ExpertMedium1 markMultiple Choice
ACCA · Question 45 · Corporate and Business Law
What is the legal effect of a company's Articles of Association?
What is the legal effect of a company's Articles of Association?
Answer options:
A.
They form a binding contract between the company and third parties.
B.
They form a binding contract between the company and its members, and between the members themselves.
C.
They are merely guidelines with no legal force.
D.
They bind the directors to the employees.
How to approach this question
Identify the parties bound by the statutory contract created by the Articles.
Full Answer
B.They form a binding contract between the company and its members, and between the members themselves.✓ Correct
Under s.33 of the Companies Act 2006, the provisions of a company's constitution bind the company and its members to the same extent as if there were covenants on the part of the company and of each member to observe those provisions.
Common mistakes
Assuming the Articles create a contract with outside third parties.
Practice the full ACCA LW — Corporate and Business Law Practice Exam 1
60 questions · hints · full answers · grading
More questions from this exam
Q01Which of the following courts is bound by the decisions of the Court of Appeal (Civil Division)?EasyQ02In the context of statutory interpretation, what is the 'mischief rule'?MediumQ03Which of the following statements regarding the Human Rights Act 1998 is correct?MediumQ04A shop displays a laptop in its window with a price tag of £50. The actual price is £500. A custo...EasyQ05Which of the following represents a valid exception to the rule that past consideration is no con...Medium