Topic 16 Key Legal Concepts Flashcards
What is a Legal Person (Legal Entity)?
Body that can enter into contracts, sue or be sued in a court of law
A legal person is not just an individual but can be groups of people and limited companies
True or False
True
What is a disadvantage of a sole trader not being a separate legal entity?
They are personally liable for the business’s debts
A company is separate from its shareholders & employees.
True or False
True
The certificate of incorporation provide evidence of what?
The company’s formation
What information can be found at the central registry at companies house?
- Shareholding & Shareholders
- Names & addresses of directors & company secretary
The nature of the company and rules about what it can & can’t do are set out where?
The company’s Memorandum & Articles of Association
The liabilities for partners in a partnership are what?
Jointly and severally responsible for the liabilities of a partnership
How is a Limited Liability Partnership different from other partnerships?
Their liability is limited to the amount they have invested should the business collapse
A Limited Liability Partnership (LLP) is a legal entity this mean it can do what?
Borrow
Most businesses agreements in the world of finance are what?
Legally Binding
What are the ways contracts are made?
- Orally
- Writing
- Deed
- Offer & Acceptance
- Consideration
- Capacity to Contract
- Contract Terms
- Intention to create a legal relationship
- Legality of Object
- Entered into Freely
Are all what?
Binding Contracts
Which Binding Contract is this?
The offeror makes an offer and there must be an unqualified acceptance by the other. This must be committed to the other party
Offer & Acceptance
Which Binding Contract is this?
Subject of contract must be matched by a consideration (payment etc)
Consideration
Which Binding Contract is this?
- Each party to the contract must have legal capability or power to do so.
- Minors or those with reduced mental capacity have limited powers
Capacity to contract
Which Binding Contract is this?
Must be complete certain and free from doubt
Contract Terms
Which Binding Contract is this?
As distinct from a merely informal arrangement
Intention to create a legal relationship
Which Binding Contract is this?
Contracts cannot be made for illegal or immoral purposes
Legality of Object
Which Binding Contract is this?
If misrepresentation, duress or undue influence occur the contract is not valid
Entered into Freely
Contracts involving land must be what?
- Must be made in writing
- Conveyance of land must be performed by deed
There is not usually what between parties to a contract?
Duty of Disclosure
How was Disclosure of Information different for insurance contacts?
Applicant had to supply all the facts relevant for a policy
What has the Consumer Insurance (Disclosure & Representations) Act 2012 now done with insurance claims for customers applying for a claim?
To answer questions with reasonable care
When an applicant for insurance answers is the below. True or False
If a question was misrepresentation was honest and reliable. The insurer has no right to refuse the claim?
True
In the case of insurance misrepresentation due to carelessness what remedy can the insurer apply?
Compensatory Remedy
When an applicant for insurance answers in the below.
True or False
If careless misrepresented other than a claim the insurer and policy holder do have the right to terminate the contract with reasonable notice?
True
If a claim was a deliberate or reckless misrepresentation. The insurer can reject the claim and is not required to refund the premiums?
True or False
True
What are the remedies for breach of contract?
- Damages
- Order for specific performance
- Injunction
This is what remedy for breach of contract?
Injured party seeks to obtain financial compensation for their loss
Damages
This is what remedy for breach of contract?
Compels the other party to complete the contract
Order for specific performance
This is what remedy for breach of contract?
Prevents someone from doing something
Injunction
Why were Critical Illness Claims claims upheld by the Financial Ombudsman rejected due to non disclosure overturned?
Tey required a claimant to remember all the times they required treatment
What is the Law of Agency?
An agent who acts on behalf of another (Principle)
In an Agent-Principal relationship an agents power is fixed?
True or False
False
Each agent has different range of power set for them
What could happen to a principal & an agent if an agent acts outside of their authority?
They could be liable on the contract
What does “Apparent Authority” mean?
Something said by the principal that gives the impression they have authorised the agent’s actions
What is “Ratification”?
When an agent has exceeded their authority. The principal can agree to what the agent has done.
The law of England & Wales refers to property as all types of asset
True or False
True
What are the 2 types of property?
- Realty
- Personalty
What is Realty?
If a court would return a property to a dispossessed owner and provide compensation for the loss
What is another feature of real property (Real Estate)?
