Unit 3 - UK Contract & Trust Legislation (2 of 80) Flashcards
Capacity to contract?
legal term which means that someone has the power in law to enter into a contract
Who can lack capacity to contract?
1) Under 18s
2) Bankrupt
3) Mentally incapable
4) Drunk
5) Companies - if not provided in their powers
Natural vs Legal Person?
‘natural person’ = describe individuals
‘legal person’ = only exist because of the way the law works
What is a partnership?
the relationship that exists between two or more parties carrying on a business together with a view to making a profit
What is an LLP?
a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities - each partner is not responsible or liable for another partner’s misconduct or negligence.
Who must sign a POA?
the donor; or if not signed by them, signed at their direction and in their presence, and in the presence of two witnesses.
Specific (limited) POA?
only lets the donee (recipient) act on specific occasions or in respect of specific property
General POA?
gives the donee a general power to act on behalf of the donor
Lasting (durable) POA?
permits decisions to be made about your financial affairs, health and care – it comes into effect if the donor loses mental capacity or if they no longer wish to make decisions themselves
Why should unmarried/same-sex partners write a will?
those who have not registered a civil partnership under the Civil Partnership Act 2004, will not automatically inherit from each other unless there is a will
Executors vs Administrators of wills?
executors – if the deceased died testate, the executors will obtain a grant of probate which allows them to manage and distribute the deceased’s assets according to the will
administrators – if the deceased died intestate, the administrators will obtain letters of administration
Real vs personal property?
Real property = land & buildings
Personal property = any other property (movable propety and chattels = personal possessions)
Joint tenancy vs tenancy in common?
joint tenancy = all the joint owners have an identical interest in the property. On the death of one owner, their interest passes to the remaining surviving owner(s)
tenancy in common = each joint tenant owns a separate share in the property. On the death of one of the joint owners, their share passes to their beneficiaries
What is an individual voluntary arrangement?
a scheme available to individuals, allowing for them to make arrangements with their creditors without becoming bankrupt
What is liquidation and the two forms?
the process of closing a business and distributing its assets to claimants, can be either
creditor’s voluntary liquidation = the shareholders decide to put the company in liquidation themselves
compulsory liquidation = whenn the courts order that the company should be wound up
What is an informal arrangement?
when a company writes to all its creditors to see if some mutually agreeable timetable for repayments can be found
What is administration?
when the courts grant an order designed to give the company some breathing space to try and put its affairs back on a firmer financial footing
What is receivership?
the process in which a ‘receiver’ is appointed by the creditor, typically a bank, to administer and ‘receive’ (ie, liquidate) the company’s assets so the secured creditors can recoup their money.
Difference between administration and receivership?
The result of receivership is the shutdown of the company/business, whereas administration provides breathing space for an insolvency practitioner to assess the company’s affairs
What is a settlor?
the person who sets up the trust by transferring money or other property to trustees
How many trustees if the trust contains land?
in order to give a valid receipt for the proceeds of sale, there must be at least two trustees (unless one is a trust corporation) and no more than four
What power did the Trustee Act 2000 give to trustees?
statutory power to delegate day-to-day duties to an agent, including the powers of investment
Life interest vs Remaindermen?
Life interest where the beneficiary (life tenant) entitled to the income
Remaindermen where the beneficiary is entitled to the capital
What is the role of a protector of a trust?
their most usual role is to veto the proposals of trustees
What is a Power of Appointment (Flexible) Trust?
where the trustees are given a power of appointment to appoint or vary beneficiaries or vary the terms of the trust (commonly used for life assurance policies written in trust)
