January – June 2022

Summative Assessment - Examination Revision

Module: Commercial Law (HLWC1181)

Instructions:
In preparation for the upcoming Summative Assessment 1, please see below 50 example Multiple
Choice Questions with solutions:

1. When does a company become a separate legal personality?

a. On commencement of company business

b. On receiving a bank loan
c. On registration when issued with its registration certificate
d. On the completion of a financial year
Answer: C (page 345 prescribed text)

2. A company is an artificial entity that is unable to act on its own. Which one of the following
persons would be able to act on the company’s behalf?

a. Trustee
b. Director
c. Accountant
d. Partner
Answer: B (page 345 prescribed text)

3. The proprietary interest in a profit company is divided into which one of the following units?
a. Dividend
b. Unit
c. Share
d. Apportionment

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Answer: C (page 345 prescribed text)

4. Which one of the following combinations indicates the two main types of companies?
a. Close corporation and non- profit companies
b. Non-profit companies and profit companies
c. Profit companies and private companies
d. Private companies and public companies
Answer: B (page 347 prescribed text)

5. Which one of the following is both a profit and non-profit company?

a. Public company
b. State owned company
c. Private company
d. Domesticated company
Answer: D (page 348 prescribed text)

6. Which one of the following types of companies features the abbreviations (Pty) Ltd after its
name?
a. Non-profit company
b. Private company
c. State owned company
d. Public company
Answer: B (page 348 prescribed text)

7. Which one of the following types of companies features the abbreviation, Ltd, after its name?
a. Public company
b. State owned company
c. Private company
d. Non-profit company
Answer: A (page 347 prescribed text)
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 8. Whichtype of company features the abbreviations, SOC Ltd, after its name?
a. Public company
b. Non-profit company
c. State owned company
d. Private company
Answer: C (page 348 prescribed text)

9. Which one of the following is a profit company?

a. State department
b. Benevolent trust
c. State owned company
d. Non-profit company
Answer: C (page 347 prescribed text)

10. Which type of company features the abbreviation, NPC, after its name?
a. Public company
b. Private company
c. State owned company
d. Non-profit company
Answer: D (page 348 prescribed text)

11. Which one of the he following companies can be either a profit or a non-profit company?
a. Public company
b. External company
c. State owned company
d. Private company
Answer: B (page 348 prescribed text)

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 12. A sareholders meeting may only proceed if persons representing 25 percent of the voting rights
are present. What is the name of the term which refers to this particular number of persons?
a. A proxy
b. A consensus
c. A quorum
d. A resolution
Answer: C (page 350 prescribed text)

13. Should a shareholder be unable to attend a meeting, they may appoint another person to
represent them at the meeting. To which one of the following procedures does this refer?
a. A resolution
b. A consensus
c. A quorum
d. A proxy
Answer: D (page 350 prescribed text)

14. Which one of the following refers to the process that occurs after shareholders exercise their
voting rights pursuant to a motion?
a. Resolution
b. Consensus
c. Quorum
d. Proxies
Answer: A (page 349 prescribed text)

15. What percentage of shareholders must vote in favour of a special resolution for it to be passed?
a. 25 percent
b. 50 percent
c. 75 percent
d. 100 percent
Answer: C (page 351 prescribed text)
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 16. What is the minimum number of directors that need to be appointed for a non -profit company?
a. Minimum 5
b. Minimum 3
c. Minimum 7
d. Minimum 6
Answer: B (page 352 prescribed text)

17. Which person or persons, as specified below, may be appointed as a director of a company?
a. A juristic person
b. A person who does not satisfy the requirements in the MOI
c. An unemancipated minor
d. A woman married in community of property
Answer: D (page 352 prescribed text)

18. Which person or persons, as specified below, are not disqualified from being appointed as a
director of a company?
a. A juristic person
b. A person who is prohibited by a court of law
c. A person who satisfies the requirements in the MOI
d. An unemancipated minor
Answer: C (page 352 prescribed text)

