Topic 16 (Key legal concepts) Flashcards
What is a legal person?
Those who can enter into contracts, or be sued in a court of law, these include executors, trustees and limited companies
What are companies?
Legal entities
Who can’t be held responsible for the debts of a company?
Shareholders
What is a partnership?
An arrangement between 2 people who are carrying a business together for a profit. It is not a separate legal entity and partners jointly own assets and liabilities
What is a limited liability partnership?
Means that if the business collapsed their liability is limited to the amount they have invested plus any personal guarantees
What happens to the loss made by a partnership?
The loss is usually allocated amongst the partners in the same ratio as profits are shared
What are the basic requirements for a binding contract?
- contracts can be made orally, in writing or by deed
- offer and acceptance
- consideration
- capacity to contract
- contract terms
- intention to create a legal relationship
For there to be a contract there must be…..?
> An offer - client completes application form and sends to the provider and they offer acceptance terms
On Acceptance - the client pay premiums to the friends life
What is meant by ‘utmost good faith’?
Means that the insurer requires all the material facts, such as health and medical history are disclosed when application is made
What is a breach of contract?
Where a party fails to meet their side of the contract and has no legal excuse for doing so
What courses of action are available for a breach of contract?
- Damages - financial compensation for loss
- Order for specific performance - obtained to compel the other party to complete the contract
- An injunction - a court preventing someone from doing something
What is an AGENT?
Acts on behalf of the principal, within specific boundaries to conclude contracts
What is APPARENT AUTHORITY?
Something either done or said by the principal that leads to the impression that they have authorised the agents actions
What is a PRINCIPAL?
The party granting permission to the agent to act on their behalf
What is RATIFICATION?
The retrospective agreement by the principal to actions taken by the agent that exceed the latter’s authority
What is an IFA?
An agent of their client and has powers under the terms of engagement
What are the 2 distinct types of property ownership?
- Reality
- Property deemed to be real if a court will restore it to a dispossessed owner and not merely provide compensation for loss
- Tends to be immovable property such as land - Personality
- All other property
What is Joint Tenancy?
> Each owner is deemed to own the whole of the property
If one dies, the property automatically reverts to the survivor
Transfer upon death to the survivor is automatic and can’t be overridden
What is Tenants in Common?
Where each owner has an identifiable share of the property. If one dies their share passes to whoever is entitled to inherit it under the terms of the will
What is a power of Attorney?
Someone who acts legally on behalf of someone
What is the difference between an ordinary power of attorney and an enduring power of attorney?
An ordinary one will cease if the donor becomes mentally incapacitated but an enduring one will continue
What happens when a donor becomes mentally incapable?
The enduring power of attorney has to be registered with the office of the public guardian and can only be revoked with the consent of the court of protection
What is a lasting power of attorney (LPA)?
enables attorneys to make decisions about personal and health matters, not just financial decisions
What are the 2 types of LPA?
- Health and Welfare
2. Property and Financial Affairs
What is a personal representative?
People who carry out the procedure necessary to distribute the estate
What 3 points are important regarding a Will?
- Testator (makes the will)
- The Executor (carries out testator’s wishes)
- The Beneficiaries
To make a will, what 2 formalities must be followed?
- Must be ins writing
2. The will must be properly executed
What is a TESTATOR?
The person making the will
What is a BENEFICIARY?
Person/organisation that receives benefits under the terms of the will
What is a CODICIL?
A document that formally amends a will
If no will is place, what do close relatives apply for?
A grant of letters of administration
What is an EXECUTOR?
Person responsible for carrying out the will’s wishes
What is a GRANT OF PROBATE?
Legal authority for executors to distribute an estate according to the terms of a valid will
What is a DEED OF VARIATION?
Legal agreement by beneficiaries to alter the terms of a will
What is MONEY’S WORTH?
Provision of goods/services in lieu of a cash payment
What is intestacy?
Means dying without a will
What is partial intestacy?
If a will makes valid provision for the distribution of some of the assets of the estate, but not others
What is INTESTATE?
Having died without leaving a will
What is an ADMINISTRATOR?
Person given the role of distributing the estate according to the rules of intestacy
What is a LETTER OF ADMINISTRATION?
Legal authority to distribute the estate of a person who has died without leaving a valid will
What is a TRUST?
A trust is a method by which the owner of an asses distributes that asset for the benefit of another person
Who is the SETTLOR?
The person who creates the trust and originally owned the assets held in it
What is a TRUST DEED?
A document that sets out how the trust is to be managed, by whom and for whose benefit
Who is a TRUSTEE?
The legal owner of the trust property, with the responsibility to look after/distribute the trust property in line with the trust deed
What must trustees act in accordance with?
The Trust Deed
What is INSOLVENCY?
A situation in which liabilities exceed assets or an organisation or individual cannot meet their liabilities within a reasonable period of their falling due
What is BANKRUPTCY
A legal process triggered by the insolvent individual or by creditors where the individual owes a minimum of £5,000. A bankruptcy order usually lasts 12 months
What is an INDIVIDUAL VOLUNTARY AGREEMENT (IVA)?
Agreement by creditors who represent at least 75% of the value of the debt to reschedule an individual’s debt repayments
What is a COMPANY VOLUNTARY AGREEMENT?
Agreement by creditors who represent at least 75% of the value of the debt as to how to manage company liabilities. With the aim of avoiding the business going into administration
What is an OFFICIAL RECEIVER?
An official appointed by the court to identify and distribute the assets of a bankrupt individual or business and investigate the reasons for the bankruptcy
What is the role of an INSOLVENCY PRACTITIONER?
Appointed by the official receiver to identify and manage the distribution of an individual’s or company’s assets. Insolvency practitioners must be licensed to practise
What is ScamSmart and who is it operated by?
It is a website designed to help consumers protect themselves against pension and investment scams
It is operated by the FCA
