Topic 16 - Legal

Question 1

What is a ‘legal person’?

Answer 1

A ‘legal person’ is a body that has a legal existence and can, therefore, enter into contracts, sue or be sued in a court of law

Question 2

What is a Limited liability partnership?

Answer 2

The partners have a limited personal liability if the business should collapse: their liability is limited to the amount that they have invested in the partnership, together with any personal guarantees they have given.

Question 3

Explain Offer an acceptance in relation to requirements for a binding contract.

Answer 3

There must be an offer made by one party (the offeror) and there must be an unqualified acceptance by the other. This acceptance must be communicated to the other party.

Question 4

Explain Consideration in relation to requirements for a binding contract.

Answer 4

The subject of the contract (often a promise to do something or supply something) must be matched by a consideration (which is frequently, but not necessarily, the payment of money). A promise to pay is a valid consideration

Question 5

Explain Capacity to contract in relation to requirements for a binding contract.

Answer 5

Each of the parties to the contract must have the legal capacity, or power, to enter into the contract, for example, minors and those of unsound mind. For financial institutions such as insurance companies, capacity to contract depends on being authorised by the FCA/PRA.

Question 6

Explain Contract terms in relation to requirements for a binding contract.

Answer 6

These must be certain, complete and free from doubt. For example, when a customer engages an independent financial adviser (IFA), the IFA’s commitments are detailed in a terms of service agreement.

Question 7

Explain Intention to create a legal relationship in relation to requirements for a binding contract.

Answer 7

As distinct from a merely informal arrangement.

Question 8

Explain Legality of object in relation to requirements for a binding contract.

Answer 8

Contracts cannot be made for illegal or immoral purposes.

Question 9

Explain Misrepresentation, duress or undue influence in relation to requirements for a binding contract.

Answer 9

If any of these factors are involved in leading someone to enter into a contract, the contract is not binding.

Question 10

What is the Consumer Insurance (Disclosure and Representations) Act 2012?

Answer 10

The Act more clearly defines the responsibilities of insurance customers. It abolishes the duty of consumers to volunteer material facts when applying for insurance and instead requires them to take reasonable care to answer the insurer’s questions fully and accurately.

Question 11

What are Damages in relation to Remedies for breach of contract?

Answer 11

The injured party seeks to obtain financial compensation for their loss. The intention is to put them in the position they would have been in had the contract not been breached by the other party, insofar as it is possible to do so with money.

Question 12

What is Order for specific performance in relation to Remedies for breach of contract?

Answer 12

Such an order compels the other party to complete the contract.

Question 13

What is an Injunction in relation to Remedies for breach of contract?

Answer 13

This is a court order preventing someone from doing something.

Question 14

What is the law of agency?

Answer 14

An agent is a person who acts on behalf of another, who is called the principal. The agent can conclude contracts on behalf of the principal.In law, the acts of the agent are treated as being those of the principal.

Question 15

Define Agent.

Answer 15

Acts on behalf of the principal, within specific boundaries, to conclude contracts.

Question 16

Define Apparent authority.

Answer 16

Something either done or said y the principal that leads to the impression that they have authorised the agent’s actions.

Question 17

Define Principal.

Answer 17

The Party granting permission to the agent to act on their behalf.

Question 18

Define Ratification.

Answer 18

A retrospective agreement by the principal to actions taken by the agent that exceed the latter’s authority.

Question 19

What is Realty?

Answer 19

Property is deemed to be real if a court will restore it to a dispossessed owner and not merely provide compensation for loss.Real property tends to be distinguished by being immovable, eg land and what is attached to it, also known as real estate.

Question 20

What is Personalty?

Answer 20

All other property (from Realty) is called personalty.

Question 21

What is an enduring power of attorney?

Answer 21

An enduring power of attorney (EPA) can continue if the donor becomes mentally incapacitated, although it has to be registered with the Office of the Public Guardian if the attorney believes that the donor is losing mental capacity.

Question 22

Define Donor in relation to power of attorney.

Answer 22

Person who is given power of attorney. Often, they are simply referred to as the attorney.

Question 23

What happens if no power of attorney is in place?

Answer 23

If a person loses mental capacity and does not have a valid LPA or EPA in place, the Court of Protection can appoint a deputy.

Question 24

Define Codicil.

Answer 24

A document that formally amends a will.

Question 25

Define Executor.

Answer 25

A person named by the testator as being responsible for carrying out the wishes expressed in a valid will.

Question 26

Define Grant of probate

Answer 26

Legal authority for executors to distribute an estate according to the terms of a valid will.

Question 27

Define Deed of variation.

Answer 27

Legal agreement by the beneficiaries to alter the terms of a will, after the death of the testator

Question 28

Under what conditions does Insolvency arise?

Answer 28

• A person’s liabilities exceed their assets; or- A person cannot meet their financial obligations within a reasonable time of them falling due.

Question 29

What is an Individual voluntary arrangement?

Answer 29

An alternative to bankruptcy, under which the debtor arranges with the creditors to reschedule the repayment of the debts over a specified period.An IVA can only be set up only if creditors who represent at least 75% of the debt agree to the arrangement.

Question 30

Define Insolvency.

Answer 30

A situation in which liabilities exceed assets or an organisation or individual cannot meet their liabilities within a reasonable period of them falling due.

Question 31

Define Company voluntary arrangement

Answer 31

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.

Question 32

Define Official receiver.

Answer 32

Official appointed by the court to identify and distribute the assets of a bankrupt individual or business and investigate the reasons for the bankruptcy.

Question 33

Define Insolvency practitioner.

Answer 33

Appointed by the court or by the official receiver (in consultation with creditors) to identify and manage the distribution of an individual’s or company’s assets. Insolvency practitioners must be licensed to practise.