Chapter 4 - Legal Concepts Flashcards
What is a ‘Lasting Power of Attorney’?
A legal document that allows a lawyer to look after a clients assets and welfare.
What are the three elements of a valid contract?
Agreement - offer and acceptance
Consideration - cash/reward
Intention - legal cooperation
What is the difference between legal and beneficial ownership?
Legal ownership - the bank looking after your money
Beneficial ownership - your money
What is the difference between being ‘Tenants in Common’ and having ‘Joint Tenancy’?
Tenants in Common - All have separately divided shares in the land.
Joint Tenancy - Where two or more people own all of the land.
When does a company become insolvent?
When it can no longer meet its obligations on time.
When does a company become bankrupt?
When a company cannot recover from insolvency with its auditors. This leads to the appointment of court administrators, debt-holders, receivers or liquidators who will then wind up the company.
What are the five requirements for a valid will?
Must be written Must be signed and witnessed by two people Author must be over 18 Author must be sane Must be independently created
What is intecstacy?
Occurs when an individual dies without a valid will. The estate of the deceased is then subject to the laws of intestacy (given to next of kin).
What is a trust?
An equitable obligation in which certain persons (trustees) are bound to deal with property over which they have no control (trust property), for the benefit of certain individuals (beneficiaries).
What is a settlor?
An individual who transfers assets into a trust over their lifetime. These trusts are known as Settlements.
What is a Bare Trust?
A trust where there is only one beneficiary.
What is an Interest in Possession Trust?
Occurs when a beneficiary has a legal right to the income or other benefit derived from the trust property.
What is a Discretionary Trust?
Occurs where the trustees exercise their discretion as to which beneficiaries will be entitled to receive income or capital from the trust.
What are the two types of Lasting Powers of Attorney?
Personal Welfare LPA
Property and Affairs LPA
What is meant by an Agency Relationship?
Agency is a relationship that exists between two legal persons (principal+agent), where the agent arranges a contract between the principal and a third-party.
How is the process of liquidation best described?
Where a company has its affairs wound up leading to its dissolution, with the liquidator acting mainly in the interests of the unsecured creditors.
Which part of a life assurance policy contract would constitute the ‘offer’?
A completed proposal form.
What was the purpose of the Mental Capacity Act 2005?
To replace the procedure of setting up Enduring Powers of Attorney with Lasting Powers of Attorney. Pre-existing EPAs can still be registered, although they cannot be changed.
Which regulatory body is able to register Lasting Powers of Attorney?
The Office of Public Guardian
Who does a Bankruptcy Order apply to?
Individuals, sole traders or partners.
What is the minimum amount of debt at which the court would hear a petition for bankruptcy?
£5,000
What are the basic aims of insolvency law?
Controlling/punishing directors (removing their responsibilities), and protecting creditors (not shareholders)
How is the process of administration best described?
Where an administrator is appointed to run the company’s affairs and aims to rescue the company.