19. Which one of the following processes can be followed by the shareholders of a company, for the
purpose of issuing shares to directors of the company?
a. A special resolution
b. A consensus
c. A quorum
d. An ordinary resolution
Answer: A (page 351 prescribed text)

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 20. Directors have a fiduciary duty, which is based on which one of the following concepts?
a. Good trust
b. Equality
c. Good faith
d. Honour
Answer: C (page 353 prescribed text)

21. Which one of the following justifies the application of the Business Judgement rule as a test in
defence of the decision making of a director?
a. Trust
b. Equality
c. Good faith
d. Honour
Answer: C (page 357 prescribed text)

22. As of which date may close corporations no longer be registered?

a. 27 April 1994
b. 1 May 2011
c. 16 June 2012
d. 15 July 2016
Answer: B (page 358 prescribed text)

23. Who may bind a close corporation?

a. All trustees of the corporation
b. Only one director of the corporation
c. Only one supervisor of the corporation
d. All members of the corporation
Answer: D (page 361 prescribed text)

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 24. What are the constitutive documents of a close corporation referred to?
a. Partnership agreement
b. Deceased will
c. Founding statement
d. Memorandum of incorporation
Answer: C (page 362 prescribed text)

25. How many natural persons may form a close corporation?

a. One to ten
b. One to five
c. One to four
d. One to three
Answer: A (page 357 prescribed text)

26. What is the minimum number of directors that may be appointed for a personal liability company?
a. Minimum 5
b. Minimum 3
c. Minimum 1
d. Minimum 6
Answer: C (page 352 prescribed text)

27. Sipho sold his Playstation to Mathew and promised delivery on Monday. Two weeks later, Sipho
has still not made the delivery. How would you define this form of non-honouring of promise?

a. Consistent duress
b. Undue influence
c. Breach of contract
d. Positive malperformance

Answer: C (page 59 prescribed text)

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 28. Which one of the following Latin terms defines a person who does not perform on time, in terms
of a contract?

a. Crebitoris
b. Mora debitoris
c. Debitoris
d. Mora creditoris
Answer: B (page 59 prescribed text)

29. Which option, from those below, represents a breach of contract which is characterised by a
person performing in terms of the contract, but his or her performance is rendered inadequate?
a. Positive malperformance
b. Prevented performance
c. Negative malperformance
d. Delayed performance
Answer: A (page 59 prescribed text)

30. Which one of the following Latin phrases represents the acronym ENAC?
a. Exception non abiditum contractus
b. Exception non abjectio contractus
c. Exception non adimpleti contractus
d. Exception non additio contractus
Answer: C (page 61 prescribed text)

31. Which one of the following describes the term delict.

a. Wrongful and blameworthy action or conduct that causes harm to another person
b. Deliberate misrepresentation that causes harm to another person
c. Damaging and undesirable influence that causes harm to another person
d. Innocent misrepresentation that causes harm to another person
Answer: A (page 62 prescribed text)

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 32. Which one of the following combinations, of delictual elements forms the basis of a delictual
claim against a wrongdoer?
a. a. Harm, conduct, wrongfulness, causation, duress
b. Harm, negligence, wrongfulness, causation, fault
c. Harm, conduct, wrongfulness, misrepresentation, fault
d. Harm, conduct, wrongfulness, causation, fault
Answer: D (page 64 prescribed text)

33. What are the three (3) forms of intent?

a. Dolus directus, dolus indirectus, and actus reus
b. Dolus directus, dolus indirectus, and mens rea
c. Dolus directus, dolus indirectus, and dolus eventualis
d. Dolus directus, culpa, and dolus eventualis
Answer: C (page 79 prescribed text)

34. Which one of the following categories, listed below, represents defences, which if argued
successfully, may excuse the intent of the wrongdoer?
a. Mistake, jest, provocation and accidental
b. Mistake, jest, provocation and intoxication
c. Mistake, jest, provocation and self defence
d. Mistake, jest, provocation and aggravation
Answer: B (page 79 – 80 prescribed text)

35. Which one of the following, one of the following describes a contract such as a donation, which
typically includes one debtor and one creditor?
a. Unilateral contract
b. Reciprocal contract
c. Bilateral contract
d. Multilateral contract
Answer: A (page 91 prescribed text)

