation of an offer C. Invitation to treat D. Counter-offer Acceptance of the proposal which is made with modification or variation of the original offers. Any modification operates as a rejection of the original offer. 21. Faiz offered his car for sale to Hakimi by sending him a letter which stated "if you do not reply to this letter, I will assume your acceptance to this offer". Hakimi was silent and did not attempt to respond to the offer. Based on the above situation, determine the legal effect of an offer. A. Hakimi's silence does not amount to an acceptance. B. The contract was voidable at Faiz's option. C. Hakimi is entitled to rescind the contract. D. There was a valid contract. Hakimi must pay the price of the car.
MULTIPLE CHOICE QUESTIONS. business law student workbook LAW OF CONTRACT Chapter 2 25 22. On 15th February, Alysa sent an offer concerning selling her computer to Musa via email and it reached Musa on 18th February. Musa replied through the letter regarding his acceptance on 19th February and received by Alysa on 22nd February. Unknowingly to Musa, Alysa had send a revocation letter on 17th February and was received by Musa on 20th February. Based on the situation above, identify the effect of the contract. i. Acceptance was valid on 19th February, therefore there is a valid contract. ii. Revocation was valid on 17th February, therefore there was no contract. iii. Musa can still revoke his acceptance before a revocation letter reached Alysa. iv. Alysa can still revoke her offer as long as the letter of acceptance did not reach Alysa. A. i and ii only B. i and iii only C. ii and iv only D. iii and iv only 23. The main elements of a contract include all the following EXCEPT: A. Intention to create legal relation B. Legal representation C. Acceptance D. Certainty
MULTIPLE CHOICE QUESTIONS. business law student workbook LAW OF CONTRACT Chapter 2 26 24. Identify a VALID contract due to certainty in the following situations : A. Suzy agrees to sell to Halim 10 bottles of oil. Halim is a supplier of various kinds of oil. B. Suzy agrees to sell all rambutans in her rambutan tree with a certain price to Halim. C. Suzy agrees to sell to Halim 10 kilograms of rice. Suzy is a supplier of various brands of rice. D. Suzy agrees to sell all rambutans in her rambutan tree to Halim for RM100 or RM200 only. 25. "Discretionary order granted by the courts directing a person to carry out their obligations under the contract". Based on the above statement, identify the relevant remedy available in law of contract. A. Rescission. B. Damages. C. Specific performance. D. Injunction. 26. Identify the principles discussed in the case of Hyde v Wrench [1840] EWHC Ch J90 A. Revocation of a proposal can be made before the completion of acceptance. B. Contract does not exist if there is a counter-offer. C. Offer must be differentiated from an invitation to treat. D. Silence does not amount to an acceptance.
MULTIPLE CHOICE QUESTIONS. business law student workbook LAW OF CONTRACT Chapter 2 27 27. Section 19 of the Contracts Act 1950 provides that an agreement is a contract voidable at the option of the party whose consent was caused by one or more of the following situation, EXCEPT : A. Misrepresentation B. Undue influence C. Illegality D. Coercion 28. Which of the following statement is TRUE regarding consideration? A. Definition of consideration can be found in Section 2(b) Contracts Act 1950. B. Adequacy of consideration is important to form a valid contract. C. Consideration need not come from the promise. D. Past consideration does not have any legal value. 29. In the case of Tan Hee Juan v Teh Boon Keat (1934) FMSLR 96, it was held that the transfer of land executed by A. an infant were valid B. an infant was void C. a mental patient was valid D. bankrupt person was valid 30. A house is put on auction by Izzuddin, a licensed auctioneer. The reserved price has been fixed at RM94,500. Under the law of contract, Izzuddin is said to be making A. A counter-offer B. An acceptance C. An invitation to treat D. An offer
