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B. a Letter of Intent, a Charter and a contract
C. Articles of Association, a Charter and a contract
D. documents of intellectual property rights, patent rights and export numbers 4. What does the author mainly discuss in Para.13? A. Shanghai Pinkerton Float Glass Plant. B. Wholly foreign investment enterprises usually export to a subsidiary or trading company in another country. C. Some enterprises in China float bonds.
D. Financing of foreign business in China may take different forms. 5. According to the passage, which of the following is NOT true? A. Six steps are necessary in entering business in China.
B. Foreign investment manufacturing firms are free of import duty if their products are exported.
C. Marketing in China will be easier for foreign firms if they are joint venture partners of Chinese firms
already involved in domestic marketing.
D. Accounting practices for equity joint venture and cooperative joint venture are the same.
C. Translate the underlined sentences into Chinese (6) (7) (8) (9) (10).
D. Answer the following questions according to your understanding of the passage:
11. What do you think a foreign manufacturing business should do first when it wants to enter China for business? 12. What do you think are the difficulties a foreign enterprise may be faced with when it operates in China?
Passage Two Introduction to Companies The General Nature of Companies
(18) A company is a form of business organization which is owned by all those who invest in it. These investors
are known as shareholders as they own or “hold” a share of the company. The size of their share of the company will depend upon the amount of money they have invested in it.
The total investment by all of the shareholders is known as the share capital of the company. Thus, unlike a
sole trader, where one person owns the business, or a partnership, where a small number of people own a business, a company may be owned by several hundred or even several thousand shareholders.
Obviously, all of these people cannot be involved in running the company. Instead, the shareholders appoint
directors to run the company on their behalf. If the directors run the company efficiently and make a profit, the shareholders will receive a dividend each year as a return on their investment. Characteristics of Companies The characteristics of companies differ in several respects from both sole traders and partnerships. The following
are among the more important differences. Separate Legal Entity
(19) A unique feature of a company is that, no matter how many individuals have bought shares in it, it is treated
in its dealings with the outside world as if it was a person in its own right. It is said to be a separate legal entity. Just as the law can create this separate legal person, so also can it eliminate it, but its existence can only be terminated by using the proper legal procedures.
Thus, the identity of the shareholders in a large concern may be changing daily as shares are bought and sold
by different people. On the other hand, a small private company may have the same shareholders from the date it is incorporated (the day it legally came into being), until the date when liquidation is completed (the cessation of the company, often known also as “winding up” or being “wound up”). A prime example of its identity as a separate legal entity is that it may sue its own shareholders, or in turn be sued by them.
Limited Liability
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Most companies are “limited” companies. This means that any shareholder who has paid for the share(s) which
he has bought cannot be forced to pay more money into the company if, for example, it is making losses or has gone into liquidation. (20) Thus, the maximum amount of money any shareholder can lose by investing in a company is the amount he has invested. Unlike in sole traders or partnerships a shareholder in a limited company cannot be forced to sell his house, car, etc. to pay the debts of the business.
If a shareholder has not paid in full for the shares he has agreed to buy, he can be forced to pay the balance
owing on the shares. Once he has paid that amount he cannot be forced to pay any further amount. Thus, his liability is limited to the amount he has agreed to pay but has not yet paid.
This is known as limited liability and the company is known as a limited company. It is important to note that
it is the liability of the shareholders that is limited not the liability of the company. (21) Companies can incur debts well beyond what they are able to pay and therefore their liabilities can exceed their assets. There are, as will be seen later, some companies, known as unlimited companies, in which the liability of the
shareholders is not limited. Limited liability and the ability to raise large amounts of finance are the principal reasons why limited companies
are the most common form of business organization. Public Companies and Private Companies
Broadly speaking, there are two classes of company, the public company and the private company. Public companies
are also known as PLCs, that is, public limited companies.
A private company may not have less than two, or more than fifty, shareholders (excluding employees and
ex-employees) and may not offer its shares to the general public. Once some someone has purchased shares in a private company the right to transfer those shares to someone else is severely restricted. A PLC is a company which fulfils the following conditions: ? It must be able to issue share capital of at least 30,000; ? It must have at lest seven shareholders. There is no maximum. ? Its name must end with the words “public limited company”, the abbreviation “plc”. A private company is usually, but not always, smaller than a public company.
