Abstract of title
A traditional method of deducing title used in unregistered conveyancing. Although rarely used now in practice, an abstract will summarise all dealings with the property interest, beginning with the root of title. It will also mention whether documents have been stamped and executed, although it is up to the person investigating title to check that the stamping is sufficient and the execution appropriate.
A percentage reduction in the amount of compensation paid to an individual on termination of employment to reflect the fact that payment is received in one lump sum rather than over the whole notice period. The amount of the percentage reduction is commonly 50% of the current annual interest rate or half of the annual official court interest rate.
Account of profits
An equitable remedy often used where the parties are in a fiduciary relationship. The purpose of this remedy is to require one party to surrender the profits made. It may also be available as an alternative action for money had and received where one person has profited from a wrong at the expense of another (and the claimant has suffered no actual loss) or in exceptional cases where other normal remedies provide inadequate.
Trust income that the trustees have decided to add to the capital of the trust, rather than to pay out to (or for the benefit of) any of the beneficiaries of the trust.
The period during which the trustees of a trust may accumulate the trust income (that is, add it to the trust capital, rather than pay it out to or for the benefit of the beneficiaries (see accumulated income)). After the accumulation period has ended, the trustees are obliged to distribute trust income to, or for the benefit of, the beneficiaries (unless they have a power to accumulate income for minor beneficiaries under section 31 of the Trustee Act 1925).
Action for an agreed sum
Also known as action for the price. A debt action under which the rules on remoteness and causation are irrelevant. The claimant need only prove that the debt is due.
Compensation which may be payable to an employee if an employer does not comply with a reinstatement or re-engagement order made by an employment tribunal under ERA 1996. If ordered, an additional award would normally be in addition to the basic award and compensatory award and will be between 26 and 52 weeks’ pay, subject to current statutory limits.
Ademption (of legacies)
A specific legacy in a will fails to take effect (adeems) if the testator no longer owns that particular asset when he dies.
Used in the context of trusts to mean: “• Setting a beneficiary up in life (or taking a step towards setting him up), for example, by paying for his professional training or providing start-up funding for his business. “”• Using trust capital to benefit a beneficiary, for example, by advancing money to him or making a settled advance. • Using trust capital to benefit a beneficiary, for example, by advancing money to him or making a settled advance. Both meanings come into play when trustees exercise a power of advancement. The trustees are then advancing capital (in the second sense given above) for a beneficiary’s advancement (in the first sense given above) or benefit. See also appointment.
A written statement of evidence which is sworn before a person authorised to administer affidavits, such as a solicitor. Affidavits take a similar form to witness statements but they include a jurat instead of a statement of truth. Before the introduction of the Civil Procedure Rules (CPR), affidavits were the principal means by which evidence was put before the court in interim applications. However, witness statements have generally taken their place now, except in some limited circumstances where affidavits must still be used.
Damages to provide compensation for mental distress or injury to feelings caused by the manner or motive with which a wrong was committed or by the defendant’s conduct subsequent to the wrong.
Agricultural property relief (APR)
A relief from inheritance tax. When the conditions for the relief are met, it reduces the agricultural value of any transfers of value (broadly, gifts) of agricultural property made in a person’s lifetime or on death. The rate of relief is usually 100% of the agricultural value, except for agricultural property subject to a tenancy that commenced before 1 September 1995; in this case 50% relief usually applies (although there are some exceptions).
Appointment (of all or part of a trust fund)
The exercise of an express power (contained in a trust document and called a power of appointment) by the trustees of a trust, to direct (or redirect) the trust fund in favour of a particular beneficiary (or beneficiaries). The power is usually seen in discretionary trusts (where the beneficiaries do not have an automatic right to the income or capital of the trust fund), but can also be found in interest in possession (or life interest) trusts; it often allows the trustees to redirect the income or capital of the trust away from (or in favour of) the life tenant.
The transfer of a right from one party to another. For example, a party to a contract (the assignor) may, as a general rule and subject to the express terms of a contract, assign its rights under the contract to a third party (the assignee) without the consent of the party against whom those rights are held. Obligations cannot be transferred to a third party except by novation. An assignment may be either a legal assignment or an equitable assignment.
Two employers where: • One is a company of which the other (directly or indirectly) has control; or
• Both are companies of which a third person (directly or indirectly) has control. ”Control” means the holding of the majority of voting power at shareholders’ meetings. If an employee leaves their job and is employed by an employer who is associated with that first employer, continuity of employment is preserved. The periods of employment with both the original employer and the associated employer will count towards the employment period (see Practice note, Continuity of employment: Change of employer).
A clause stating that a document has been executed in the presence of one or more witnesses (who attest the execution). Requirements will vary according to the type of document being executed.
A person appointed by another to act on his behalf and in his name.
Automatically unfair dismissal
Certain dismissals are automatically unfair dismissals, for example, where the dismissal is for a reason related to a TUPE transfer (where there is no economic, technical or organisational reason), the assertion of a statutory right, trade union membership or participation, or pregnancy or maternity. There is no minimum qualifying period of employment for most categories of automatically unfair dismissal.
Broadly, the transfer of possession (and not ownership) of goods by the owner (the bailor) to another person (the bailee) so that they might be used for a specified purpose on condition that they are returned to, or in accordance with the instructions of, the bailor, or kept until he reclaims them. The bailee does not own the goods, but has possession of them. The bailee has a duty to take reasonable care of the goods and return them in accordance with the terms of any express or implied contract of bailment.
Also known as a bank bond (but not to be confused with debt securities). An undertaking by a bank to cover a debt or risk on a transaction. This may sometimes be used as an alternative to a company offering security for a debt itself, although banks will usually require some form of security or quasi-security in return (so obviating this benefit), for example: * cash collateral * a counter-inemnity * security over the company’s assets
A simple trust, where the beneficiary (or beneficiaries) has an immediate and absolute right to both the capital and income of the trust. The property is held in the name of the trustee (or trustees), but the trustee has no discretion over the assets held in trust. The trustee of a bare trust is a mere nominee, in whose name the property is held. Except in the case of bare trusts for minors, the trustee has no active duties to perform. The trustee must simply follow the (lawful) instructions of the beneficiary in relation to the assets held in trust. A bare trust can be express or implied.