28 business law student workbook Chapter 2 Question 1 (a) Identify FIVE (5) elements of a valid contract. (b) Briefly explain FOUR (4) remedies available in law of contract. Question 2 (a) According to Section 2(h) of the Contracts Act 1950, contract is an agreement enforceable by law. Elaborate FIVE (5) elements of contract and support your answer with relevant section. (b) Section 10 of the Contracts Act 1950 provides that all agreements are contracted if they are made by free consent of parties. By virtue of Section 14, consent is said to be free when it is not caused by some elements. Thus, illustrate FOUR (4) elements which caused a consent to be affected. Question 3 Syahir offered to sell his car at the price of RM25,000 to Ammar. Aiman who happened to hear the offer was interested in buying the car. However, Syahir refused to sell his car to Aiman. Aiman claimed that Syahir was bound to sell to him. Based on the above situation, you are required to: (a) Identify the relevant issue pertaining to the matter above. (b) Relate the above situation to relevant provisions of the Contracts Act 1950. (c) Identify a relevant case to support your answer. (d) Adapt the conclusion to the situation. STRUCTURED / ESSAY QUESTIONS. LAW OF CONTRACT
29 business law student workbook Chapter 2 Question 4 Marisa offered to sell her house to Harris. Harris accepted the offer on a condition that Marisa will repaint the house. Marisa disagreed. Later, Harris said he was willing to accept Marisa's offer without any condition. Marisa said that she was no longer interested to sell her house to Harris. Based on the above situation, you are required to: (a) Relate the issue that arises in the situation. (b) Identify the relevant principles of law. (c) Conclude the effect of contract between Marisa and Harris. STRUCTURED / ESSAY QUESTIONS. LAW OF CONTRACT Question 5 Pak Wahid wants to give his land to his son, Azlan for his 18th birthday. Azlan will not be paying any money to his father. His father is worried because there is no consideration for the transfer of his land to Azlan. Please advise Pak Wahid by identifying the following matters : (a) Identify the relevant issue pertaining to the matter above. (b) Relate the above situation to relevant provisions of the Contracts Act 1950. (c) Explain ONE (1) decided case to support your answer. (d) Adapt the conclusion to the situation.
30 business law student workbook Chapter 2 STRUCTURED / ESSAY QUESTIONS. LAW OF CONTRACT Question 6 Tony advertised in Hello! Harian an offer of reward of RM850 for the return of his puppy dog. Kate saw and read the advertisement. On her way to work, Kate found the puppy dog. She recognized the puppy and returned it to Tony. However, Tony refused to pay the reward money as per the advertisement. Based on the above situation, you are required to: (a) Identify the issue that arises in the situation. (b) Explain the relevant provisions under Contracts Act 1950. (c) Interpret your conclusion of the above issue. Question 8 (a) "An agreement made without consideration is void". However, there are several exceptions to the general rule. Discuss the relevant section and explain THREE (3) exceptions to the rule. (b) Differentiate between void contract and voidable contract. Question 7 (a) Describe THREE (3) examples of invitation to treat and support your answer with relevant cases. (b) Explain THREE (3) circumstances for revocation of Offer and Acceptance.
31 business law student workbook Chapter 2 STRUCTURED / ESSAY QUESTIONS. LAW OF CONTRACT Question 9 Fikri's parents passed away while he was in form three. He was very shocked and concerned about his school financial. As a consequence, he sold his father's motorcycle to Uncle Lim. After a week, he was advised by his aunt about his action. Fikri had changed his mind and intends to rescind the transaction. Fikri wanted to return the money he received to Uncle Lim but Uncle Lim refused to return the motorcycle to Fikri. Based on the above situation, you are required to: (a) Interpret the issue that arises in the situation. (b) Illustrate the relevant provisions under Contracts Act 1950. (c) Apply ONE(1) relevant case to support your answer. (d) Interpret your conclusion of the above issue. Question 10 (a) Describe the meaning of "contract" as stated in Section 2(h) of the Contracts Act 1950. (b) Differentiate between unilateral contract and bilateral contract. (c) Explain THREE (3) ways a contract may be discharged.
