Legal Latin & definitions Flashcards
Limited Liability
shareholders are not liable to pay debts which the company owes to its creditors because it is the obligation of the company (usually through a contract) to pay its creditors. If the company has insufficient funds to meet its liabilities, creditors cannot pursue their claims against the shareholders.
Partnership Act 1890
Governs the rights and duties of people or corporate entities conducting business in partnership.
Definition of a partnership
S1 (1) PA 1890: Defined in the act as ‘the relation which subsists between persons carrying on a business in common with a view of profit.’
This is the reason partnerships ma be created without formalities
Definition of company
As association formed to conduct business or other activities in the name of the association. Companies that are incorporated (most) have a distinct legal personality from those of its members. Incorporation is by registration under the Companies Act 2006 but may be by Private Act of Parliament or Royal Charter. Shareholders and director are gneerally protected if a company goes out of buusinss.
Definition of private company under Section 4(1) CA 2006
‘a private company is any company that is not a public company’
Definition of debenture
Simple def: a long-term security yielding a fixed rate of interest, issued by a company and secured against assets.
Oxford dic: A document that acknowledges and contains the terms of aloan (usually to a company). The loan may be unsecured ( a naked debenture ). More usually, however, the debenture will be subject to a charge and will contain the terms of the charge (e.g. the right to appoint a receiver or a crystallisation event.) Debentures may be issued toa single creditor or in a series to several creditors in order to raise finance for the company. inn the case of the latter a trust may be created and contained within the debenture in favour of such creditors. This enables the company to appoint a trustee for debenture hoders to ensure that the financial activities of the company are managed in the interests of the group of creditors. Finance raised by the issue of debentures is know as loan capital. This is contrasted with share capital, the holders of which are company members.
Formal term for corporation is…
…body corporate
Definition of Limited Liability
Limited liability means that the sharholders liability for debts and liabilities of the company is limited to the amount (if any) unpaid on their shares. The company is a separate legal personality & any debts; contracts; property etc is owned by the company and not the shareholders (owners).
Who is the man on the Clapham omnibus?
Is it you? Is it me? Is it your mother or father? Ha! Trick question! It could be anyone you fool! Here’s the google definition:
The man on the Clapham omnibus is a hypothetical ordinary and reasonable person, used by the courts in English law where it is necessary to decide whether a party has acted as a reasonable person would – for example, in a civil action for negligence. The character is a reasonably educated, intelligent but nondescript person, against whom the defendant’s conduct can be measured.
The test for professional standard of care
McNair J: ‘The test is the standard of the ordinary reasonable man exercising and professing to have that special skill. ‘
or ‘exercises the ordinary skill of an ordinary competent man exercising that particular art…..”’