The first of two elements of compensation payable to an employee found by an employment tribunal to have been unfairly dismissed (the second element being the compensatory award). The basic award is designed to compensate an employee for loss of job security and is calculated in the same way as the statutory redundancy payment according to a formula based on the employee’s age, length of service and weekly pay (subject to a statutory limit).
Beneficiary (of a gift, will or trust)
In the context of a gift, will or trust, a person who receives a gift of money or other assets from a benefactor. The gift can be in the form of an outright gift, or in held in trust for the beneficiary.
For inheritance tax (IHT) purposes, a person who is under the age of 18 and at least one of whose parents has died (section 71C, Inheritance Act 1984 (IHTA 1984)). “Parent” for these purposes includes a step-parent, and someone who has parental responsibility for the minor under the Children Act 1989 (section 71H, IHTA 1984). “Trusts for bereaved minors have beneficial IHT treatment (see Practice note, Taxation of UK trusts: overview: Trusts for bereaved minors). A bereaved minor is also a vulnerable person for income tax and capital gains tax purposes (see Practice note, Taxation of UK trusts: overview: How income tax and CGT apply to trusts for vulnerable persons).
Bill of sale
A written instrument which transfers title to personal property, and which may contain a conditional transfer of this personal property as security for a debt.
A clause giving a party to an agreement the option to determine the agreement before its expiry.
According to the Interpretation Act 1978, the United Kingdom, the Channel Islands and the Isle of Man, but not the Republic of Ireland.\
Includes Great Britain (which consists of England (including the Isle of Wight and the Scilly Isles), Scotland and Wales) together with both Northern Ireland and the Republic of Ireland, the Isle of Man, the Channel Islands and other smaller islands.
Business property relief (BPR)
A relief from inheritance tax for certain shareholdings, interests in a business or assets used by the owner’s business (relevant business property). When the conditions for the relief are met, it reduces the value transferred by a transfer of value (broadly, a gift) made during a person’s lifetime or on death. The rate of relief is either 100% or 50% of the value transferred, depending on the nature of the relevant business property and who owns it. (Chapter 1, Part V, Inheritance Tax Act 1984.)
One of the five potentially fair reasons for dismissing an employee under section 98 of the ERA 1996. To ensure that such a dismissal is fair, an employer must demonstrate it acted reasonably in relying on capability as the reason for dismissal and followed a fair procedure to establish whether the employee was “capable” of doing their job by reference to skill, aptitude, health or any other physical or mental quality.
Capital transfer tax (CTT)
A tax on lifetime transfers and on death. It was introduced in 1974 as a replacement for estate duty, although it did not apply on death until 1975. It was substituted by inheritance tax following the Finance Act 1986, when the Capital Transfer Tax Act 1984 was renamed the Inheritance Tax Act 1984. For more information, see Practice note, Inheritance tax transferable nil rate band: overview: Capital transfer tax (CTT): 13 March 1975 to 17 March 1986.
A principle used in the assessment of damages for breach of contract or tort. Losses may have been foreseeable at the time of contracting or at the time of the breach of duty in the case of tort, but they will only be recoverable if those losses were caused by the breach of contract or duty. The claimant must prove on a balance of probabilities that the breach caused the loss. It is not sufficient for the breach merely to provide the opportunity or occasion for the claimant to injure himself. The so-called “but for” test is used as a preliminary filter. If the loss would have happened in any event, then the breach could not be said to have caused the loss.
Change of control clause
A contractual provision which gives a party to an agreement enhanced protection if the controlling shareholding of the other party is transferred. In commercial contracts a change of control clause will often give the party who is not subject to a change in ownership the right to terminate the agreement in the event of a change of control of the other party. In employment contracts, a change of control clause entitles the employee to a specified payment or enhanced notice period if their employer is taken over and the takeover results in dismissal by their employer or a material reduction in the employee’s responsibilities leading to constructive dismissal within a specified time. In finance contracts a change of control clause will enable the bank to declare an event of default or a mandatory prepayment event and therefore cancel any obligation to make further loans and require the repayment of existing loans.
Security over an asset which gives the lender the right to have the particular asset and its proceeds of sale appropriated to the discharge of the debt in question. A charge does not transfer ownership; it is merely an encumbrance on the asset.
A thing that a person can possess in physical form; a tangible, moveable asset (for example, a piece of jewellery, a painting or a car and, in some contexts, goods, equipment or machinery). Chattels are sometimes called “choses in possession”, to distinguish them from choses in action.
An individual who has entered into a civil partnership under the Civil Partnership Act 2004. Only same-sex couples can enter into a civil partnership. With effect from 13 March 2013, it is also lawful for same-sex couples to marry (section 1, Marriage (Same Sex Couples) Act 2013; see Practice note, Marriage (Same Sex Couples) Act 2013: changes to wills and trust documents: Provisions of MSSCA 2013 that may affect wills and trust documents).
The party who brings a court action. In employment law, an individual who has issued a claim in an employment tribunal.
Complete days, not including: • The day on which the period begins. • If the end of the period is defined by reference to an event (for example, a hearing), the day of that event.
Code of practice
In the context of employment law, Codes of Practice are issued from time to time by official and government agencies. Examples of such Codes of Practice are the Acas Code of Practice on Disciplinary and Grievance Procedures and Information Commissioner: Employment Practices Code.
A document that amends a previously executed will. Amendments made by a codicil may be small (for example, changing the executors) or may change the will significantly. A codicil must comply with the same legal requirements and be executed in the same way as a will.
Collateral warranty or collateral contract
• In the general law of contract, a term or contract which runs outside the main written contractual agreement between the parties. • In construction law, collateral warranty refers specifically to a contract between a professional consultant, building contractor or sub-contractor and a third party (for example, a funder, tenant or buyer). It is an agreement under which a professional consultant, building contractor or sub-contractor generally warrants to a third party that it has complied with its appointment, building contract or sub-contract.