business law student workbook LEGAL ASPECTS OF BUSINESS ENTITIES Chapter3:
business law student workbook Chapter 3 1. "If a business fails or is declared bankrupt, creditors can sue the sole proprietor's owner for all the debts owed to the respective merchants". The above statement refers to : A. Unlimited liability B. Limited liability C. Constitution D. Dissolution 2. The following are the advantages of partnership, EXCEPT : A. Shared responsibility B. Unlimited liability C. Easy to form D. More capital needed 33 LEGAL ASPECTS OF BUSINESS ENTITIES MULTIPLE CHOICE QUESTIONS. 3. Among the rights and duties laid down in Section 26 of the Partnership Act 1961 are : i. All partners can take part in business management. ii. Partners are not entitled to receive wages or salary. iii. Partners are not entitled to receive any benefit if the profit have not been calculated. iv. Advance payment in excess capital, the partners are entitled to interest at the rate of 8% per annum. A. i and ii only B. i and iv only C. i, ii and iii only D. i, ii and iv only
business law student workbook Chapter 3 LEGAL ASPECTS OF BUSINESS ENTITIES MULTIPLE CHOICE QUESTIONS. 4. A partnership may be dissolved by way of i. Express appointment. ii. Death or bankruptcy. iii. Agreement. iv. Ratification. A. i and ii only B. ii and iii only C. iii and iv only D. i and iv only 5. Based on the statements below, identify the differences between company, partnership, and sole proprietorship. A. Only sole proprietorship must be registered under Companies Commission of Malaysia, but not company and partnership. B. Sole proprietorship and partnership consists of only one member while there are no maximum members in a company. C. Company and partnership must keep their business information for themselves but the owner in sole proprietorship may share the business information. D. A company is an entity separate from its members but not for partnership and sole proprietorship. 34 6. Identify the minimum number of person(s) needed to form a partnership. A. 10 persons B. 2 persons C. 1 person D. 20 persons
business law student workbook Chapter 3 LEGAL ASPECTS OF BUSINESS ENTITIES MULTIPLE CHOICE QUESTIONS. 35 7. The principle of separate legal entities for companies in Malaysia is based on one distinguished precedent case. Determine the name of the case. A. Salomon v A Salomon and Co Ltd [1897] AC 22 B. Hyde v Wrench (1840) 49 ER 132 C. Harris v Nickerson (1872) LR 8 QB D. Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1 8. Determine the definition of "partnership". A. The relation which subsists between persons carrying on business. B. The relation which subsists between two persons carrying on business. C. The relation which subsists between persons carrying on business in common with a view of profit. D. The relation which subsists between persons carrying on a business with a view of profit. 9. The business is owned by a single entrepreneur and sometimes, the owner may decide to employ staff for assistance. This statement refers to A. Partnership B. Public company C. Private practice D. Sole proprietorship 10. When there is mutual consent between partners to dissolve the partnership, it is said that the partnership will be dissolved by A. Revocation B. Agreement C. Operation of law D. Supervening illegality
business law student workbook Chapter 3 LEGAL ASPECTS OF BUSINESS ENTITIES MULTIPLE CHOICE QUESTIONS. 36 11. The court may order the dissolution of partnership, on application by a partner in the following circumstances, EXCEPT : A. Charging on shares. B. Insanity of a partner. C. Permanent incapacity of any partner. D. Conduct calculated to prejudicially affect the carrying on of the business. 12. "The mere failure to register the partnership would not mean that the partners cannot enforce their rights against each other". Identify the case that lays down the above principle. A. Cox v Hickman (1860) HL Cas 268 B. Pratt v Strick (1932) 17 T.C. 459 C. Wong Peng Yuen v Senanayake [1962] 28 MLJ 204 D. Gulazam v Noorzaman and Sobath [1957] 23 MLJ 45 13. "The effect of incorporation of a company is vested with a corporate personality. A company is a legal person by itself separate and distinct from its shareholders and directors." This principle is known as A. Bona fidei B. Caveat emptor C. Utmost good faith D. Separate legal entity
business law student workbook Chapter 3 LEGAL ASPECTS OF BUSINESS ENTITIES MULTIPLE CHOICE QUESTIONS. 37 14. The word "business" is stated under Section 2 of Partnership Act 1961 to include 'every trade, occupation or profession'. Identify which of the following is considered as partnership business. A. Kiut & Chantiq Club B. Seri Kacak Home Affairs C. Messrs Yana & Partners D. Sedap Baq Hang Restaurant 15. "The relation which subsists between persons carrying on business in a common with a view of profit". Identify the provision that lays down the above definition. A. Section 3(1) Partnership Act 1961 B. Section 2(a) Contracts Act 1950 C. Section 4(b) Partnership Act 1961 D. Section 10 Contracts Act 1950 16. Identify the principle laid down in the case of William Jacks & Co (Malaya) Ltd v Chan & Yong Trading Co [1964] 30 MLJ 105. A. Everyone sui juris is capable of entering into a partnership agreement. B. A minor could be in a partnership for any duration until he/she wishes to disaffirm the partnership. C. Failure to repudiate the partnership by a minor upon reaching age of majority will make him liable for partnership debts. D. A minor, upon reaching the age of majority can discharge himself by terminating the partnership.
