Chapter 4: Legal Concepts Flashcards
What are the essential elements in the formation of a valid contract?
a. Intention
b. Agreement
c. Consideration
Where a company has its affairs wound up leading to its dissolution, how is this best described?
Liquidation – Liquidation means that the company must be brought to an end, with the liquidator acting mainly in the interests of unsecured creditors.
In a life assurance policy, which part of the contract constitutes the ‘offer’?
A completed proposal form constitutes an offer in the legal contractual sense.
To be a fully binding agreement, which attributes does a contract need to have?
a. Offer and acceptance
b. Intention to create legal relations
c. Considerations
A binding contract does not necessarily need to be expressed in writing.
What are the features of the relationship between an agent and principal?
a. The agent has a duty to avoid conflicts of interest with the principal
b. The agent must hand over any benefit to the principal unless the principal agrees otherwise
c. The agent must keep what he knows of the principal’s affairs confidential even after the agency relationship ceases.
A retail investment adviser who offers advice and recommendations to a client from a full range of products is acting as a what?
As agent of the client – The adviser owes a duty of care to the client, and acts as his or her agent.
An attorney (in an LPA) may be defined as what?
A person who has been given authority to act on another person’s behalf. The attorney, who is given ‘power of attorney’ to handle someone’s affairs, has the authority to enter into contracts.
An Enduring Power of Attorney that has not yet been registered cannot what?
The Mental Capacity Act 2005 replaced the procedure for setting up Enduring Powers of Attorney with Lasting Powers of Attorney. Pre-existing EPAs can still be registered, although they cannot be changed.
Which UK Act of Parliament specifies a ‘decision-specific’ test which assesses whether a person will be able to take a particular decision at a particular time?
The Mental Capacity Act 2005 specifies such a test.
Bob wishes to register a lasting power of attorney (LPA) which would allow his brother to make decision on his behalf in the event that he becomes physically incapacitated by a progressive disease that he is suffering from. With which body would he need to register the LPA?
An LPA must be registered with the Office of the Public Guardian before it can be used.
Mr and Mrs Bob are both liable as individuals for the whole of their joint mortgage. This is most likely because they are what type of tenants?
Joint tenants – With the form of joint ownership known as joint tenancy, the survivor will automatically inherit the whole of the property. Each joint tenant will normally be liable for the whole mortgage.
If one or two joint tenants dies, the property will automatically what?
Belong to the survivor – Joint tenancy means that the survivor inherits the deceased’s share of the property, rather like a joint bank account.
A Bankruptcy Order cannot be brought against who?
A Bankruptcy Order may apply to individuals, sole traders or partners. Corporate insolvency will apply to a limited company.
Can a supplier who is owed £4,000 of unsecured debt from an individual, petition to the court for that individual’s bankruptcy to recover the funds?
No. The court will not hear a petition unless the creditor is owed at least £5000.
What is the basic aim of insolvency law?
Balancing the interests of competing groups and encouraging ‘rescue’ operations. The basic aims would include controlling or punishing directors rather than removing their responsibilities, and protecting creditors rather than shareholders of the company.
