Question 1

'AgriBotics Ltd' secures a bank loan using its fleet of autonomous tractors as collateral. The company is allowed to sell old tractors and buy new ones without asking the bank's permission, as long as it doesn't default on the loan.

What type of charge has the bank most likely taken over the tractors?

Accepted Answer

Identify the key characteristic: the company can deal with the assets in the ordinary course of business without permission. This defines a floating charge.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Confusing fixed and floating charges. If the company needs the bank's permission to sell the asset, it's a fixed charge.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA LW — Corporate and Business Law Practice Exam 2

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