Topic 4 - Important legal principles Flashcards
Describe a legal persons
- Also known as legal entity
- Someone/company that has separate legal existence
- Can enter in contracts or be sued
What body must companies be registered through
- Companies house
Main features of a Public Limited Company (PLC)
- Listed on the stock market
- Effectively owned by the public
- In order to be listed, must meet certain requirements
Main features of a Private Limited Company (Ltd.)
- Owned by a small number of shareholders
- Cannot be listed on stock market - shares sold privately
Explain how liability is distributed in a partnership
- 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
What is liability in Limited liability partnerships based on
- Liability is limited to amount invested
What is a power of attorney and what are the requirements to become one
- A person given legal responsibility to act on behalf of another
- Over 18
- Mental capacity to under take the role
- Cannot be bankrupt
What is a donor when talking about powers of attorney
- The person who is delegating their powers (assigns PoA)
What are the main activities that can be carried out by an ordinary power of attorney
- Sign documents
- Handle financial affairs
- Disposal of property
- CANNOT make non-financial decisions
Can an ordinary power of attorney make decisions whilst the donor is mentally incapacitated
- 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
What is the main difference between ordinary PoA and enduring/lasting PoA
- 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
When were EPA’s replaced with LPA’s
- 30th September 2007
With what body must an EPA and LPA be registered with
- Office of the public guardian (OPG)
What are the 2 forms Lasting power of attorney (LPA) can be split into and what powers does each form give you
- Personal welfare - Personal healthcare and welfare
- Property and affairs - Property and personal affairs (similar to EPA)
Can an EPA take control of personal welfare?
- No, only LPA
What are the 6 key requirements for a valid contract
- Offer and acceptance
- Consideration (E.G. payment of money) from promisee to promisor
- Capacity to contract - must have legal power to enter a contract
- Terms of contract
- Intention to create a legal relationship
- Legality - cannot be made for illegal purposes
What was the main aim for the Consumer Insurance (disclosure and representation) Act 2012
- 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
What is the definition of an agent, and the liability rules around an agent
- 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)
Explain what ratification is in relation to agents
- If an agent exceeds their authority, yet the principle has decided to agree with their action/s
What are the 2 distinctions of agents in financial services
- 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
Within property ownership, what 2 broad categories does property fall into
- 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
2 types of ownership with property
- Single ownership - asset owned solely by one person
- Joint ownership (Joint tenancy and tenancy in common)
What body must you register previously unregistered land with
- Land registry
Explain joint tenancy
- Joint ownership of an asset, where neither person owns a specific legal share
- Upon death, asset passed absolutely to other tenant
Explain tenancy in common
- Joint owners (typically in realty) where each person owns a specific share of the property/asset
- Registered with land registry
What happens upon death with a tenancy in common
- 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
Bankruptcy/insolvency arises when
- Person’s liabilities/debts exceed their assets
- Cannot meet financial obligations within a reasonable time limit
What is the minimum amount of debt a person needs to be in for someone to declare bankruptcy
- £5000
What did the Enterprise act (2002) change for people in terms of bankruptcy
- Reduced the amount of restrictions on an undischarged bankrupt at the discretion of the court
What is the difference between a un/discharged bankrupt
- 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
How long does a bankrupt have to move out of their house if there is a family living in it
- 12 months
What is meant by an insolvency practitioner “attacking” previous transactions
- When the practitioner (trustee in bankruptcy) challenges transactions in previous years
- Transactions may be deliberate moves to get assets out of the estate
What are some of the criminal offences that apply to undischarged bankrupts
- 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
What is an IVA and what are its main features
- 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
What is a DRO and what are its main features
- 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
Requirements to be met to apply for a DRO
- 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
What is a company voluntary arrangement (CVA)
- 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
