Topic 4 - Important legal principles Flashcards
(37 cards)
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
2
Q
What body must companies be registered through
A
- Companies house
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
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
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
6
Q
What is liability in Limited liability partnerships based on
A
- Liability is limited to amount invested
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
8
Q
What is a donor when talking about powers of attorney
A
- The person who is delegating their powers (assigns PoA)
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
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
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
12
Q
When were EPA’s replaced with LPA’s
A
- 30th September 2007
13
Q
With what body must an EPA and LPA be registered with
A
- Office of the public guardian (OPG)
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)
15
Q
Can an EPA take control of personal welfare?
A
- No, only LPA
16
Q
What are the 6 key requirements for a valid contract
A
- 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
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
Explain tenancy in common
* Joint owners (typically in realty) where each person owns a specific share of the property/asset
* Registered with land registry
26
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
27
Bankruptcy/insolvency arises when
* Person's liabilities/debts exceed their assets
* Cannot meet financial obligations within a reasonable time limit
28
What is the minimum amount of debt a person needs to be in for someone to declare bankruptcy
* £5000
29
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
30
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
31
How long does a bankrupt have to move out of their house if there is a family living in it
* 12 months
32
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
33
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
34
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
35
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
36
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
37
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
