CeMAP 1 Practice Test

CeMAP 1 Law, Wills & Trusts Practice Questions

Law, Wills & Trusts makes up 5 of every 40 questions on a Tigertest CeMAP 1 practice test. Here are 10 of the 25 questions on it, each with the answer and the reason.

Updated 2026-11-10 by the Tigertest team. Based on LIBF's FSRE (CeMAP Module 1) syllabus for FRE1 and FRE2. Original questions; case studies written as single questions. Not affiliated with LIBF or Walbrook Institute London.

1. 1. Under the Partnership Act 1890, a partner in an ordinary partnership is liable for the firm's debts:

   • A.Only after the firm closes
   • B.Personally and without limit
   • C.Only up to their capital
   • D.Only for debts they signed

   Answer: B. Partners in an ordinary partnership have unlimited personal liability for the firm's debts, so a creditor can pursue any partner's own assets. Only an LLP or a company gives limited liability.

2. 2. A director keeps a company trading when they should have known it could not avoid insolvent liquidation. They may be personally liable for:

   • A.Tipping off
   • B.Misrepresentation
   • C.Market abuse
   • D.Wrongful trading

   Answer: D. Under the Insolvency Act 1986, a director who carries on trading when they knew or ought to have known insolvent liquidation could not be avoided can be ordered to contribute to the company's assets.

3. 3. A limited company can own property and be sued in its own name because it:

   • A.Has its own legal personality
   • B.Is registered with the FCA
   • C.Is owned by its directors personally
   • D.Has unlimited shareholders

   Answer: A. Incorporation creates a legal person separate from its shareholders and directors, so contracts and debts are the company's. FCA registration is unrelated.

4. 4. An ordinary power of attorney stops being valid when the donor:

   • A.Opens a new bank account
   • B.Reaches state pension age
   • C.Loses mental capacity
   • D.Moves to a care home

   Answer: C. An ordinary power of attorney ends on the donor's mental incapacity, which is exactly when help is most needed. A lasting power of attorney is designed to continue.

5. 5. In England and Wales, a lasting power of attorney can be used only after it has been:

   • A.Approved by the donor's own bank
   • B.Signed by the donor's employer
   • C.Registered with the Public Guardian
   • D.Witnessed by an FCA-authorised adviser

   Answer: C. Under the Mental Capacity Act 2005 an LPA must be registered with the Office of the Public Guardian before the attorney can act. It may cover property and finance or health and welfare.

6. 6. Two friends agree a casual favour with no thought of legal consequences. Which element of a contract is most likely missing?

   • A.An intention to create legal relations
   • B.A deposit paid by the buyer
   • C.A document stamped by a court
   • D.A signature witnessed by a solicitor

   Answer: A. A contract needs offer, acceptance, consideration, capacity and an intention to create legal relations. Family and social arrangements are presumed not to have that intention.

7. 7. A seller offers a flat and the buyer replies with a lower price. What happens to the seller's original offer?

   • A.The buyer must pay the full price
   • B.The offer remains open
   • C.A contract is formed
   • D.The offer ends

   Answer: D. A counter-offer rejects the original offer and replaces it, so the first offer cannot later be accepted unless it is made again.

8. 8. In England and Wales, a contract made with a 16-year-old for goods that are not necessaries is generally:

   • A.Valid only if notarised
   • B.Not enforceable against the minor
   • C.Void for both parties from the start
   • D.Enforceable like any other contract

   Answer: B. Minors lack full contractual capacity, so most such contracts cannot be enforced against them, although the minor can usually enforce them. Contracts for necessaries are an exception. Scotland differs: at 16 a person generally has full capacity to contract.

9. 9. When an agent acts within their authority, the contract binds:

   • A.Only the third party
   • B.The principal
   • C.The agent alone
   • D.Neither party

   Answer: B. An agent creates a contract between the principal and the third party. The agent usually drops out, unless acting without authority or for an undisclosed principal.

10. 10. Which duty does an agent owe to the principal?

    • A.To guarantee every contract
    • B.To act for both sides at once
    • C.To pay the principal's debts
    • D.Not to make secret profits

    Answer: D. An agent is in a fiduciary position: they must act in good faith, follow instructions, avoid conflicts of interest and account for any benefit received.