The shares that are dealt in on the Stock Exchange are all of public limited companies. This does not mean that
all public companies’ shares are traded on the Stock Exchange, as, for various reasons, some public companies have either chosen not to, or not been allowed to, have their share traded there. The ones that are traded in are known as quoted companies or listed companies meaning that the price of shares in them is quoted (or listed) by the Stock Exchange. Quoted companies have to comply with Stock Exchange rules and regulations. Share Capital and Dividends
A shareholder in a limited company obtains his reward for investing in the form of a share of the profits, known
as a dividend. (22) The directors decide how much of the profits is to be retained in the company and used for expansion. Out of the profits remaining they propose the payment of a certain amount of dividend. The shareholders cannot propose a dividend for themselves higher than that already proposed by the directors. They can, however, propose that a lesser dividend should be paid, although this action is very rare. If the directors propose that no dividend be paid, then the shareholders are powerless to alter the decision. The decision by the directors as to the amount proposed as dividends is a very complex one. Such matters as
the effect of taxation, the availability of bank balances to pay the dividends, the possibility of take-over bids and so on will all be taken into account.
Dividends are usually expressed as a percentage of the share capital. A dividend of 10% in Company A on 500,000
Common Shares of ￡1 each will amount to ￡50,000, or a dividend of 6% in Company B on 200,000 Common Shares of ￡2 each will amount to ￡24,000. A shareholder having 100 shares in each firm would receive ￡10 from Company A and ￡12 from Company B.
B. Answer the following questions according to your understanding of the passage:
13. A most significant difference between a public company and a small private company lies in that ______.
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A. B.
a public company has more shareholders than a private company the shareholders of a public company can secure a dividend each year whereas the shareholders of a private company does not C. the identity of the shareholders of a public company may be changing daily whereas the identity of the
shareholders of a private company almost remains the same D. a public company is treated as a separate legal entity whereas a private company is not 14. Which of the following statements is true? A. Unlike a sole trader or partnership a shareholder in an unlimited company can forced to sell his house
or car to pay the debts of the business. B. Like a sole trader or partnership a shareholder in a limited company also faces the risk of being forced
to sell his house or car to pay the debts of the business. C. The liabilities of a limited company cannot exceed its assets. D. The liability of a shareholder of a limited company is limited to what he has invested in it. 15. Which of the following statements is NOT true? A. The number of a private company’s shareholders may not exceed fifty. B. A PLC must have at lease seven shareholders. C. A PLC is always larger than a private company. D. Listed companies are those whose shares are traded on Stock Exchange.
16. The shareholders of a PLC have the right to do all of the following EXCEPT ______. A. attend general meetings of the company B. vote for directors at a general meeting of the company C. propose a dividend for themselves higher than that already proposed by the board D. propose a dividend less than that already proposed by the board
17. When the directors decide the amount proposed as dividends, they have to take into consideration all the
following EXCEPT ______. A. the effect of taxation B. whether they have enough money on the account to pay the dividends C. the number of the company’s shareholders D. whether they have enough reserves possibly to be used to take over some other company through Stock
Exchange
C. Translate the underlined sentences into Chinese (18) (19) (20) (21) (22).
D. Answer the following questions according to your understanding of the passage:
23. What are the major differences among companies, sole traders and partnerships according to our passage? 24. Why do most companies nowadays adopt the form of limited companies?
Passage Three Contracts 1 One legal agreement fundamental to many kinds of businesses is the contract. (30) We can broadly define
a contract as an exchange of promises enforceable by law. Few people realize how many businesses and personal transactions involve contracts. Contracts are so fundamental to business practice that even 5,000 years ago the Egyptians and Mesopotamians knew and enforced them. The contracts with which you are probably familiar – insurance policies, leases, and installment buying agreements – are only a few of the many forms. They are visible and recognizable as contracts because of their legal jargon. But a contract can be formed without even an exchange of spoken words.
Conditions for Contracts
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2 The law of contracts deals largely with identifying the exchanges that can be classified as contracts. In
the United States all of the following conditions must be met for a promise to be considered a valid and binding contract.
3 An offer must be made. One party must propose that agreement be entered into by both parties. (31) (Each
person or group of persons forming a contract is referred to as a party.) The offer can be oral or written: A salesperson telephones or writes a prospective client, telling the client he or she can purchase materials at a certain price. Or it can be in the form of an act: the telephone company offers to provide service by the act of placing a pay phone on a street corner. In any case, the offer must be specific enough to make clear the intention of the offering party.
4 An advertisement is not considered an offer. The placement of merchandise in a store window, therefore,
is not considered by contractual law as an offer to sell that merchandise. But when a store places merchandise on the shelf and marks it with a price tag, this is considered a legal offer.