business law student workbook Chapter 3 LEGAL ASPECTS OF BUSINESS ENTITIES MULTIPLE CHOICE QUESTIONS. 38 17. Section 9 of the Partnership Act 1961 stipulates the liability of partners pertaining to situations where the partner uses credit of firm for private purposes. In order for the third party to hold the partnership firm and the rest of the partners liable, identify the conditions that needs to be satisfied. i. The act must be done for the purpose of the business of the partnership. ii. The act must be done with the consent of only one partner. iii. The act must be done in the firm's ordinary course of business. iv. The act must be done by the partner as a partner of the firm and not in his own personal capacity. A. i, ii and iii only B. i, ii and iv only C. i, iii and iv only D. All of the above 18. "All partners in a firm are jointly liable for all contractual and other debts and liabilities including tax and judgment debts which are incurred while each is a partner". Identify the provision that stipulates the above principles. A. Section 13 Partnership Act 1961 B. Section 12 Partnership Act 1961 C. Section 11 Partnership Act 1961 D. Section 15 Partnership Act 1961
business law student workbook Chapter 3 LEGAL ASPECTS OF BUSINESS ENTITIES MULTIPLE CHOICE QUESTIONS. 39 19. Identify the significant features of a limited liability partnership. i. Appointment of a compliance officer from amongst the partners. ii. Requirement to lodge the annual declaration. iii. Retainment of accounts and other records for not less than seven years. iv. The ability to initiate voluntary winding-up when partners are unable to pay their creditors. A. i, ii and iii only B. i, ii and iv only C. i, iii and iv only D. All of the above 20. "Professional partnership firms are not subject to a maximum of fifty partners. There is no ceiling number of members who can join professional partnerships". Identify the provision that stipulates the above principles. A. Section 14(3)(a) Partnership Act 1961 B. Section 47(2) Partnership Act 1961 C. Section 14(3) Companies Act 1965 D. Section 3(1) Partnership Act 1961
business law student workbook Chapter 3 LEGAL ASPECTS OF BUSINESS ENTITIES STRUCTURED / ESSAY QUESTIONS. Question 1 Emily and Anwar are two talented and brilliant investors of robotic surgery. They have developed a product and have the intention to market their product. They were advised to form a partnership for their business. Emily and Anwar would like to seek your advice on the definition of partnership and to explain TWO (2) advantages of the partnership. Question 2 (a) Analyze FIVE (5) differences between a partnership and a company. (b) Explain the difference of sole proprietorship and company in terms of : i. Registration ii. Management iii. Structure iv. Constitution v. Dissolution Question 3 "Dissolution of a partnership may happen in various circumstances and its consequences not only affect the partners themselves, but also third parties dealing with them." Based on the above statement, examine FIVE (5) ways in which a partnership may be dissolved. 40
business law student workbook Chapter 3 LEGAL ASPECTS OF BUSINESS ENTITIES STRUCTURED / ESSAY QUESTIONS. Question 4 The relations between partners are determined by their partnership agreement. Therefore, discuss FOUR (4) rights of partners according to Section 26 of the Partnership Act 1961. Question 5 Partnerships are one of the common modes of business operation in Malaysia. Elaborate the definition of 'partnership' according to Partnership Act 1961. Question 6 Ahmad, Mohan and Ah Chong are partners in a firm called 'Hallo!Hello! Talk' which provides telecommunication services. Mohan wishes to retire as a partner. Advise Mohan as to the legal procedures and modes of giving notice of dissolution of partners to their existing and new customers of Hallo!Hello! Talk. Question 7 Emma and a few of her friends wishes to form a partnership. You are required to advise them on the legal principles pertaining to the following matters : (a) The minimum and maximum number of partners in the firm; (b) The necessity of a written partnership agreement; (c) Civil and criminal liability of partners; (d) The registration of the firm and whether the partnership is a legal entity. 41
