Topic 16: Key Legal Concepts Flashcards
(38 cards)
What is a Limited Liability Partnership?
A form of partnership which is a legal entity in its own right and registered at Companies House. Partners have no liability for the partnership’s debts over and above their initial investment in the business – hence ‘limited liability’. Contrasts with a standard partnership, where the business is not a legal entity in its own right, and partners are jointly and severally liable for all the partnership’s debts.
What is Apparent authority?
Relates to agency agreements. The agent does something that is not permitted in the agency agreement, but something the principal said or did appears to have given, or gave the impression that, the action was acceptable.
What is Ratification?
Relates to agency agreements. The agent did something not contained in the agency agreement, but after the event the principal agreed (ratified) the action.
What is Realty?
Immovable property (land, etc) that can be restored to the rightful owner in the event of dispossession. Hence the term ‘real estate’.
What is Personalty?
Personal property that is not immovable – money, shares, antiques etc.
What is Joint Tenancy?
A type of joint property ownership. Two or more people are registered as legal owners. On the death of one legal owner, legal ownership automatically transfers to the survivor(s) equally, regardless of any will or intestacy.
What is Tenants in common?
A type of joint property ownership. Legally, the property is jointly owned, as with joint tenancy, but each owner is also the beneficial owner of an agreed share of the property and can leave that share to anyone they choose. On the death of an owner, the surviving owner must hold the deceased’s share of the property on trust for their beneficiaries until it is sold.
What is a ‘legal person’?
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. It is important to remember
that this includes not just an individual acting in a personal/private capacity
but also an individual acting in a formal capacity such as that of executor, as
well as groups of individuals such as trustees. It also includes bodies such as limited companies.
What is a Sole Trader?
As a sole trader, the owner is not considered a separate legal person from the business, meaning that they are personally liable for their business’s debts.
This also means that they are entitled to keep all of the profits generated by
the business, after income tax and National Insurance contributions have been
paid.
What are the requirements for a binding contract?
- Offer and acceptance
- consideration
- capacity to contract
- Terms certain, complete and free from doubt
- Intention to create a legal relationship
- Legality of object
- Entered into freely
What does caveat emptor mean?
Let the buyer beware
What does Unberrima fides mean?
Utmost good faith
Describe the three court remedies for brach of contract?
- Damages – 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. - Order for specific performance – such an order compels the other party to complete the contract.
- Injunction – this is a court order preventing someone from doing something.
What is an Agent?
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. In the context of financial services, an IFA is an agent of their client and given specific powers under the terms of engagement. Another example is an estate agent, who is the agent of
a person looking to sell their property.
In relation to joint ownership of property, there are two types:
- Joint tenants – each joint owner owns 100 per cent 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. - Tenants in common – 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 law of intestacy.
What is power of attorney?
An attorney is a person who is given the legal responsibility to act on behalf of another person. Examples of situations in which the need for an attorney might arise include:
- a person who, while currently in good health, is concerned about how their
affairs will be run should they become unable to manage their own finances
(for instance if they develop an illness such as dementia); or
- someone with affairs in the UK who is moving abroad.
A person who does not have the legal capacity to enter into a contract (eg a
minor or a mentally incapacitated person) cannot appoint someone else as their attorney.
What is an enduring power of attorney?
An ordinary power of attorney automatically ceases if a person becomes mentally incapacitated. This can create problems for those responsible for managing the individual’s affairs. 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 (OPG) if the attorney believes
that the donor is losing mental capacity. An EPA can be revoked only with the consent of the Court of Protection.
What is a lasting power of attorney?
From 1 October 2007, under the provisions of the Mental Capacity Act 2005,
enduring powers of attorney were replaced by lasting powers of attorney (LPAs).
EPAs made before that date can remain in force, but all new arrangements
must be lasting powers of attorney.
There are two types of LPA:
- Health and welfare – 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.
- Property and financial affairs – 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.
In both cases, the LPA must be registered with the OPG before it can come into
effect.
What happens if no power of attorney is in place?
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. This process can take some time and a deputy’s powers are much more restricted when compared to those of an attorney. It is for these two reasons that all clients should be encouraged to
draw up an LPA if they have not done so already
What is a WIll?
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.
To make a valid will, two formalities must be followed:
- the will must be in writing;
- the will must be properly executed.
What is a Testator?
Person who makes the will
What is a Beneficiary?
A person or organisation that receives benefits under the terms of a will.
What is a Codicil?
Document that formally amends a will