It is immovable
What is Personalty?
All other property
What are the features of joint tenants?
- Each joint owner owns 100% of the property
- On death of a owner the surviving owner takes ownership to the property
- Transfer cannot be overridden by joint tenant or in a will
What are the features of Tenants in Common?
- Joint owners regarded as single owner but trustees to the land
- Each owner has share in equity in the property
- If owner does share of the property passes to whoever inherits
Each joint mortgage is written on a joint and several liability basis.
This means what?
Each owner is responsible for the mortgage if another owner cannot make their payment
What is a Power of Attorney?
When attorney is given legal responsibility to act on behalf of another person
When might a Power of Attorney be used?
- Able person who is concerned about their finances after they are no longer capable
- Person who has affairs in the UK who is moving abroad
Can a person who does not have legal capacity appoint a power of attorney?
No
What is an Enduring Power of Attorney?
Power of Attorney that continues when a person becomes mentally incapable
Where does a Enduring Power of Attorney (EPA) have to be registered?
Office of Public Guardian (OPG)
What is a donor in relation to a Power of Attorney?
Person who makes the power of attorney
What is a donee in relation to a Power of Attorney?
A person who is given power of attorney
What happened to Enduring Power of Attorneys (EPA)?
Were replaced by Lasting Power of Attorney (LPA)
What are the 2 types of Lasting Power of Attorney (LPA)
- Health & Welfare
- Property & Financial Affairs
What is Heath & Welfare Lasting Power of Attorney (LPA)
Donee can make decisions about care when the doner is no longer capable of making decisions
What is Property & Financial Affairs Lasting Power of Attorney (LPA)?
Give donee right to manage doner’s bank account, collect benefits and sell property
What does the Mental Capacity Act 2005 do?
- Supports & protects individuals who lack the capacity to make their own decisions
- Makes provision for substituted decision-making on behalf of an individual
What is a Will?
Written declaration of a person’s wishes (assets etc) after they have died
What does it mean to die Intestate?
Dying without leaving a valid will
For a will to be valid it must be what?
- In writing
- Properly Executed
What is the minimum age for a valid Will under English law?
18
What would happen if the witness to the will was a beneficiary of the will?
They would not be able to inherit under the terms of the will
If the testor of a will marries, remarries or enters into a civil partnership what happens to the will? (unless in contemplation of change of status)
The will is revoked
Who is the testor of a will?
The person who makes a will
What is the name of a document that amends a will?
Codicil
The actions to be carried out in a will is the responsibility of the?
Executor
What does the grant of probate enable the executor to do?
Gives legal authority to carry out the instructions in the will
If there is no will what does the appropriate person need to apply for to distribute a person’s estate?
Letters of administration
What is a “Deed of Variation”?
Legal agreement that enables the terms of a will to be altered after the death of a testor
Why might a “Deed of Variation” be used?
To reduce a persons liability to Inheritance Tax (IHT)
What does “Money’s Worth” mean?
Goods received instead of a cash payment
According to the laws of Intestacy:
If the deceased dies has a spouse and not children
Who inherits the estate
Spouse inherits the entire estate
According to the laws of Intestacy:
If there is a spouse and children
What does the spouse inherit?
- Deceased personal possessions
- First £322,000
- Half of residue above £322,000 absolutely
According to the laws of Intestacy:
If there is a spouse and children
What do the children inherit?
- Any amount in residue over £322,000 is divided between the children
According to the laws of Intestacy:
If there a children but no spouse
How is the estate distributed?
- Estate is distributed amongst the children
According to the laws of Intestacy:
What happens if there is neither spouse nor children
Estate goes to the parents of the deceased or (if dead) the deceased’s siblings
According to the laws of intestacy
Who inherits an estate if no blood relative can be found?
The crown
If a person dies in testate the estate goes to any surviving spouse even if they are divorced from the spouse.
True or False
True
The Executor of a will cannot benefit from the will.
True or False
False
They can
For an Enduring Power of Attorney (EPA) the only place it can be revoked is the Court of Protection.
True or False
True
How are Limited Liability Partnerships (LLP) taxed?
They are taxed as self employed and are subject to income tax
Where is the only place an enduring power of attorney be revoked and registered?
Court of Protection
