Why Business Law Decides Your FLK1 Result
Business Law and Practice is the largest, most content-heavy subject on FLK1 — and one of the three hardest on the whole exam. It carries a big share of FLK1 questions, the detail is dense, and the distractors are precise. Get BLP under control and you have moved the needle on the entire paper.
This is the traps and high-frequency topics companion to our full Business Law revision guide. It assumes you know the syllabus shape and zeroes in on what comes up most and where candidates lose marks.
High-Frequency Topic 1 — Business Structures and Liability
Expect questions that turn on the difference between a sole trader, a general partnership, an LLP and a private company:
- Sole trader and general partnership: owners have unlimited personal liability. A partnership under the Partnership Act 1890 needs no formality to exist.
- LLP: separate legal personality and limited liability, but taxed like a partnership.
- Private limited company: separate legal personality; members' liability limited to any amount unpaid on their shares.
The trap is liability: questions describe a business going wrong and ask who is personally on the hook. Read the structure first.
High-Frequency Topic 2 — Board vs Shareholders (the Classic Trap)
The single most-tested BLP idea: who has the power to make a given decision — the directors or the shareholders?
- Directors manage the company day to day and make most operational decisions by board resolution (a simple majority of votes at a quorate board meeting; the chair may have a casting vote under the model articles).
- Shareholders decide the constitutional and structural matters reserved to them — changing the articles, removing a director, approving substantial property transactions — by ordinary or special resolution.
Questions routinely offer a "board resolution" answer where a shareholder resolution is actually required, or vice versa. Always ask: whose decision is this?
The Resolution Thresholds You Must Know Cold
| Resolution | Threshold | Used for (examples) |
|---|---|---|
| Ordinary resolution | Over 50% | Removing a director, most general decisions |
| Special resolution | 75% or more | Amending the articles, changing the company name, reducing capital |
| Written resolution (private companies) | Same thresholds, of eligible members | Most decisions, without holding a meeting |
Mixing up 50% and 75% is the most common avoidable error in the subject. Memorise the table.
Directors: Appointment, Duties and Removal
- Duties are codified in the Companies Act 2006, sections 171-177 — act within powers, promote the success of the company, exercise independent judgement, exercise reasonable care and skill, avoid conflicts of interest, not accept benefits from third parties, and declare interests in proposed transactions. Expect a scenario testing one specific duty.
- Removal is the favourite trap: a director can be removed by ordinary resolution (over 50%) under section 168 — but it requires special notice (28 days to the company), and the director has the right to make representations. Candidates wrongly pick "special resolution" because removing someone feels like it should need 75%. It does not.
Share Capital: Allotment, Pre-emption, Maintenance
- Allotment: directors need authority to allot shares; pre-emption rights generally mean new shares must be offered to existing shareholders first, unless those rights are disapplied.
- Maintenance of capital: a company generally cannot return capital to shareholders except by permitted routes (for example a properly conducted reduction of capital, or a share buyback). This underpins questions on dividends — which may be paid only out of distributable profits.
Financing and Charges
- Debt vs equity financing and their consequences come up regularly.
- Charges: a company can grant fixed charges (over specific assets) and floating charges (over a class of assets that changes from time to time). The deadline trap: a charge must be registered at Companies House within 21 days of creation, or it is void against a liquidator, administrator and creditors. The 21-day rule is heavily tested.
Partnerships: the Default-Rules Trap
Where partners have no written agreement, the Partnership Act 1890 default rules apply — and they surprise people:
- Partners share profits and losses equally, regardless of how much capital each contributed.
- No partner is entitled to a salary.
- Ordinary matters are decided by majority, but changing the nature of the business needs unanimity.
Questions love the partner who put in 80% of the capital and assumes they get 80% of the profit. Under the default rules, they do not.
Insolvency and Tax in Brief
You need the outline: the main corporate insolvency options (administration, liquidation, company voluntary arrangement) and the broad order of priority on a winding up — fixed-charge holders, then preferential creditors, then floating-charge holders, then unsecured creditors, then shareholders — plus the basics of corporation tax, VAT and capital allowances. These reward a clear framework more than fine detail.
How to Drill BLP
BLP is too big to cram and too detailed to skim. Learn it in structured chunks from the Business Law study guide, then hammer the high-frequency areas above with exam-style questions until the thresholds and deadlines are automatic. Because BLP carries so many FLK1 marks, the hours you put in here have the best return on the paper.
FAQ
Is Business Law the hardest SQE1 subject?
It is consistently ranked in the top three for difficulty and volume, alongside Criminal Law and Practice and Property — see our hardest subjects ranking. Its sheer size is the main challenge.
What is the most tested topic in BLP?
Decision-making — the split between board and shareholder power, and the resolution thresholds. If you nail nothing else, nail those.
Do I need to memorise the Companies Act section numbers?
You do not get marks for citing sections, but knowing that directors' duties sit at sections 171-177 and removal at section 168 helps you anchor the rules. The exam tests the content, not the citation.
The Bottom Line
Business Law rewards structure over cramming: get the board-versus-shareholder split, the 50% / 75% thresholds, section 168 removal and the 21-day charge deadline genuinely automatic, and the densest part of FLK1 becomes manageable. Our 13-book bundle includes the full Business Law guide — mapped to the specification with worked MCQs in every chapter — for £49.99.