Redundancies of 20 or more employees at an establishment in a period of 90 days or less. Before making these redundancies, the employer must consult on its proposal with representatives of the affected employees and also notify BEIS.
Commission for Equality and Human Rights (CEHR)
The Commission for Equality and Human Rights, established under the Equality Act 2006, came into being on 1 October 2007. It has since rebranded itself the Equality and Human Rights Commission (EHRC).
Commission for Racial Equality (CRE)
The CRE was a publicly funded, non-governmental body set up under the Race Relations Act 1976 to tackle racial discrimination and promote racial equality. On 1 October 2007, the CRE was dissolved and its functions taken over by the Equality and Human Rights Commission (EHRC) (for more information on the EHRC, see Practice note, Equality and Human Rights Commission).
The second element of compensation payable to an employee found to have been unfairly dismissed by an employment tribunal (along with the basic award). The amount of the compensatory award will, subject to a statutory limit, be such amount as the tribunal considers just and equitable in all the circumstances, having regard to the loss sustained by the employee because of the dismissal in so far as that loss is attributable to the employer’s action.
Also known as substantial damages. Damages awarded in respect of the actual losses suffered by the claimant. Their purpose is to compensate the claimant for pecuniary and non-pecuniary losses. Pecuniary losses generally include the gains prevented by the breach of contract or tort, expenses caused by the breach of contract or tort and expenses rendered futile by the breach of contract or tort. Non-pecuniary losses generally include pain and suffering and loss of amenity and mental distress. [para] Compensatory damages may be contrasted with damages which are not strictly compensatory because, for example, the claimant may have suffered damage but cannot prove actual loss or he has suffered no loss but the breach of contract or duty results in a benefit to the wrongdoer. Examples of this type of damages include nominal damages, exemplary damages, restitutionary damages and liquidated damages.
Also known as “closing”. In the context of a property transaction, completion is the final step in the legal process of transferring ownership of property. Completion is usually the point at which the purchase price for the property is paid and the transfer documents are dated. “In a transaction for the sale and purchase of shares in a UK company, completion the legal formalities necessary to conclude the transaction are performed at completion. In the context of a loan finance transaction, completion or closing usually refers to the point at which the borrower draws down the loan.
A written agreement, regulated by statute, whereby an employee or worker agrees to waive their right to bring or pursue certain employment tribunal claims against a respondent or potential respondent, usually their current or former employer. Re-named as a settlement agreement by the Enterprise and Regulatory Reform Act 2013 in all relevant primary legislation on 29 July 2013, and in secondary legislation on 30 August 2013.
The meaning of this term depends on the context in which it is used: • In contract law, a condition in a contract which provides that the agreement or certain parts of the agreement will only come into force if and when certain conditions are met. • In a loan agreement, a condition that must be satisfied by the borrower before it may request a drawdown and the lender is obliged to lend. Unless otherwise provided, the rest of the loan agreement (including any obligation of the borrower to pay fees) will be binding on the borrower on execution of the loan agreement.
One of the potentially fair reasons for dismissal under section 98 of the ERA 1996 which the employer must establish to show that an employee was not unfairly dismissed. Misconduct may be either a single act of serious misconduct or a series of acts that are less serious. For a dismissal to be fair on the grounds of conduct, it must be established that:
• At the time of dismissal, the employer believed the employee to be guilty of misconduct. The burden of showing that there is a potentially fair reason for the dismissal lies with the employer. • At the time of dismissal, the employer had reasonable grounds for believing that the employee was guilty of that misconduct. This goes to the question of reasonableness under section 98(4) of ERA 1996 and the burden of proof is neutral. • At the time that the employer formed that belief on those grounds, it had carried out as much investigation as was reasonable in the circumstances. Again, this goes to the question of reasonableness under section 98(4) of ERA 1996 and the burden of proof is neutral.
Also known as non-disclosure agreement. An agreement requiring one party to keep certain information disclosed in the course of a transaction or period of employment confidential and to use that information only for the particular purpose for which it is disclosed.
Payment, in any form, under a contract; any value given at the counterparty’s request can be good consideration, including any action, inaction, or a promise. For more about consideration, see Practice note, Contracts: formation: Consideration.
A constructive dismissal occurs where the employer does not dismiss the employee, but the employee resigns and can show that they were entitled to do so by virtue of the employer’s conduct. The employer’s conduct in such cases is a repudiatory breach or fundamental breach of contract, and the employee’s resignation in response is an acceptance of the employer’s repudiation of the contract. A constructive dismissal may be an unfair dismissal and a wrongful dismissal as the employer has breached the employee’s contract of employment.
An interest that does not take effect until a condition (contingency) has been met. When the condition is met, the interest becomes a vested interest.
Wills and trusts often include interests that are contingent on reaching a certain age or on surviving another person. For example, Adam dies and leaves his estate to his son Brian absolutely, provided Brian reaches the age of 21. Brian has a contingent interest in his father’s estate. On his 21st birthday, his interest vests and he gets the estate outright.
An employee must complete a minimum period of continuous employment with an employer to be eligible for certain rights and payments such as unfair dismissal, statutory redundancy payments, statutory maternity pay (SMP), statutory paternity pay (SPP) and statutory adoption pay (SAP). Continuity is calculated in accordance with provisions in the ERA 1996, except in the case of SMP, SPP and SAP, where it is calculated in accordance with the various regulations governing those schemes. Continuity will usually be broken by, amongst other events, a break of one clear week (measured from Sunday to Saturday) between two contracts of employment, unless certain exceptions apply. These include where the employee is incapable of work through illness or injury, or where the break is due to a “temporary cessation of work”, or where continuity is preserved by arrangement or custom.
Contract for services
A contract that is used for appointing a genuinely self-employed individual such as a consultant (or a profession or business run by that individual) to carry out services for another party where the relationship between the parties is not that of employer and employee.
