CIMA Exam CIMAPRA17-BA4-1 Topic 4 Question 104 Discussion

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

Question #: 104
Topic #: 4

X Ltd has entered into a number of contracts with Y Ltd. In which of the following situations could the directors be held personally liable for the debts contracted with Y Ltd?

(i) X Ltd has continued to trade at a time when insolvency appeared inevitable

(ii) X Ltd has become insolvent and is unable to pay its debts to Y Ltd

(iii) X Ltd has contracted for a purpose not specified in its articles of association

A(i) only

B(i) and (ii) only

C(ii) only

D(iii) only

Show Suggested Answer

Suggested Answer: B

by Judy at Dec 07, 2024, 01:13 PM

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Jennifer

3 months ago

Oh man, this question is really making my head spin. I think I'm going to have to go with the answer that involves the most personal liability for the directors. After all, that's the juiciest option, right?

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Alecia

3 months ago

I think the answer is B as well. It makes sense that the directors would be on the hook if they kept the company going when they knew it was doomed. But the article thing is also interesting - I wonder if that's a common issue?

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Lenna

4 months ago

Haha, this question is a real brain-teaser! I'm just glad I'm not the one who has to make these tough decisions as a director. It's a tough job, that's for sure.

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Lauran

2 months ago

C) (ii) only

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Nidia

3 months ago

B) (i) and (ii) only

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Jaleesa

3 months ago

A) (i) only

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5 months ago

I think the directors could be held liable in situation (i) only.

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