Question 11: In the tort of negligence, it is said that the defendant owes the plaintiff a duty of care under what is now termed as the neighbour principle (Donoghue v. Stevenson). Which statement best describes this neighbour. (2 marks)

A. Persons nearby who are likely to be affected by my act or omission that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question.

B. Persons who are so closely and directly affected by my act or omission that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question.

C. Persons who are likely to be affected by my act or omission that I ought reasonably to exercise better judgement when directing my act.

D. Persons who are so closely and directly affected by my act or omission that I ought reasonably to have warned them about being so affected when I am directing my mind to the acts or omissions so that precautions can be taken.

Question 12: Unlike a sole proprietorship or a partnership, a company is a separate legal entity, i.e. it is a separate person in its own right. What does this mean? (2 marks)

A. The sole proprietor and partner are personally liable for all the debts of the business, whereas the owners of a company can only be made liable for the debts of a business if it is reasonable that they should be liable.

B. The sole proprietor and partner are not personally liable for all the debts of the business, whereas the owners of a company are personally liable for any outstanding debts of the company.

C. The sole proprietor and partner are personally liable for all the debts of the business, whereas the owners of a company are liable only for transactions done with the full knowledge of all the members.

D. The sole proprietor and partner are personally liable for all the debts of the business, whereas the owners of a company are only liable up to the amount they have invested in the company.

Question 13: Which best describes the business relationship of parties who enter into a purely contractual relationship with each other without intending to set up a company, limited liability partnership, limited partnership or partnership? (2 marks)

A. Directorship.

B. Shareholding.

C. Partnership.

D. Joint Venture.

Question 14: Which of the following is NOT a members right? (2 marks)

A. The power to manage the company.

B. To enforce the constitution.

C. To attend meetings and vote.

D. To company information.

Question 15: When a company is facing financial problems, an alternative to liquidating the company is Judicial Management. What is the basic aim of judicial management? (2 marks)

A. To liquidate the company.

B. To rehabilitate the company.

C. To bring the company under the control of the shareholders.

D. To have lawyers manage the company