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 36. Which one of the following is a contract in which the contracting parties are both creditors and
debtors, and more than one obligation is created between them?
a. Unilateral contract
b. Reciprocal contract
c. Bilateral contract
d. Multilateral contract
Answer: B (page 91 prescribed text)

37. Companies, close corporations, universities and statutory bodies are examples of which type of
legal subject?
a. Natural persons
b. Juristic persons
c. Legal persons
d. Minor persons
Answer: B (page 91 prescribed text)

38. Which one of the following statements accurately differentiates between debtors from a legal/law
perspective and debtors from an accounting perspective?
a. In law, debtors have a duty they must perform, whereas in accounting, debtors owe money
to the business
b. In law, debtors have a right that they may enforce, whereas in accounting, the business owes
the debtor money
c. In law, debtors have a duty they must perform, whereas in accounting, the business owes
the debtors money
d. In law, debtors do not have a duty to perform, whereas in accounting, the debtors owe the
business money
Answer: A (page 93 prescribed text)

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 39. Which one of the following statements accurately differentiates between creditors from a legal
/law perspective and creditors from an accounting perspective?
a. In law, creditors have a duty that they must perform, whereas in accounting, creditors owe
money to the business
b. In law, creditors have a right that they may enforce, whereas in accounting, the business
owes the creditors money
c. In law, creditors have a duty that they must perform, whereas in accounting, the business
owes the creditors money
d. In law, creditors do not have a duty to perform, whereas in accounting, a creditor owes money
to the business
Answer: B (page 93 prescribed text)

40. Which one of the following selections of contracts, is an example of a nominate contract?
a. Contract of sale, contract of lease and partnership agreements
b. Contract of sale, contract of lease and restraint of trade agreements
c. Contract of sale, contract of lease and surety agreements
d. Contract of sale, contract of lease and notarial bond agreements
Answer: A (page 94 prescribed text)

41. Which one of the following contracts of sale is indicated when something is sold as is, with or
without defects?
a. Over the counter sale
b Lay-bye sale
c Higher purchase sale
d Voetstoots sale

Answer: D (page 94 prescribed text)

42. How would one describe a contract that has entered into force but is affected by improper
conduct or a defective process of conclusion?
a. Legal
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 b. Valid
c. Voidable
d. Defective
Answer: C (page 95 prescribed text)

43. How would one classify a contract when legal obligation, rights and duties are created?
a. Temporary contract
b. Valid contract
c. Voidable contract
d. Defective contract
Answer: B (page 95 prescribed text)

44. How would one describe a contractual situation when there are no legal obligations, rights and
duties?
a. Void
b. Valid
c. Enforceable
d. Defective
Answer: A (page 95 prescribed text)

45. Which one of the following elements is necessary for consensus to occur?
a. Meeting of parties
b. Meeting of wills
c. Meeting of attorneys
d. Meeting of minds
Answer: D (page 99 prescribed text)

46. Which one of the following refers to the person who makes the offer?
a. Offeree
b. Offeror
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 c. Lessee
d. Applicant
Answer: B (page 100 prescribed text)

47. Which one of the following refers to the person to whom the offer is made?
a. Offeree
b. Offeror
c. Lessee
d. Applicant
Answer: A (page 100 prescribed text)

48. Which one of the following is a requirement for a valid offer?

a. The intention to reach an agreement
b. The intention to enter into a contract
c. The intention to serve as an offer
d. The intention to create rights and duties
Answer: C (page 101 prescribed text)

49. Which one of the following acceptance theories states that a contract will enter into force, on the
date and the place where the offeree posts the letter of acceptance?
a. Default theory
b. Information theory
c. Declaration theory
d. Expedition theory
Answer: D (page 108 prescribed text)

50. Which one of the following acceptance theories states that the contract will enter into force, when
and where the acceptance by the offeree comes to the notice of the offeror?
a. Default theory
b. Information theory
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 c. Declaration theory
d. Expedition theory
Answer: B (page 108 prescribed text)

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