business law student workbook Chapter 3 LEGAL ASPECTS OF BUSINESS ENTITIES STRUCTURED / ESSAY QUESTIONS. Question 8 Fauzan and Shafiq who were livestock dealers, had made arrangements to form a partnership with Jievan. Under the partnership agreement, Jievan was to provide capital for the purchase of livestock. Fauzan and Shafiq will then look after the livestock and sell them. Profit from the sale transaction is to be divided equally amongst them. After a while, Fauzan and Shafiq failed to render accounts to Jievan, neither did they pay his share of the profits. Based on the above situation, you are required to: (a) Interpret the issue that arises in the situation. (b) Illustrate the relevant provisions under Partnership Act 1961. (c) Apply ONE(1) relevant case to support your answer. (d) Interpret your conclusion of the above issue. Question 9 Sarah, Azam and Nabila intend to set up a company to be known as Friends4ever Sdn Bhd. You are closely acquainted with them and since you are working in a financial institution, they seek your advice on the following matters : (a) The characteristics and types of companies under the Companies Act 1965. (b) The differences between a private company and public company. 42
business law student workbook Chapter 3 LEGAL ASPECTS OF BUSINESS ENTITIES STRUCTURED / ESSAY QUESTIONS. Question 10 Salmah and Rashid are partners of Syarikat Ketuk Ketuk, a hardware shop. Salmah's friend, Rina, went to Syarikat Ketuk Ketuk to complain about a knife she bought from the shop a week ago. Salmah became angry and stabbed Rina with the knife. Rina brought a charge against Salmah for causing her grievous hurt. Rashid is worried that he would also be charged for causing grievous hurt since he is Salmah's partner. Based on the above situation, you are required to : (a) Advise Rashid on the criminal liability of partners in a partnership. (b) Explain ONE (1) decided case to support your answer. (c) Adapt the conclusion to the situation given. 43
business law student workbook AGENCY Chapter4:
business law student workbook Chapter 4 1. A person who appoints another individual to act on his/her behalf is called A. Sub agent B. Appointer C. Principal D. Agent AGENCY MULTIPLE CHOICE QUESTIONS. 2. Identify the remedies available to the principal in the event an agent makes a secret profit : i. The principal may repudiate the contract if he/she feels that it will bring loss to him. ii. Agents may dismiss the principal for breach of duty. iii. The principal may recover the amount of bribe received by the agent. iv. The principal may refuse to pay the agent his commission or any other remuneration. A. i and ii only B. i and iv only C. i, ii and iii only D. i, ii and iv only 3. An agency may be revoked by the operation of law in any of the following circumstances, EXCEPT : A. Principal or agent becomes insolvent or bankrupt. B. Principal and agent agreed to terminate the agency relationship. C. Principal or agent becomes insane or unsound mind. D. Death of the principal or agent. 45
business law student workbook Chapter 4 4. The following statements are true about ratification of an agent, EXCEPT : A. The agent does not have a principal. B. An agent who is appointed has exceeded his authority. C. An unauthorized agent acted as if he/she has the authority. D. The principal is aware and has full knowledge of the rectified matters. AGENCY MULTIPLE CHOICE QUESTIONS. 5. Determine the main duties of an agent to his principal : i. To exercise care and diligence. ii. To pay his principal all money received from the third party. iii. Not to act solely for the benefit of his principal. iv. To render proper accounts when required. A. i and ii only B. i and iv only C. i, ii and iii only D. i, ii and iv only 6. Determine the person who is nominated by the original agent with the knowledge and consent of the principal to work in the business of the agency for some particular part of the business. A. A substituted agent B. An assistant. C. A sub agent. D. A temporary agent. 46
