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FSRE - Josh > Topic 4 - Important legal principles > Flashcards

Topic 4 - Important legal principles Flashcards

1
Q

Describe a legal persons

A
  • Also known as legal entity
  • Someone/company that has separate legal existence
  • Can enter in contracts or be sued
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2
Q

What body must companies be registered through

A
  • Companies house
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3
Q

Main features of a Public Limited Company (PLC)

A
  • Listed on the stock market
  • Effectively owned by the public
  • In order to be listed, must meet certain requirements
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4
Q

Main features of a Private Limited Company (Ltd.)

A
  • Owned by a small number of shareholders
  • Cannot be listed on stock market - shares sold privately
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5
Q

Explain how liability is distributed in a partnership

A
  • All jointly and individually liable - if one or more partners cannot/do not pay any debts, they can all fall to one person
  • Should have written agreements to avoid these issues
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6
Q

What is liability in Limited liability partnerships based on

A
  • Liability is limited to amount invested
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7
Q

What is a power of attorney and what are the requirements to become one

A
  • A person given legal responsibility to act on behalf of another
  • Over 18
  • Mental capacity to under take the role
  • Cannot be bankrupt
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8
Q

What is a donor when talking about powers of attorney

A
  • The person who is delegating their powers (assigns PoA)
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9
Q

What are the main activities that can be carried out by an ordinary power of attorney

A
  • Sign documents
  • Handle financial affairs
  • Disposal of property
  • CANNOT make non-financial decisions
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10
Q

Can an ordinary power of attorney make decisions whilst the donor is mentally incapacitated

A
  • No, ordinary PoA is only valid whilst the donor is alive and still has mental capacity
  • Power automatically ends when donor dies, becomes bankrupt or any time limit expires
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11
Q

What is the main difference between ordinary PoA and enduring/lasting PoA

A
  • Enduring and lasting have the ability for the attorney to make decisions whilst the donor is mentally incapable, ordinary PoA is not allowed to do this
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12
Q

When were EPA’s replaced with LPA’s

A
  • 30th September 2007
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13
Q

With what body must an EPA and LPA be registered with

A
  • Office of the public guardian (OPG)
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14
Q

What are the 2 forms Lasting power of attorney (LPA) can be split into and what powers does each form give you

A
  • Personal welfare - Personal healthcare and welfare
  • Property and affairs - Property and personal affairs (similar to EPA)
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15
Q

Can an EPA take control of personal welfare?

A
  • No, only LPA
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16
Q

What are the 6 key requirements for a valid contract

A
  1. Offer and acceptance
  2. Consideration (E.G. payment of money) from promisee to promisor
  3. Capacity to contract - must have legal power to enter a contract
  4. Terms of contract
  5. Intention to create a legal relationship
  6. Legality - cannot be made for illegal purposes
17
Q

What was the main aim for the Consumer Insurance (disclosure and representation) Act 2012

A
  • Abolished volunteering of consumers facts/relevant information
  • Insurers used to expect consumers to voluntarily give past information without being transparent on what they truly wanted
  • This led to insurers cancelling policies due to medical history etc. that was unrelated to the claim
18
Q

What is the definition of an agent, and the liability rules around an agent

A
  • An agent acts on behalf of another (known as the principle)
  • Principle is liable for agents actions, so they should be closely monitored (in some cases the agent can be liable)
19
Q

Explain what ratification is in relation to agents

A
  • If an agent exceeds their authority, yet the principle has decided to agree with their action/s
20
Q

What are the 2 distinctions of agents in financial services

A
  • Representatives of product provider/company, acting as agents of the company (known as a Tied Agent)
  • Independent financial advisers act as agents of the customer
21
Q

Within property ownership, what 2 broad categories does property fall into

A
  • Real property (realty) - fixed or immovable, action for loss would be restoration of the physical property
  • Personal property (personalty or chattels) - movable assets including animals - Action for loss would be compensation as the asset could have been sold, destroyed or lost
22
Q

2 types of ownership with property

A
  • Single ownership - asset owned solely by one person
  • Joint ownership (Joint tenancy and tenancy in common)
23
Q

What body must you register previously unregistered land with

A
  • Land registry
24
Q

Explain joint tenancy

A
  • Joint ownership of an asset, where neither person owns a specific legal share
  • Upon death, asset passed absolutely to other tenant
25
Q

Explain tenancy in common

A
  • Joint owners (typically in realty) where each person owns a specific share of the property/asset
  • Registered with land registry
26
Q

What happens upon death with a tenancy in common

A
  • Survivor becomes sole or joint owner and becomes trustee of land (must look after relevant beneficiaries
  • Survivor must appoint another trustee and make them joint owner before asset can be sold
  • Value of deceased’s share goes into their estate
27
Q

Bankruptcy/insolvency arises when

A
  • Person’s liabilities/debts exceed their assets
  • Cannot meet financial obligations within a reasonable time limit
28
Q

What is the minimum amount of debt a person needs to be in for someone to declare bankruptcy

A
  • £5000
29
Q

What did the Enterprise act (2002) change for people in terms of bankruptcy

A
  • Reduced the amount of restrictions on an undischarged bankrupt at the discretion of the court
30
Q

What is the difference between a un/discharged bankrupt

A
  • Discharged - after a 12 month bankruptcy period (including some restrictions) you are released from bankruptcy and all debts are cleared
  • Undischarged - a bankrupt within the 12 month period
31
Q

How long does a bankrupt have to move out of their house if there is a family living in it

A
  • 12 months
32
Q

What is meant by an insolvency practitioner “attacking” previous transactions

A
  • When the practitioner (trustee in bankruptcy) challenges transactions in previous years
  • Transactions may be deliberate moves to get assets out of the estate
33
Q

What are some of the criminal offences that apply to undischarged bankrupts

A
  • Obtaining credit of £500 or more, alone or jointly, without declaring it
  • Carrying on business in a different name without disclosing bankruptcy to business partners etc.
  • Managing a limited company or acting as director without courts permission
34
Q

What is an IVA and what are its main features

A
  • Where debtors agree with creditors to schedule repayment of part of the debt
  • Can only be set up if the single creditor who is owed at least 75% of debt agrees
  • Supervised by insolvency practitioner
  • Record of IVA stays for 6 years after start date
35
Q

What is a DRO and what are its main features

A
  • Relief of debts provided to those who have low disposable income and no assets
  • Creditors subject to moratorium - 12 month period where they cannot seek repayment
  • After the 12 months, all debts written off
36
Q

Requirements to be met to apply for a DRO

A
  • Must be unable to pay
  • Owe £30k max
  • Gross assets of £2k
  • Disposable income of no more than £75
  • Not subject to DRO (in the last 6 years)
  • Not subject to IVA or bankruptcy (ever)
  • Pay a fee of £90
37
Q

What is a company voluntary arrangement (CVA)

A
  • Same as IVA but for companies - same rules apply
  • Allows directors to keep control of the company and continue to trade
  • A CVA cannot be proposed by a creditor

FSRE - Josh (18 decks)

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