{ "quiz": { "id": 1141075, "pass_fail": false, "show_explanation": false, "passing_score": null, "question_ids": [ 6538082, 6538083, 6538084, 6538085, 6538086, 6538087, 6538088, 6538089, 6538090, 6538091 ] }, "choices": [ { "id": 22748642, "text": "

Intention to create legal relations.

", "credited": "MTl0cnVlNDY=", "question_id": 6538082, "position": 0 }, { "id": 22748643, "text": "

A clear, written agreement.

", "credited": "MTBmYWxzZTk=", "question_id": 6538082, "position": 1 }, { "id": 22748644, "text": "

The exchange of money.

", "credited": "MTNmYWxzZTE5", "question_id": 6538082, "position": 2 }, { "id": 22748645, "text": "

Consideration.

", "credited": "MTAwdHJ1ZTg0", "question_id": 6538082, "position": 3 }, { "id": 22748646, "text": "

A promise to pay the other party pound for pound compensation if specified scenarios take place.

", "credited": "NjVmYWxzZTk5", "question_id": 6538083, "position": 0 }, { "id": 22748647, "text": "

A statement of existing fact contained in a contract.

", "credited": "NTd0cnVlNTg=", "question_id": 6538083, "position": 1 }, { "id": 22748648, "text": "

A condition that must be fulfilled before full performance under a contract becomes due.

", "credited": "ODRmYWxzZTU=", "question_id": 6538083, "position": 2 }, { "id": 22748649, "text": "

A statement, given orally or in writing, promising to take/refrain from taking certain action in the future.

", "credited": "NzJmYWxzZTk0", "question_id": 6538083, "position": 3 }, { "id": 22748650, "text": "

Undertaking.

", "credited": "MzJmYWxzZTE3", "question_id": 6538084, "position": 0 }, { "id": 22748651, "text": "

Retention of title.

", "credited": "N2ZhbHNlODk=", "question_id": 6538084, "position": 1 }, { "id": 22748652, "text": "

Force majeure.

", "credited": "NjB0cnVlOTA=", "question_id": 6538084, "position": 2 }, { "id": 22748653, "text": "

Indemnity.

", "credited": "MjFmYWxzZTE0", "question_id": 6538084, "position": 3 }, { "id": 22748654, "text": "

A promise to pay the other party pound for pound compensation if specified circumstances arise.

", "credited": "NTN0cnVlMzI=", "question_id": 6538085, "position": 0 }, { "id": 22748655, "text": "

A statement given in the course of business/legal practice by someone held out as representing the firm, to a party that reasonably places reliance on them.

", "credited": "MzJmYWxzZTM=", "question_id": 6538085, "position": 1 }, { "id": 22748656, "text": "

An assurance or promise relating to the present condition of an object, entity or state of affairs, the breach of which may give rise to a legal claim for damages.

", "credited": "NjJmYWxzZTI=", "question_id": 6538085, "position": 2 }, { "id": 22748657, "text": "

An essential form of protection for borrowers.

", "credited": "NzVmYWxzZTEwMA==", "question_id": 6538086, "position": 0 }, { "id": 22748658, "text": "

An essential form of protection for buyers.

", "credited": "NTlmYWxzZTM=", "question_id": 6538086, "position": 1 }, { "id": 22748659, "text": "

An essential form of protection for lenders.

", "credited": "MTF0cnVlMTA=", "question_id": 6538086, "position": 2 }, { "id": 22748660, "text": "

An essential form of protection for sellers.

", "credited": "MTJmYWxzZTQw", "question_id": 6538086, "position": 3 }, { "id": 22748661, "text": "

A loan provided on very short notice.

", "credited": "OTZmYWxzZTU=", "question_id": 6538087, "position": 0 }, { "id": 22748662, "text": "

A loan requiring a special form of security from the borrower.

", "credited": "MGZhbHNlNDc=", "question_id": 6538087, "position": 1 }, { "id": 22748663, "text": "

A loan given to a company that is valued at more than £1 billion.

", "credited": "NThmYWxzZTM4", "question_id": 6538087, "position": 2 }, { "id": 22748664, "text": "

A loan provided by a collection of lenders.

", "credited": "Mjh0cnVlODU=", "question_id": 6538087, "position": 3 }, { "id": 22748665, "text": "

A charge over assets that cannot be freely sold.

", "credited": "Njh0cnVlODM=", "question_id": 6538088, "position": 0 }, { "id": 22748666, "text": "

A charge over assets that can be freely sold.

