Sept 2023 Flashcards
- What is the purpose of having proportionate policies and procedures in place?
The purpose is to ensure ethical conduct, prevent bribery, and promote transparency within the practice.
What is the significance of carrying out due diligence on suppliers?
It helps ensure that suppliers adhere to ethical standards and do not engage in corrupt practices.
- Why is appointing a contact person within the company or office important in preventing bribery?
It provides employees with someone to report concerns about bribery and unethical behavior to.
- Explain what runoff cover is and when it is required for a company.
Runoff cover is insurance that is needed when a company ceases to trade, and it covers claims that may arise after the company has stopped operating.
- What determines the duration of runoff cover?
• The duration of runoff cover depends on how long it is required, typically ranging from 6 to 12 years, or even 15 years in some cases.
- What legal case is relevant to runoff cover in the context of professional indemnity insurance?
The case of “Merrett v. Babb” is relevant, as it determined that damages could still be brought against a party even if they ceased to trade.
Summary
The defendant, a chartered surveyor, was employed by a firm of valuers (owned by an individual) as manager of one of the firm’s branch offices. In the course of his work the defendant carried out a mortgage valuation for a building society, signing the valuation report in his own name and stating his professional qualifications. By the time the house purchaser sought to bring an action for negligence on the basis of this report the owner of the firm had become bankrupt and the firm’s professional indemnity insurance policy had been cancelled. The firm was therefore not worth suing.
The Court of Appeal held by a majority that the purchaser was entitled to recover damages from the defendant personally, despite the fact that the purchaser had not actually seen the valuer’s report and was unaware, at the time of purchase, of his identity.
What is a financial statement?
A financial statement is a formal record of the financial activities and position of a business, person, or other entity. It typically includes an income statement, balance sheet, and cash flow statement, providing a comprehensive view of financial performance and stability.
What was the outcome of the “Merrett v. Babb” case?
The case determined that damages could still be pursued even if the company had ceased to trade because there was an actual loss involved.
Summary
The defendant, a chartered surveyor, was employed by a firm of valuers (owned by an individual) as manager of one of the firm’s branch offices. In the course of his work the defendant carried out a mortgage valuation for a building society, signing the valuation report in his own name and stating his professional qualifications. By the time the house purchaser sought to bring an action for negligence on the basis of this report the owner of the firm had become bankrupt and the firm’s professional indemnity insurance policy had been cancelled. The firm was therefore not worth suing.
The Court of Appeal held by a majority that the purchaser was entitled to recover damages from the defendant personally, despite the fact that the purchaser had not actually seen the valuer’s report and was unaware, at the time of purchase, of his identity.
- How does the duration of professional indemnity insurance coverage (e.g., 6, 12, or 15 years) affect a firm’s liability?•
The duration of coverage affects how long a firm can potentially be held liable for claims related to its past work.
- What is the significance of having records for 15 years in professional indemnity insurance?
Maintaining records for 15 years helps ensure that a firm can provide evidence and coverage for potential claims during that period.
- How does the duration of professional indemnity insurance coverage (e.g., 6, 12, or 15 years) affect a firm’s liability?
The duration of coverage affects how long a firm can potentially be held liable for claims related to its past work.
- What is the significance of having records for 15 years in professional indemnity insurance?
Maintaining records for 15 years helps ensure that a firm can provide evidence and coverage for potential claims during that period.
- If a company cannot obtain professional indemnity insurance on the open market, where can they seek coverage?
- They can approach the RICS Insurance Pool for coverage for a 12-month period, allowing time to secure coverage from the open market.
- What is the difference between being a sole trader and operating under a limited company umbrella concerning liability?
As a sole trader, you have unlimited liability, potentially risking personal assets. Operating under a limited company provides more protection, limiting losses to the initial investment.
- What is meant by “gifts and Hospitality log” in the context of managing bribes?
It refers to a record of gifts and hospitality offered or received, helping to track and prevent potential bribes or unethical influence.
