QUESTION ONE (20 marks)

Assume for the purposes of this Question One that it is 1 April 2020.

You act for Simon Shepperton. On 4 March 2020, Simon retired from Sibert & Sons ("Sibert"), a cyber-business which he set up in partnership with Robert Maynard in 2011. Being friends, Simon and Robert did not enter into a partnership agreement when they set up the business, and simply shared everything equally. Simon took no legal advice at the time of set-up and did not take any upon his retirement because, for tax reasons, he needed to extricate his share of the business within the tax year 2019/20. Therefore, the valuation of his share was basic and did not take into account his share of debts incurred by Sibert at the date of his retirement. Maxine Prentice (an existing employee of the business) bought his share of the business and with Robert's assent became a partner on Simon's retirement. The only administrative task that Simon requested Robert to undertake was to remove his name from all business stationery and from the business website.

Simon has recently received a letter of claim from solicitors acting for Bennetts Electronics, a supplier of Sibert (Document A).

(a)Explain whether Simon is liable for the sum claimed and if so, to what extent.

(8 marks)

(b)Assuming Simon is liable, explain whether there is anything you would advise Simon to do now to prevent any further liability in relation to Sibert's future debts.

(6 marks)

(c)Simon is considering investing some of the proceeds from the sale of his share in Sibert and asks whether you think investing in land for development purposes is as good as he is led to believe.He would not need any external finance to invest.Your firm is not authorised by the Financial Conduct Authority.How would you respond, and why?

(6 marks)

QUESTION TWO (20 marks)

Your firm acts for SBL Bakery Limited ("SBL"), which runs a food manufacturing business in Rotherham.A schedule of the directors and shareholders in SBL together with a copy of SBL's articles of association is set out in Document B. SBL's current Net Borrowing is 3.5 million and its current Net Worth is 10.5 million.

The directors of SBL wish to put into effect the following proposals:

1)The purchase of a new Heissenkoch 123 Oven for 105,000.

2)The entry into an unsecured loan of 100,000 from Flytrap Plant Finance Limited to finance the purchase of the oven.

3)The appointment of Dilip Sharma to the board of directors as a non-executive director as soon as possible.

(a)Explain how SBL may put these matters into effect within one set of chronological meetings/documents, identifying all relevant matters of company procedure. Assume for the purposes of this part (a) that all participants are in favour of the proposals.

(14 marks)

(b)For the purposes of this part (b), assume that a board meeting has been called to appoint Dilip that Andrew Thompson is opposed to the appointment and that Sharad Kapoor is unable to attend the meeting.Explain whether Andrew can prevent Dilip's appointment.

(6 marks)

Total Part 2: 40 marks

TOTAL FOR THIS MOCK EXAMINATION: 50 MARKS

DOCUMENT A

Taylors Solicitors LLP

Number One

Bentley Square

Camberley

Surrey

CT7 9NN

Mr S Shepperton

333 Trighton Drive

Burpham

Surrey

GU22 3NY

Ref: SL/Tr/7766BennettsE

[Yesterday's date]

Dear Mr Shepperton

Simon Shepperton (Sibert & Sons) v Bennetts Electronics

We have been instructed by Bennetts Electronics to inform you that you have seven days from the date of this letter to pay the attached invoice.If payment is not forthcoming, we have been instructed to commence proceedings against you.

Full payment should be made to Bennetts Electronics in the usual way.

Yours sincerely

Stanley Leeman

Associate Solicitor

Taylors Solicitors LLP

Taylors Solicitors LLP is a limited liability partnership registered in England and Wales, registered number OC22121234, and is authorised and regulated by the Solicitors Regulation Authority.Any reference to a partner in relation to Taylors Solicitors LLP is to a member of Taylors Solicitors LLP or an employee with equivalent standing and qualifications.A list of members and of non-members who are described as partners is available for inspection at the registered office, Number One, Bentley Square, Camberley, Surrey CT7 9NN.

Bennetts Electronics

INVOICE NUMBER 77243

Invoice Date:27 February 2020

Customer: Sibert & Sons: Simon Shepperton

Sum due: for parts supplied on 27 February 2020 42,300 (incl VAT)

In accordance with our terms and conditions such sum to be payable immediately on delivery of this invoice.

If paying by cheque, cheques should be made payable to 'Bennetts Electronics'.

If paying directly through our bank account the details are:

Metro Bank

Sort code: 20:10:01

A/c number 77300212

Assume that for the purposes of this question:

-Bennetts Electronics have complied with its terms and conditions; and

-That Sibert are very familiar with the terms and conditions.

DOCUMENT B

Shareholder

Number of fully paid shares of 1 nominal value

Directorship

Jessica Drew

45,000

Managing director and Chairperson

Andrew Thompson

25,000

Finance director

Dilip Sharma

25,000

No

Sharad Kapoor

0

Production director

Hilary Lane

5,000

No

The Companies Act 2006

Private Company Limited by Shares

Articles of Association of SBL Bakery Limited ("the company")

1.Definitions: [assume that "Model Articles", "Net Borrowing" and "Net Worth" are all appropriately defined.]

2.The Model Articles shall apply to the company, except in so far as they are modified or excluded by these articles or are inconsistent with them.

3.The directors of the company may not increase Net Borrowing of the company where as a result thereof Net Borrowing would exceed two times Net Worth unless they are authorised to do so by a special resolution of the members.

4.Model Article 8 shall not apply to the company.