Contract of employment
A contract of service or apprenticeship, whether express or implied and, if express, whether oral or in writing. Whether or not an individual is working under a contract of employment will determine whether they are entitled to certain statutory rights, such as statutory redundancy payments and statutory maternity pay and the right not to be unfairly dismissed. This can be contrasted with a contract for services, where the relationship between the parties is not that of employer and employee. [para] For a contract of employment to arise there must at least exist an obligation to personally perform the work, mutuality of obligations between employer and employee, and a sufficient element of control over the employee’s work (Ready-Mixed Concrete (South East) Limited v the Minister of Pensions and National Insurance  2 QB 497). For more information on this, see Practice note, Employment status (2): how to identify an employment contract.
Where a seller has received and accepted two or more offers on a property and will sell to the party who is ready to exchange contracts first.
Contractual notice period
The period of notice required to be given under a term (whether express or implied and, if express, whether oral or in writing) of a contract of employment. It is possible for the employer and employee to have to give different periods of notice. Various additional terms may be agreed, such as a requirement that notice be given in writing, or the option that the employer may shorten the notice period by making a payment in lieu of notice. The contractual notice period may be longer than the statutory minimum notice period but may not be shorter. A failure to give the required notice is likely to constitute a breach of contract.
Contractual retirement age
The age at which employees are obliged to retire under any relevant terms of a contract of employment. Where a pool of employees has the same retirement age it will also usually be the normal retirement age.Since the abolition of the default retirement age on 6 April 2011, a contractual retirement age has to be objectively justified (see Practice note, Discrimination in employment: retirement).
Conduct by an employee that may lead to a reduction in the amount awarded by an employment tribunal for unfair dismissal: • Where the employee’s action(s) caused or contributed to any extent to the dismissal the compensatory award shall be reduced by such proportion as is just and equitable (section 123(6), ERA 1996). • Where the employee’s conduct before the dismissal (or notice of dismissal, where given) was such that it would be just and equitable to reduce the basic award to any extent, it shall be reduced to that extent (section 122(2), ERA 1996). A reduction for contributory fault can affect the basic award and/or the compensatory award, and may result in no award or a percentage reduction in award. The tribunal must look at the claimant’s conduct in isolation and not be influenced by its assessment of the respondent’s conduct.
A defence available where it is proved that the claimant’s own negligence contributed to its loss or damage. The Law Reform (Contributory Negligence) Act 1945 provides for apportionment of loss where the fault of both claimant and defendant have contributed to the damage. “Fault” is defined in the Act as “negligence or other act or omission which gives rise to liability in tort or would, apart from this Act, give rise to the defence of contributory negligence” (section 4). A claim for damages will be reduced to such extent as the court thinks just and equitable having regard to the claimant’s share in responsibility for the damage. The Act was designed for the tort of negligence but can be applied to cases of contractual breaches where the defendant’s liability in contract is the same as his liability in negligence.
Broadly, conversion occurs when a person interferes with the personal property of another, so as to amount to (in the eyes of the law) appropriating the property for himself. For more information on the relationship between a bailor and a bailee, see Practice note, Bailment: introduction.
Course of dealing
Regular trading between two persons over a period of time on the basis of consistent terms of trade which is sufficient for the same terms to be treated as incorporated in a new contract between those persons.
Court of Protection
An office of the High Court, with power to make decisions in relation to the property and affairs, health care and personal welfare of adults (and children in a few cases) who lack capacity. The court also has the power to make declarations about whether someone has capacity to make a particular decision. The court has the same powers, rights, privileges and authority in relation to mental capacity matters as the High Court.
An agreement or promise to do or provide something, or to refrain from doing or providing something, which is meant to be binding on the party giving the covenant (who may be referred to as the “covenantor”). In a finance law context, also known as an undertaking.
Agreements between two parties who are competitors in relation to the products covered by the agreements, by which one party grants a licence to the other and, in exchange, the other (whether or not in a separate agreement or through connected undertakings) grants a licence to the first party.
The unauthorised use of a trade mark or a name confusingly similar to a trade mark in a domain name in circumstances of bad faith.
As near as possible (from the old French, literally “near to”). In the context of charities, the cy-près doctrine allows the wishes of a donor to charity to be carried out even if the original purpose of the gift has failed. For the doctrine to apply, the new purpose should be as close as possible to the original purpose.
A deed is a written document which is executed with the necessary formality (that is, more than a simple signature), and by which an interest, right or property passes or is confirmed, or an obligation binding on some person is created or confirmed. Deeds are generally enforceable despite any lack of consideration. The limitation period for actions brought under a deed is generally 12 years, although it is six years for claims for arrears of rent and arrears of interest under a mortgage (sections 8, 19 and 20, Limitation Act 1980).
A gift in a will that is not a gift of a particular asset in the testator’s estate, but is to be paid for out of a particular asset. For example, “I give £100 from my current account with X bank to my nephew”. See also specific gift and general legacy.
A type of discrimination that occurs where, because of a protected characteristic, a person (A) treats another (B) less favourably than A treats or would treat others (section 13(1), Equality Act 2010). In relation to the protected characteristic of age only, there is no direct discrimination where the treatment is a proportionate means of achieving a legitimate aim.
For the purposes of disability discrimination under the Equality Act 2010 (formerly under the Disability Discrimination Act 1995), a “disability” is a physical or mental impairment which has a substantial and long-term adverse effect on an individual’s ability to carry out normal day-to-day activities. The effect must have lasted for 12 months or be likely to last 12 months. An effect that is likely to recur is treated as continuing for this purpose.
Under the Equality Act 2010 (EqA 2010), disability discrimination can take four forms: • Direct discrimination because of disability. • Discrimination arising from disability. • Indirect discrimination against someone with a particular disability. • A failure to comply with a duty to make a reasonable adjustment. The EqA 2010 also contains provisions concerning disability harassment and victimisation.
Disabled person’s interest
For inheritance tax (IHT) purposes, a trust for a disabled person that meets certain requirements about how the income and capital of the trust may be applied during that person’s lifetime (section 89B(1), Inheritance Tax Act 1984).