business law student workbook Chapter 4 AGENCY MULTIPLE CHOICE QUESTIONS. An agent who was duly appointed has exceeded his authority. A person who has no authority to act for the principal has acted as if he has the authority. 7. Section 149 of the Contracts Act 1950 stipulates that when any of the above-mentioned situations arise, the principal can either reject or accept the contract. When the principal accepts and confirms such a contract, the acceptance is called a A. Power of attorney B. Performance C. Ratification D. Necessity 8. An agent can act on behalf of a principal A. When a person by his words holds another person as having authority to act for him. B. When a person has exceeded his authority. C. When a person who has no authority acted as if he has one. D. When a person acted in good faith to prevent the loss to the principal. 9. Identify which of the following statements best defines an agent according to Contracts Act 1950. A. An agent must be provided with training by the agency. B. An agent must not keep the money received from all transactions made without the consent of the principal. C. An agent must have a registered company. D. An agent must have a sub-agent to run his business. 47
business law student workbook Chapter 4 AGENCY MULTIPLE CHOICE QUESTIONS. 10. An agency may be created by the following ways, EXCEPT : A. Express appointment. B. Implied appointment. C. Performance. D. Necessity. 11. An agency may be dissolved based on these situations, EXCEPT : A. An outbreak of war. B. When both parties desire and agree to dissolve. C. The agency entered international market. D. Court impose an order for dissolution. 12. An agency relationship is relevant to many business and commercial transactions. Determine the way an agency may be created. A. By ratification. B. By registration at Companies Commission Malaysia. C. By a bank. D. By court order. 13. Identify the definition of an "agent" according to Contracts Act 1950. A. A person appointed to act beyond authority. B. A person employed to do any act for another in dealings with third person. C. A person appointed to to gain secret profit. D. A person employed to do any act outside the scope of duty. 48
business law student workbook Chapter 4 AGENCY MULTIPLE CHOICE QUESTIONS. 14. Identify the common types of agents : i. An auctioneer. ii. A factor. iii. A del credere. iv. Power of attorney. A. i, ii and iii only B. i, ii and iv only C. i, iii and iv only D. i, All of the above 15. Section 138 of the Contracts Act 1950 provides that no consideration is necessary to create an agency. Identify the ways an agency may be created : i. By express appointment by the principal. ii. By implied appointment by the principal. iii. By voluntary appointment by the agent. iv. By the principal adopting the act of an agent via process of ratification. A. i, ii and iii only B. i, ii and iv only C. i, iii and iv only D. i, All of the above 16. The following are the elements of agency of necessity under Section 142 of the Contracts Act 1950, EXCEPT : A. There must be a situation of necessity. B. The agent's act must be reasonable and prudent. C. The agent was able to communicate with the principal. D. The agent must act in good faith and in the business of the principal. 49
business law student workbook Chapter 4 AGENCY MULTIPLE CHOICE QUESTIONS. 17. Determine the main duties of a principal to his agent : i. To indemnify the agent for acts done in the exercise of his authority. ii. To pay his principal all money received from the third party. iii. Not to act solely for the benefit of his principal. iv. To pay the agent the commission or other remuneration agreed, unless the agency relationship is gratuitous. A. i and ii only B. i and iv only C. i, ii and iii only D. i, ii and iv only 18. The following is the necessary element to constitute estoppel, EXCEPT : A. A representation made on behalf of the principal to the third party concerning the authority of the agent. B. The third party must rely on the principal's representation and alter his legal position on the strength of the representation. C. Reliance by the third party on the representation made by the principal to the third party. D. The principal must ratify the whole act or contract. 50