TOPIC 16 - Key legal concepts Flashcards
On receipt of a policy claim, an insurer suspects inaccurate information was provided on the original application form. Under the Consumer Insurance (Disclosure and Representations) Act 2012, the insurer:
a) can apply a compensatory remedy if the applicant took reasonable care and any misrepresentation was honest and reasonable.
b) cannot refuse the claim in any circumstance.
c) must pay the full claim if the consumer had just been careless when completing the application form.
d) can refuse the claim if there was deliberate misrepresentation when completing the application form.
d) can refuse the claim if there was deliberate misrepresentation when completing the application form.
Which of the following is a reason a contract could be deemed invalid?
a) The buyer promised to pay the full purchase price.
b) It was a contract for land performed by deed.
c) The contract was to buy 200 litres of smuggled rum.
d) The buyer was aged 18.
c) The contract was to buy 200 litres of smuggled rum.
Graham is a 2% shareholder in a small limited company. What is his liability if the company becomes insolvent?
a) He is jointly and severally liable for all of the company’s debt with other shareholders.
b) He is fully liable for 2% of the company’s UK debts.
c) He is fully liable for 2% of the company’s worldwide debts.
d) His liability is limited to the amount he has invested in the company.
d) His liability is limited to the amount he has invested in the company.
Novak died without a valid will, leaving an estate of £500,000. He had not made a will because he assumed that his estate would automatically pass to his civil partner, and then to their two adult children. How will Novak’s estate be distributed?
a) The courts will decide on a fair distribution of the estate.
b) His wife will inherit £385,000 and the children will inherit £57,500 each.
c) His wife will receive £500,000, and on her death the children will inherit whatever is left.
d) His wife will inherit £270,000 and the children will inherit £115,000 each.
b) His wife will inherit £385,000 and the children will inherit £57,500 each.
Under agency law, ratification is where:
a) The principal did or said something that could be seen as giving the agent powers outside the agency agreement.
b) The contract is deemed to be valid by a court.
c) Although the agent acted outside the terms of the agency agreement, the principal agreed to the actions after the event.
d) The other party to a contract agrees that it should remain in place, despite the agent acting outside their authority.
c) Although the agent acted outside the terms of the agency agreement, the principal agreed to the actions after the event.
Gary is a 50% partner in a limited liability partnership with his friend Mike. Gary has invested £30,000 and has provided a personal guarantee on a £50,000 bank loan the partnership took out. The business has become insolvent with debt of £1,000,000 and Mike cannot be found. What is Gary’s liability?
a) 50% of the partnership’s debts.
b) The £30,000 he initially invested.
c) The £30,000 he initially invested and the £50,000 bank loan.
d) All the debts of the partnership.
c) The £30,000 he initially invested and the £50,000 bank loan.
Which one of the following is not a legal requirement for a will to valid but is recommended?
a) The will must be in writing.
b) The will must be properly executed.
c) The will must be dated.
d) The testator must be aged 18 or over.
c) The will must be dated.
Bartholomew has debts he cannot service and has applied for an individual voluntary arrangement (IVA). He owes £15,000 to his credit card company, £2,000 to a local builder, £1,500 to his bank and £1,500 to a local furniture shop. Which of the following is true?
a) The IVA application can be approved if the builder, bank and furniture shop agree.
b) The credit card company can veto the IVA application.
c) All four creditors must agree for the IVA application to be approved.
d) William can insist on the IVA being approved.
b) The credit card company can veto the IVA application.
o register a lasting power of attorney, application should be made to the:
a) County Court.
b) Court of Protection.
c) Office of the Public Guardian.
d) County Registrar.
c) Office of the Public Guardian.
A property owned on a joint-tenancy basis will allow each owner to leave their share to their chosen beneficiaries.
a) True b) False
b) False
Jagdeep is a partner in Pascoe & Partners. In the event that
the business becomes insolvent, her liability is limited to the
amount she has invested in the partnership, together with any
personal guarantees she has given. True or false?
False. There is no information here to suggest that the partnership is a
limited liability partnership (LLP) so Jagdeep has unlimited personal
liability
Jagdeep is also a shareholder in Allenton Engineering Ltd. If
the company were to become insolvent, what personal liability
would she have for its debts?
None. As a limited company, Allenton Engineering Ltd is a separate legal
entity and shareholders would not be liable for its debts.
For a contract to be valid, there must be consideration. What does this mean?
a) There must be payment or a promise to provide payment.
b) Both parties to the contract must be aged 18 or over.
c) Both parties must be open and honest in their dealings
with each other.
d) There is a right to cancel the contract.
a) There must be payment or a promise to provide payment.
Rebecca owns a small paddock that she no longer needs for her horses. The neighbouring farmer has offered to buy it and
they shook hands on the sale over a drink at the pub. Later, the farmer changed his mind and tried to withdraw from the
purchase. Rebecca argued that their agreement in the pub constituted a contract and he must honour it. Was she right?
No.
Which is true of independent financial advisers in terms of
agency law?
a) They act on behalf of a network.
b) They act on their own account.
c) They act as agents of their client.
d) They act as agents of their company.
c) They act as agents of their client.