Disclosure and Barring Service (formerly the Criminal Records Bureau (CRB))
An executive agency of the Home Office that helps organisations to make safer recruitment decisions by providing appropriate access to details of spent and unspent criminal convictions and other related information in certain circumstances. The disclosure service provides employers and organisations engaging volunteers with information to assist them to assess the suitability of an individual for work which involves a position of trust, including work with children and vulnerable adults.
A flexible trust under which no beneficiary of the trust has an automatic right to income or capital as it arises (and in which there is no interest in possession). The trustees have the power to decide who (from a class of beneficiaries named in the trust document) should receive the capital or income from the trust. These trusts are also “relevant property trusts”.
Under the Equality Act 2010 (EqA 2010), in Great Britain it is potentially unlawful to discriminate in relation to age, disability, gender reassingment, marriage or civil partnership, pregnancy or maternity, race, religion or belief, sex or sexual orientation. See Direct discrimination, Indirect discrimination, Discrimination arising from disability and Pregnancy and maternity discrimination.
Discrimination arising from disability
A new form of disability discrimination introduced on 1 October 2010 by the Equality Act 2010. It broadly mirrors disability-related discrimination under the Disability Discrimination Act 1995. It occurs where A treats B unfavourably because of something arising in consequence of B’s disability, and A cannot show that the treatment is a proportionate means of achieving a legitimate aim.
For the purposes of the law on unfair dismissal, section 95 of the Employment Rights Act 1996 provides that an employee is dismissed if: • The employer terminates the employee’s contract of employment, either summarily or with notice. • The employee resigns (with or without notice) and can establish that they were constructively dismissed. • The employer does not renew a fixed-term contract on the expiry of the fixed term.
Broadly, domicile can be summarised as an individual’s permanent home. It is a common law concept that the courts use to determine which legal system applies to an individual, where that individual has connections with more than one jurisdiction. Domicile is relevant in matters of personal law and where there is a conflict of laws. The concept of domicile has also been imported into UK tax legislation to determine an individual’s liability to income tax, capital gains tax and inheritance tax.
Donatio mortis causa
A gift made by a person (the donor) in contemplation of impending death, also known as a deathbed gift. When the donor dies, the subject-matter of the gift does not pass to the personal representative but to the person the deceased intended to benefit (the donee). To qualify as a donatio mortis causa: • The gift must be made by the donor in contemplation of the donor’s impending death. • The gift must be contingent on the donor dying. “• The donor must part with the gift or deliver it in some way to the donee. • The donor must part with the gift or deliver it in some way to the donee. “”• The subject-matter of the gift must be capable of being given away in this manner. The doubt about whether land could be given away is now resolved (see Sen v Headley  Ch 425). • The subject-matter of the gift must be capable of being given away in this manner. The doubt about whether land could be given away is now resolved (see Sen v Headley  Ch 425).
An arrangement where an employee has two employment contracts with different employers (usually in the same group), covering the whole of their working time. Employees who are resident in the UK are subject to UK income tax on their worldwide income. However, if they are non-UK domiciled they are not subject to UK tax on income for wholly non-UK duties with a non-UK employer unless that income is remitted to the UK. From 6 April 2014, additional conditions must be met to qualify for the remittance basis.
Duty of good faith
A duty imposed in many continental European jurisdictions. The duty extends to all phases of commercial relationships both in the pre-contractual and contractual stages. The duty of good faith exists when negotiations commence. Entering into heads of terms may help to crystallise the duty and make it easier to enforce, for example, a letter that sets out detailed terms agreed in principle would be evidence of the closeness of the relationship and of what each party is expecting from the other.
Effective date of termination (EDT)
An employee’s period of continuous employment will end on the effective date of termination (EDT). The EDT is defined as: • The date on which the employee’s notice expires (where the employee has been terminated with notice); or • The date on which termination takes effect (where the employee has been dismissed without notice). Establishing the EDT is important for determining when an employee should bring a claim for unfair dismissal. An employee has three months from the EDT in which to bring a claim.
See Enterprise investment scheme.
An individual who has entered into or works (or worked) under the terms of a contract of employment, whether such contract is expressly agreed (in writing or orally) or is implied by the nature of the relationship (section 230, ERA 1996).
Enduring power of attorney (EPA)
A power of attorney formerly governed by the Enduring Powers of Attorney Act 1985, which was repealed on 1 October 2007. From 1 October 2007, no new EPA may be created and existing EPAs are governed by the Mental Capacity Act 2005. An EPA was only applicable to individuals and it specifically provided for the mental incapacity of the donor and the subsequent continuation of the attorney’s power (if that power was registered with the Court of Protection). EPAs have been replaced by lasting powers of attorney.
Enterprise Investment Scheme (EIS)
A tax efficient scheme introduced to encourage equity investment in new and small companies. The EIS has been available for investments since 1994. Taxpayers can benefit from unlimited deferral relief from capital gains tax (CGT) where gains (including gains on shares) are reinvested in newly issued eligible shares (section 150C and Schedule 5B, Taxation of Chargeable Gains Act 1992). The investment in eligible shares must occur within the period beginning one year before and ending three years after a gain is realised. The gain is then postponed and becomes chargeable only on the occurrence of one of several specified events, for example, on the disposal of the EIS shares or the shares ceasing to be eligible EIS shares. Taxpayers are also entitled to relief from income tax on investment in EIS shares. The income tax deduction is given at the rate of 30% on the amount invested, up to a maximum annual investment of £1 million (from 6 April 2012), provided that the shares are held for at least 3 years. If income tax relief is granted and the EIS shares held for 3 years, the disposal is exempt from CGT. A company’s shares will be eligible for the EIS if it is an unquoted trading company and meets various other conditions, which are described in Practice note, Enterprise Investment Scheme (EIS).
Entire agreement clause
Also known as whole agreement clause. A contractual provision which aims to prevent the party relying on it from being liable for any statements or representations (including pre-contractual representations) except as expressly set out in the agreement.
