Unit 1 Topic 16 - Key legal concepts Flashcards

1
Q

What is a ‘legal person’?

A

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.

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2
Q

What is a Limited liability partnership?

A

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.

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3
Q

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

A

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.

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4
Q

Explain Consideration in relation to requirements for a binding contract.

A

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.

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5
Q

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

A

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.

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6
Q

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

A

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.

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7
Q

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

A

As distinct from a merely informal arrangement.

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8
Q

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

A

Contracts cannot be made for illegal or immoral purposes.

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9
Q

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

A

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

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10
Q

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

A

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.

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11
Q

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

A

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.

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12
Q

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

A

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

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13
Q

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

A

This is a court order preventing someone from doing something.

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14
Q

What is the law of agency?

A

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.

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15
Q

Define Agent.

A

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

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16
Q

Define Apparent authority.

A

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

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17
Q

Define Principal.

A

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

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18
Q

Define Ratification.

A

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

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19
Q

What is Realty?

A

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.

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20
Q

What is Personalty?

A

All other property (from Realty) is called personalty.

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21
Q

What are Joint tenants?

A

Each joint owner owns 100% of the property - there is no division of the property. On the death of any joint owner, the surviving joint owner(s) will take over legal ownership of the property. The transfer is automatic and cannot be overridden by any provisions made by a joint tenant in a will or through the laws of intestacy.

22
Q

What are Tenants in common?

A

The joint legal owners are regarded as one single owner but are trustees of the land. However, each legal owner is also the beneficial (or equitable) owner of a defined interest (share) of the equity in the property, as agreed between them. If one owner dies, their share of the property passes to whoever is entitled to inherit it under the terms of their will or the laws of intestacy.

23
Q

What is the power of attorney?

A

An attorney is a person who is given the legal responsibility to act on behalf of another person.

24
Q

What is an enduring power of attorney?

A

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.

25
Q

Define Donor in relation to power of attorney.

A

Person who makes a power or attorney.

26
Q

Define Donee in relation to power of attorney.

A

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

27
Q

Explain Health and welfare in relation to lasting power of attorney.

A

This gives the attorney power to make decisions over issues such as medical care or moving into residential care. It can only be used once the donor can no longer make decisions for themselves.

28
Q

Explain Property and financial affairs in relation to power of attorney.

A

This gives the attorney power to manage the donor’s bank accounts, collect benefits and sell property. It can be used even if the donor has mental capacity, as long as the donor gives permission.

29
Q

What happens if no power of attorney is in place?

A

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.

30
Q

What is a will?

A

A will is a written declaration of an individual’s wishes regarding what they want to happen after they have died. Although primarily concerned with how the person wishes to dispose of their assets, a will can also deal with other matters, such as giving instructions about burial.

31
Q

What two formalities must be followed to make a valid will?

A
  • The will must be in writing.

- The will must be properly executed.

32
Q

Define Testator.

A

Person who makes the will.

33
Q

Define Beneficiary in relation to wills.

A

A person or organisation that receives benefits under the terms of a will.

34
Q

Define Codicil.

A

A document that formally amends a will.

35
Q

Define Executor.

A

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

36
Q

Define Grant of probate.

A

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

37
Q

Define Deed of variation.

A

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

38
Q

Define Money’s worth in relation to distribution of the estate.

A

Provision of goods/services in lieu of a cash payment.

39
Q

What is Intestacy?

A

A person who has died without having made a valid will is said to have died intestate.

40
Q

Define Administrator in terms in relation to distribution of the estate.

A

Person given the role of distributing the estate according to the rules of the intestacy.

41
Q

Define Letters of administration in relation to distribution of the estate.

A

Legal authority to distribute the estate of a person who has died without leaving a valid will.

42
Q

Define Settlor in relation to distribution of the estate.

A

The person who creates the trust and originally owned the assets held within it.

43
Q

Define Trust Dee in relation to distribution of the estate.

A

Document that sets out how the trust is to be managed, by whom and for whose benefit.

44
Q

Define Trustee in relation to distribution of the estate.

A

Person named in the trust deed as the legal owner of the trust property, with responsibility to look after and distribute the trust property in line with provisions in the trust deed.

45
Q

Under the Trustee Act 2000, what are the requirements of trustees who exercise investment powers?

A
  • Be aware of the need for suitability and diversification of assets.
  • Obtain and consider proper advice when making or reviewing investments.
  • Keep investments under review.
46
Q

Under what conditions does Insolvency arise?

A
  • A person’s liabilities exceed their assets; or

- A person cannot meet their financial obligations within a reasonable time of them falling due.

47
Q

What is an Individual voluntary arrangement?

A

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.

48
Q

Define Insolvency.

A

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

49
Q

Define 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.

50
Q

Define Company voluntary arrangement.

A

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.

51
Q

Define Official receiver.

A

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

52
Q

Define Insolvency practitioner.

A

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.