5 (32) Acceptance of the offer must be voluntary. Don Corleone, the Godfather of film and novel, frequently
made people “an offer they couldn’t refuse”. Luckily for him, he did not depend on the law to enforce the promises gained by these offers, for an ability to refuse is a prerequisite for a valid contract. The courts will not uphold a contract if either the offer or the acceptance was obtained through what is termed “duress or undue influence”.
6 This rule is referred to as the principle of mutual acceptance. A counteroffer implies rejection of the
offer. If, for example, someone offered to sell you a car for $1,000 but you refused to pay more than $880, there would be no contract. But if the seller handed you the keys after your counteroffer, this act would be considered voluntary acceptance, and a contract would be made.
7 Both parties must give consideration. A promise binds legally only when each party gives something of value
to the other. This item of value, or consideration, may be money, goods, services or the forbearance (give up) of a legal right. The central idea behind this requirement is that bargaining should take place and that each party should get something for giving something.
8 The relative value of each party’s consideration does not matter to the courts. If people make what seems
to be a bad bargain, that is their affair. Consideration is legally sufficient when both parties receive what they thought was sufficient when making the agreement. In a famous 1888 Maryland decision (Devecmon v. Shaw) a man had promised that if his nephew took a trip to Europe, he would fully reimburse him for expenses. The uncle attempted to avoid payment, but the court ruled in favor of the nephew. The nephew was under no previous obligation to make the trip. By giving up his legal right to stay at home, he gave sufficient consideration. Thus, even though the bargain was very much to the nephew’s advantage, the contract was legal.
9 Both parties must be competent. (33) The law gives to certain classes of people only a limited capacity
to enter into contracts. These are minors, the insane, and the intoxicated. In most states, people so classified can make agreements only for the necessities of life: food, clothing, shelter, and medical care. 10 If a store sells a mentally incompetent man a TV set on credit, the installment purchase agreement is not
a valid contract and the store must bear any losses incurred. A hospital that gives this same person emergency treatment on credit, however, is entitled to payment.
11 There is little variation among states on the matter of contracts with the drunk or insane, but minors
are a special category. The age of majority is established by state law. In most states it is eighteen; in some, it is twenty-one. In addition, many states have adopted the Uniform Minor Student Capacity to Borrow Act. This law allows a lender to enforce an educational loan made to a minor, provided that the lender possesses a statement indicating that the borrower has been accepted for enrollment at a specific school.
12 The contract must be legal. The law will not enforce a promise that involves an illegal act. Some illegal
situations are obvious. A gangster can not get help form the courts to enforce a contract to deliver illegal
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drugs at a prearranged price. Less obvious is the case of the man who signs a promissory note to repay a gambling debt: the note is not an enforceable contract if state law prohibits gambling. Even on a loan that is otherwise legal, if the lender asks more interest than state law allows, the courts will allow him to collect only the principal, not the interest.
13 The contract must be in proper form. Although many contracts can be made orally, by an act, or by a casually
written document, in certain situations the law requires that a prescribed form be allowed for a promise to be considered a valid contract. The statute of frauds requires that the transfer of personal property worth more than $500 be put into writing. The written form is also required for all real property contracts and for contracts that cannot be fulfilled within one year, such as installment-purchase agreements. (34) When the law requires a written document, any change in the agreement must also be written.
14 A contract need not be long; all the elements of a contract can be contained in a simple document.
B. Answer the following questions according to your understanding of the passage: 25. The passage mainly talks about ______. A. the history of the contract B. the definition of the contract C. the conditions for the contract D. the kinds of contracts
26. What is meant by “consideration” in a contract? A. An item of value given to the other party. B. An item of considerable value given to the other party. C. Careful thinking before signing a contract. D. Money in exchange of goods.
27. We can infer from the text, ______ can make agreements for more than food, clothing, shelter, and medical
care in most states of the United States. A. the minors B. the deaf-mutes C. the insane D. the intoxicated
28. On a loan that is legal, the courts will allow a lender to collect only his principal when ______. A. there is no fixed interest rate B. the lender demands an interest more than the state law allows C. the interest rate is very low D. the borrower can’t pay the interest
29. We learn from the sixth condition that _______. A. any changes made in an agreement must be written B. contracts of any personal property transfer must be written C. a long contract must be written D. for all real property contracts and contracts that will extend over a year, written form is required.
C. Translate the underlined sentences into Chinese (30) (31) (32) (33) (34).
D. Answer the following questions according to your understanding of the passage: 35. In what forms can an offer be made?
36. According to the text, in what situations must a contract be written?
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