A relief from capital gains tax (CGT) that is available to individuals and trustees. It can be claimed for gains arising on disposals of businesses, shares in personal trading companies and associated business assets (section 169H-169S,Taxation of Chargeable Gains Act 1992). Relief applies an effective rate of CGT of 10% to qualifying gains falling within the cumulative lifetime limit of £10 million (for gains realised on or after 6 April 2011).
Equal Opportunities Commission (EOC)
The EOC was an independent, non-departmental public body, which worked to eliminate sex discrimination. On 1 October 2007, the EOC was dissolved and its functions taken over by the Equality and Human Rights Commission (EHRC) (see Practice note, Equality and Human Rights Commission.
Equality and Human Rights Commission (EHRC)
The Commission for Equality and Human Rights, established under the Equality Act 2006, came into being on 1 October 2007. The Commission has since rebranded itself the Equality and Human Rights Commission (EHRC). The EHRC took over the functions of the Equal Opportunities Commission (EOC), Commission for Racial Equality (CRE) and Disability Rights Commission (DRC). The EHRC aims to bring together the expertise and resources to promote equality and challenge discrimination on grounds of race, gender, gender reassignment, disability, sexual orientation, religion or belief and age, as well as tackling human rights issues.
An assignment which does not fulfil the statutory criteria for a legal assignment.
The Employment Rights Act 1996, which consolidated a number of enactments relating to employment rights.
A deed which has been signed but only delivered conditionally. It will not become operative until the condition (e.g. that payment of money) is fulfilled.
In general terms, an individual’s estate is the total of all their assets, less all their liabilities. For inheritance tax (IHT) purposes, an individual’s estate is the aggregate of all the assets to which they are beneficially entitled, less all their liabilities. The definition includes assets held in a trust in which the deceased had an immediate post-death interest, a disabled person’s interest, or a transitional serial interest. However, the estate of an individual immediately before their death does not include excluded property. (Section 5, Inheritance Tax Act 1984.)
European works council (EWC)
A consultative body set up by employers for the purposes of discharging the requirements for informing and consulting employees at European level, in undertakings or groups with at least 1,000 employees across the member states of the EEA and at least 150 employees in each of two or more of those member states (regulation 2(1), Transnational Information and Consultation of Employees Regulations 1999 (SI 1999/3323)).
Ex gratia payment
A payment made (for example, by an employer to an employee) where there is no contractual requirement to do so.
For inheritance tax (IHT) purposes, certain types of property are excluded from IHT. It is a technical term and includes property outside of the UK.
Execution in counterparts
A way of executing a document that is intended to have legal effect between two or more parties, which involves each party signing their own separate copy of the document and then exchanging their signed copy for the copy that has been signed by the other party.
An individual who administers a deceased person’s estate in England, Wales and Northern Ireland, having been appointed in the will. A woman who is an executor is sometimes called an executrix.
The term sometimes used for a woman who is an executor.
See Punitive damages.
The usual measure of damages for breach of contract. It refers to the innocent party’s loss of a bargain, such as the profits that it would have expected to receive had the contract been performed, less the costs it would have incurred to earn that profit. The aim of expectation loss damages is to put the innocent party in the same position as if the contract had been performed. It is to be contrasted with reliance loss, also a measure of damages for breach of contract and often referred to as wasted expenditure. It has been held that expectation loss and reliance loss are mutually exclusive to prevent double recovery. However, Chitty on Contracts (Sweet & Maxwell, 32nd edition, Chapter 26, paragraph 26-028) states that this is correct if it is interpreted to mean that the claimant should not recover his gross profits expected under the contract and also the wasted expenditure incurred in reliance of the contract which he intended to meet from the gross profit. A claimant should, in principle, be able to recover for both profit and reliance loss as long as both claims do not overlap.
The requirement, first introduced by section 1(2)(a) of the Law of Property (Miscellaneous Provisions) Act 1989 that an instrument is not a deed unless it makes clear on its face that the maker or parties to the instrument intend it to be a deed.
This term has a number of meanings: • In the context of security, a charge over a particular asset where the chargee controls any dealing or disposal of the asset by the chargor. A fixed charge ranks before a floating charge in the order of repayment on an insolvency. • In relation to a tenancy, under the Landlord and Tenant (Covenants) Act 1995, rent, any service charge as defined by section 18 of the Landlord and Tenant Act 1985, any amount payable under a tenant covenant of the tenancy providing for the payment of a liquidated sum in the event of failure to comply with such a covenant.
The happening of events outside the control of the parties, for example, natural disasters or the outbreak of hostilities. It is usual for parties to provide in a contract that such events will not make the defaulting party liable if they prevent it from performing its obligations. The concept is derived from civil law and is not fully recognised under common law, therefore it should always be fully defined.
The forfeiture of a lease by the re-entering by the landlord on the demised property, or by the commencement of proceedings for possession of the demised property by the landlord. The term is also used more widely in the context of supply of goods to relate to forfeiture of those goods for non-payment.
In general terms, the assets that an individual is free to dispose of by his will or that pass under the intestacy rules.
Where a serious event occurs which is both unexpected (so that any contractual force majeure provisions do not cover it) and beyond the control of the parties to a contract, and which will make performance of the contract in the changed circumstances fundamentally different from performance under the contract that the parties originally entered into. This is a common law principle and the courts apply it as narrowly as possible.
A repudiatory breach of contract, also known as repudiation.In the 1970s it was asserted that an exclusion clause was ineffective against a fundamental breach (or breach of a fundamental term). However, it is now established that there is no such rule of law; it is always a question of interpretation, whether the exemption clause covers the breach.
There was at one time support for the view that, in addition to conditions, innominate terms and warranties, a fourth category of contract term existed, namely, a “fundamental term”. A fundamental term was one which was deemed to form the “core” of the contract. It was also asserted that performance of a fundamental term could not, unlike other contract terms, be avoided by means of an exemption clause. However, the House of Lords have indicated that they consider “fundamental term” to be a synonym for “condition”. The general view now is that there is no legal basis for a separate category of “fundamental terms”.