", "credited": "ODJmYWxzZTg5", "question_id": 6538088, "position": 1 }, { "id": 22748667, "text": "

All creditors that have not yet been repaid.

", "credited": "OTBmYWxzZTgy", "question_id": 6538089, "position": 0 }, { "id": 22748668, "text": "

Creditors that do not have the benefit of security over any of a borrower's assets.

", "credited": "Nzh0cnVlNTc=", "question_id": 6538089, "position": 1 }, { "id": 22748669, "text": "

All the creditors of an insolvent business.

", "credited": "ODVmYWxzZTI1", "question_id": 6538089, "position": 2 }, { "id": 22748670, "text": "

Vehicles.

", "credited": "MjBmYWxzZTYx", "question_id": 6538090, "position": 0 }, { "id": 22748671, "text": "

Money the borrower is owed.

", "credited": "N2ZhbHNlNQ==", "question_id": 6538090, "position": 1 }, { "id": 22748672, "text": "

Cash in the borrower's bank account.

", "credited": "MzVmYWxzZTg4", "question_id": 6538090, "position": 2 }, { "id": 22748673, "text": "

Intellectual property rights.

", "credited": "MjZmYWxzZTc3", "question_id": 6538090, "position": 3 }, { "id": 22748674, "text": "

Unfinished products.

", "credited": "MjVmYWxzZTI3", "question_id": 6538090, "position": 4 }, { "id": 22748675, "text": "

Factories.

", "credited": "OTFmYWxzZTQ3", "question_id": 6538090, "position": 5 }, { "id": 22748676, "text": "

All of the above.

", "credited": "OTF0cnVlMzU=", "question_id": 6538090, "position": 6 }, { "id": 22748677, "text": "

It has taken out a loan that exceeds the value of its revenue.

", "credited": "NzRmYWxzZTE1", "question_id": 6538091, "position": 0 }, { "id": 22748678, "text": "

When it needs to raise investment in order to expand.

", "credited": "N2ZhbHNlOTk=", "question_id": 6538091, "position": 1 }, { "id": 22748679, "text": "

When the total of its liabilities exceeds its assets.

", "credited": "MzJ0cnVlNTc=", "question_id": 6538091, "position": 2 }, { "id": 22748680, "text": "

It cannot pay its debts on time.

", "credited": "ODR0cnVlMA==", "question_id": 6538091, "position": 3 } ], "questions": [ { "id": 6538082, "prompt": "

Which of these elements are required to form a binding contract?

", "text_explanation": "

The “consideration” requirement in this context means that something of value must flow from each party to the other. It need not be money however, and it doesn't matter if the goods/services to be exchanged are of different values. 

If I promise to give my laptop to a friend for free, that friend has not given any consideration for my promise. My friend therefore cannot sue me for breach of contract if I do not then give him/her the laptop. However, if I promise to give my laptop to a friend in exchange for that friend promising to (for instance) give me their car or paint my house, then this would satisfy the “consideration” requirement. 

Note that contracts do not have to be in written form, as long as the parties can demonstrate that an offer was made, this offer was accepted, consideration flowed between the parties, and those parties intended to create legal relations. Contracts are often written out in practice to help explicitly demonstrate that these elements have been fulfilled, and to add certainty in respect of the terms governing those contracts.

", "quiz_id": 1141075, "position": 0, "display_type": "checkbox", "choice_ids": [ 22748642, 22748643, 22748644, 22748645 ] }, { "id": 6538083, "prompt": "

Which of these definitions best describes a "warranty"?

", "text_explanation": "

Warranties are statements of existing fact that are contained in a contract. These amount to assurances or promises relating to the present condition of an object, entity or state of affairs, the breach of which may give rise to a legal claim for damages. By way of example, a seller may warrant to a buyer that it is not currently involved in any litigation.

", "quiz_id": 1141075, "position": 1, "display_type": "radio", "choice_ids": [ 22748646, 22748647, 22748648, 22748649 ] }, { "id": 6538084, "prompt": "

Which type of clause predetermines the allocation of risk and frees each party from liability if specified circumstances arise that are beyond the control of the parties and prevent either party from fulfilling their obligations?

", "text_explanation": "", "quiz_id": 1141075, "position": 2, "display_type": "radio", "choice_ids": [ 22748650, 22748651, 22748652, 22748653 ] }, { "id": 6538085, "prompt": "

What is an indemnity?

