CIMA Exam CIMAPRA17-BA4-1 Topic 1 Question 99 Discussion

Actual exam question for CIMA's CIMAPRA17-BA4-1 exam

Question #: 99
Topic #: 1

Which of the following statements is correct in relation to the ability of a company to contract?

AIf a company has restricted the ability of its directors to contact and the directors ignore the restrictions, then the outsiders may not enforce the contract.

BThe shareholders of a company have the ability to enter into a contract on behalf of the company, irrespective of any restrictions on the directors.

CIf a company wishes to restrict the ability of its directors to enter into particular contracts it may do so by placing restrictions on the directors in its
articles of association

DIf the shareholders learn that the directors are about to ignore the restrictions placed upon their ability to contract by the company the shareholders are unable to prevent the directors from proceeding

Show Suggested Answer

Suggested Answer: D

by Angelica at Sep 15, 2024, 12:48 PM

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Xuan

2 months ago

I'm going with C as well. It's the only option that really captures how companies can limit their directors' contracting powers.

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Margarita

1 months ago

C) If a company wishes to restrict the ability of its directors to enter into particular contracts it may do so by placing restrictions on the directors in its articles of association

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Charlie

1 months ago

B) The shareholders of a company have the ability to enter into a contract on behalf of the company, irrespective of any restrictions on the directors.

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Lashawna

1 months ago

A) If a company has restricted the ability of its directors to contact and the directors ignore the restrictions, then the outsiders may not enforce the contract.

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Giuseppe

2 months ago

Haha, option D is a classic case of 'too little, too late'. If the shareholders can't stop the directors, what's the point of having those restrictions in the first place?

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Arminda

1 months ago

Haha, option D is a classic case of 'too little, too late'. If the shareholders can't stop the directors, what's the point of having those restrictions in the first place?

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Lili

1 months ago

C) If a company wishes to restrict the ability of its directors to enter into particular contracts it may do so by placing restrictions on the directors in its articles of association

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Audra

1 months ago

B) The shareholders of a company have the ability to enter into a contract on behalf of the company, irrespective of any restrictions on the directors.

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Eladia

2 months ago

A) If a company has restricted the ability of its directors to contact and the directors ignore the restrictions, then the outsiders may not enforce the contract.

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Lashon

2 months ago

Option B seems a bit off to me. Shareholders don't have the ability to directly enter into contracts on behalf of the company, that's the directors' job.

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Delfina

3 months ago

I think option C is the correct answer. Companies can definitely restrict their directors' ability to enter into certain contracts by placing those restrictions in their articles of association.

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Jerry

1 months ago

It's crucial for shareholders to be aware of the restrictions placed on directors in order to ensure that the company operates within the boundaries set by its articles of association.

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Tula

1 months ago

That's true, it's important for companies to have clear guidelines in place to regulate the actions of their directors when it comes to contracting.

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Ozell

1 months ago

I agree, option C is the correct answer. Companies can definitely restrict their directors' ability to enter into certain contracts by placing those restrictions in their articles of association.

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