The term used for a period during which an employee remains on normal salary and bound by their contract of employment but is requested, usually under an express term of the contract, not to attend the office or contact clients or customers. Employers often use garden leave during an employee’s notice period to prevent the employee from having further access to customers, clients and staff and to prevent the employee from working for a competitor.
A gift in a will that is not a gift of a particular asset in the testator’s estate, but is to be paid for out of the testator’s estate. For example, “I give £100 to my nephew”.
General power of appointment
A power given by an individual (the donor) to another individual (the donee) to appoint property in favour of whomever the donee wishes, including the donee himself. The power should be capable of being exercised by deed or by will. As the donee of a general power of appointment is free to appoint the property to himself if he wishes, the donee is treated as being the beneficial owner of the property for inheritance tax purposes.
Genuine occupational qualification or requirement
An exception under the pre-October 2010 discrimination legislation allowing employers to discriminate where a particular characteristic (for example, a specific race) is necessary for the job. From 1 October 2010, it is replaced by the occupational requirement exception set out in the Equality Act 2010.
A payment to induce a candidate to join, or an existing employee to remain in, employment. See also Golden hello.
Also known as a golden parachute. Financial benefits provided to employees (usually senior employees or directors) on leaving their employer. Such provisions may be: “• A long fixed-term contract giving rise to damages in the event of early termination; “”• Payment of a fixed sum in the event of employer repudiation or non-renewal of a contract; or “”””• The option to resign and claim a fixed sum in the event of a change of control of the company because of a takeover. Such clauses run the risk of being held unenforceable as a penalty if they are payable on breach of contract and do not genuinely pre-estimate the loss that an employee may suffer. Approval of such clauses by directors may also fall foul of their fiduciary duty to act in good faith in the best interests of the company. See also Golden hello and Golden handcuffs.
A payment to induce a candidate to join, or an existing employee to remain in, employment. See also Golden handcuffs.
Also known as a golden handshake. Financial benefits provided to employees (usually senior employees or directors) on leaving their employer. Such clauses run the risk of being held unenforceable as a penalty if they are payable on breach of contract and do not genuinely pre-estimate the loss that an employee may suffer. Approval of such clauses by directors may also fall foul of their fiduciary duty to act in good faith in the best interests of the company. See also Golden hello and Golden handcuffs.
Great Britain comprises England, Scotland and Wales. Northern Ireland, the Channel Islands and the Isle of Man are NOT part of Great Britain.
Grievance procedure (GP)
A procedure for an employer to deal with complaints by employees. The statutory dispute resolution procedures in Schedule 2 to the Employment Act 2002 contain two statutory GPs, the standard GP and the modified GP, one of which must usually be followed where an employee or former employee has a grievance that could form the basis of a tribunal claim. Employers may incorporate the steps contained in the statutory GPs into their own internal grievance procedures. The Employment Act 2008 repeals the procedures with effect from 6 April 2009 (subject to transitional provisions).
Misconduct so serious as to justify summary dismissal of an employee. What constitutes gross misconduct may vary according to the particular circumstances of the employer and the work the employee is carrying out. Acts of gross misconduct, such as theft, fraud, physical violence, serious negligence or serious breach of health and safety regulations, will result in a serious breach of contractual terms and examples of such conduct will usually be given in an organisation’s disciplinary procedure.
A legal commitment to repay a debt if the original borrower fails to do so. A guarantee is not enforceable unless it is in writing or there is a memorandum or note of the agreement signed by the guarantor or at its direction (section 4, Statute of Frauds 1677).
This term has different meanings depending on the context in which it is used: “• In the context of private client, an (adult) individual appointed to take parental responsibility for a child under the age of 18 years. “”• For further details (including how guardians can be appointed), see Practice note, Appointing guardians in wills. • In the context of family law, a person who has been appointed to care for a child where both parents or a person who holds parental responsibility by virtue of a child arrangements order or special guardianship order have died. This assignment of parental responsibility can happen through a parent’s will or by court order (section 5, Children Act 1989).
Under the Equality Act 2010, where A engages in unwanted conduct related to a protected characteristic (or of a sexual nature) that has the purpose or effect of violating B’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for B. Whether the conduct has that effect is judged subjectively from B’s viewpoint, subject to a test of reasonableness.
Literally, a “mixture of property”. Broadly, hotchpot clauses and rules apply to trusts and wills, to ensure fairness to the beneficiaries by taking into consideration amounts already received when calculating the final amount due to the beneficiaries under the terms of the trust or will.
Under the Equality Act 2010, a type of discrimination that occurs where A applies to B an apparently neutral provision, criterion or practice that A would apply equally to others, but which puts or would put those who share B’s protected characteristic at a particular disadvantage. There will be no discrimination if the provision, criterion or practice is objectively justified.
Inheritance tax (IHT)
A tax on transfers of value introduced to replace capital transfer tax. It is primarily a charge on death, on the value of an individual’s estate as at the date of their death, over and above a certain allowance called the nil rate band. The rate of tax on death is 40% . (IHT may also be payable in lifetime, when assets are given to a relevant property trust (RPT) or to a company. Assets within a RPT are also subject ot an IHT charge of up to 6% every ten years and when capital is distributed from the trust. The government is consulting on its proposals to change the way in which RPTs are taxed. For further information, see Practice note, Inheritance tax: relevant property trusts: changes to rules.)
A court order on a party: • Requiring them to take a particular action (a mandatory injunction). • Prohibits a person from taking a particular action (a prohibitory injunction).
• Requiring them to take a particular action (a mandatory injunction).
Injunctions may be granted as either:
• Final relief at trial, sometimes referred to as “perpetual” injunctions.
• Final relief at trial, sometimes referred to as “perpetual” injunctions.
• Interim relief, prior to commencement of or during proceedings, sometimes referred to as “interlocutory” injunctions (or, in the US, a preliminary Injunction).
Interest in possession
Interest in possession (IIP) is a trust law principle that has UK taxation implications. A beneficiary of a trust has an IIP if they have the immediate right to receive the income arising from the trust property, or have the use and enjoyment of it.