", "text_explanation": "

Indemnities are promises to pay the other party pound for pound compensation if specified scenarios take place. For instance, if the target company is in the middle of a law suit at the time it is acquired, the seller can agree to reimburse the buyers in the future for any money that the target company is required to pay out in relation to that law suit post-acquisition. Indemnities may be subject to financial caps, i.e. limits on the amount that the seller will have to pay out if the buyer makes a claim that relates to the circumstances covered by the indemnity. Indemnities may also be subject to time limitations, meaning that after a pre-agreed period of time post-acquisition, the buyer can no longer rely upon those indemnities

", "quiz_id": 1141075, "position": 3, "display_type": "radio", "choice_ids": [ 22748654, 22748655, 22748656 ] }, { "id": 6538086, "prompt": "

What is "security"?

", "text_explanation": "

Security is an essential form of protection for lenders. It refers to a right given by a borrower to a lender that typically entitles the lender to take control of some (or all) of the borrower’s assets if the borrower fails to repay the loan as agreed. Under such circumstances, the lender can then try to sell enough of those assets to repay itself. 

", "quiz_id": 1141075, "position": 4, "display_type": "radio", "choice_ids": [ 22748657, 22748658, 22748659, 22748660 ] }, { "id": 6538087, "prompt": "

What is a syndicated loan?


", "text_explanation": "

Syndicated loans are typically arranged where borrowers need to raise large amounts of money. They involve lenders “syndicating” (i.e. grouping together) and collectively providing the required capital (hence the term “syndicated loan”). Doing so enables lenders to spread the risk and collectively lend amounts that each individual lender may be prohibited from lending by their internal credit committees. Each lender will then receive a share of the interest payments.

", "quiz_id": 1141075, "position": 5, "display_type": "radio", "choice_ids": [ 22748661, 22748662, 22748663, 22748664 ] }, { "id": 6538088, "prompt": "

Which of these best describes a fixed charge?

", "text_explanation": "

If a loan has not been repaid in accordance with the agreed terms, a fixed charge (or mortgage) may give a lender the legal right to claim and sell the secured assets in order to recover the funds loaned out. A borrower cannot usually sell assets that are subject to fixed charges without the lender’s consent, so fixed charges will not usually be suitable for assets such as stock (which businesses need to be able to freely sell in order to generate profit). Note that mortgages and fixed charges are not identical in all respects. However, discussion of the differences (which relate to the transfer of ownership) is beyond the scope of this course. Floating charges operate in a similar manner to fixed charges, but are different in that the assets over which floating charges are taken can be freely sold unless the floating charge “crystallises”. 

", "quiz_id": 1141075, "position": 6, "display_type": "radio", "choice_ids": [ 22748665, 22748666 ] }, { "id": 6538089, "prompt": "

What are "unsecured creditors"?

", "text_explanation": "", "quiz_id": 1141075, "position": 7, "display_type": "radio", "choice_ids": [ 22748667, 22748668, 22748669 ] }, { "id": 6538090, "prompt": "

Over which of these assets could a lender take security?

", "text_explanation": "

Borrowers in commercial transactions will typically be companies that own a wide range of assets. Lenders will usually take security over one or more of these assets (as they would over a house when lending to the purchaser of a home). These assets typically include factories, machinery and stock. 

However, lenders can take security over a much wider range of assets, for instance: cash the borrower has in its company bank accounts; money the borrower is owed but has not yet received from its customers (this money is referred to as “book debts”); work in progress (i.e. products that have not yet been fully manufactured); the borrower’s intellectual property rights; and shares the borrower owns in other companies (e.g. shares in its subsidiaries).

", "quiz_id": 1141075, "position": 8, "display_type": "checkbox", "choice_ids": [ 22748670, 22748671, 22748672, 22748673, 22748674, 22748675, 22748676 ] }, { "id": 6538091, "prompt": "

A company is insolvent when...

", "text_explanation": "

The amount of debt a company owes won't necessarily link to its solvency. For example, a company might borrow £100 million, but will not be "insolvent" as long as it repays the debt in accordance with the terms of the loan agreement. The company may only need to make proportionately small repayments over time and - if it's generating comparatively low revenue - might be able to make such repayments using cash invested by investors.

", "quiz_id": 1141075, "position": 9, "display_type": "checkbox", "choice_ids": [ 22748677, 22748678, 22748679, 22748680 ] } ] }