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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Noel

5 days ago

I believe the directors could also be held liable in situation (ii) as the company is unable to pay its debts.

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Bobbye

8 days ago

I agree with Rochell, because trading when insolvency is inevitable shows negligence.

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Rochell

10 days ago

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

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