A term is an intermediate (or innominate) term if the remedy for its breach depends on the effect of the breach at the time it happens. If the effect of the breach substantially deprives the innocent party of the whole of the benefit of the contract then it will be a serious, or fundamental, breach of the term and the remedy will be for breach of condition. That is, the innocent party can terminate the contract. If this is not the case, then the remedy will be for breach of warranty.
Occurs when someone dies intestate. The intestacy rules apply in these circumstances.
The statutory rules that govern the administration and distribution of a person’s estate where they have died intestate. The rules are contained principally in Parts 3 and 4 of the Administration of Estates Act 1925.
A reference to someone who has died without leaving a valid will or who has failed to dispose of his entire estate by will, for example, “he died intestate”. Also used as a noun, for example, “the intestate died on…”.
A trust in which there is an immediate post-death interest (IPDI).
A rule (first proposed in a news release numbered IR35) to stop the avoidance of tax and National Insurance contributions (NICs) by using intermediaries (typically a service company owned by the “employee”). The intermediary is required to pay tax and NICs through the pay as you earn (PAYE) system.
An individual’s descendants (for example children, grandchildren, great-grandchildren and remoter descendants).
Joint and several liability
In contract, it arises when two or more persons in the same contract jointly promise to do the same thing, but also separately promise to do the same thing. For example, if A and B promise jointly and severally to pay £100 to C, then they are together under an obligation to pay £100 to C, but also individually they are under an obligation to pay the money to C. Performance by A or B discharges the obligation. In such a case, C is entitled to £100 in total and it can enforce the obligation in full against A or B or both. If C sues A and not B, it is open to A to claim a contribution from B. [para] In tort, joint and several liability may arise where A and B act independently to cause C the same damage (for these purposes, A could be a contract-breaker and B a tortfeasor). In such a case, C is entitled to sue all or any of them for the full amount of its loss. If C sues A but not B, it is open to A to seek a contribution from B, in respect of its relative responsibility. For more information, see Practice note, Joint, several and joint and several liability.
A type of joint ownership of property, where each owner is called a “joint tenant” and each owns the whole of the asset, rather than a distinct fractional share. When a joint tenant dies, the asset in question does not pass to his personal representatives as part of his estate. Instead, the asset (usually land, but can be a joint bank account or shares, for example) automatically passes to the surviving joint tenant(s). For inheritance tax and capital gains tax purposes, each joint tenant is entitled to an equal share in the asset. It is one of two main types of joint ownership of property. The other is called a tenancy in common. It is possible to sever a joint tenancy and create a tenancy in common. For these purposes, the word “tenancy” simply means ownership.
The government body that guarantees the title to, and records the ownership of, and interests in, registered land in England and Wales.
Lapse (of legacies)
A legacy in a will fails (lapses) if the intended beneficiary has died before the testator. Lapse also occurs where a will names a former spouse or civil partner as a beneficiary and the marriage or civil partnership is later dissolved (see Practice note, Amending and revoking wills). A legacy to a child of the testator lapses if the child dies first. The legacy is substituted automatically with a gift to the deceased child’s own children unless the will provides for this not to happen (section 33, Wills Act 1837). If a legacy lapses the gift passes to the residuary estate unless the testator has named a substitute beneficiary, for example “I give my car to X but if X dies before me then to Y”. If the lapsed gift is already part of the residuary estate then it will pass under the intestacy rules. To avoid this the testator could provide for the residue to pass only to beneficiaries who survive him. Lapse should not be confused with abatement or ademption.
Last in first out (LIFO)
A method of selecting employees for redundancy on the basis of their length of service, with those who have the least service being chosen first. It should not be used as a sole criterion as that would be a “blunt instrument”, an approach likely to result in claims for unfair dismissal and indirect discrimination on grounds of age and sex.
Lasting power of attorney (LPA)
A legal document (created by the Mental Capacity Act 2005) that enables any individual over the age of 18 and who has mental capacity (the donor) to choose another individual or individuals (called attorneys) to make decisions on their behalf. For a property and financial affairs LPA, a trust corporation can also be an attorney. “The two types of LPA are: • A property and financial affairs LPA (for decisions about finances, such as selling the donor’s house or managing their bank account) • A property and financial affairs LPA (for decisions about finances, such as selling the donor’s house or managing their bank account).
• A health and welfare LPA (for decisions about both health and personal welfare, such as where to live, day-to-day care or medical treatment).
A gift to someone in a will. A legacy can be general, specific or demonstrative.
The usual way of assigning the benefit of any debt or other legal thing in action under section 136 of the Law of Property Act 1925.
Letter of wishes
A letter (sometimes called a memorandum of wishes) written by the settlor of a trust to the trustees, to guide them as to how the settlor would like the trust to be administered. A letter of wishes is not binding on the trustees and often accompanies a discretionary trust, where the trustees may be in need of guidance. A letter of wishes may also accompany a will, to enable the testator to guide the executors where they have an element of discretion over a gift.
A trust law principle that has UK taxation implications. A beneficiary of a trust has a life interest if they have the immediate right to receive the income arising from the trust property, or have the use and enjoyment of it. In spite of the name, a life interest is not necessarily for life, although it can be.
The beneficiary who has a life interest in a trust. The trust is known as a life interest trust or an interest in possession trust.
The period of time within which court action must be commenced. The law on limitation periods is set out in the Limitation Act 1980.
A fixed or determined sum agreed by the parties to a contract to be payable on breach by one of the parties. If a liquidated damages payment constitutes a penalty it will be unenforceable. The term also describes sums expressly payable as liquidated damages under statute. In all other cases where the court quantifies or assesses damages or loss, whether pecuniary or non-pecuniary, the damages are known as unliquidated damages.
Measure of damages
See Measure of damages in contract and Measure of damages in tort.
A term used by internet service providers to describe the preservation of content created by an online account holder to honour the memory of the account holder after they have died. An example of memorialisation is Facebook’s policy of allowing friends and family to preserve a deceased account holder’s profile page for a year after their death to enable comments to be posted before the profile is permanently removed.
An individual under the age of 18.
An untrue statement of fact or law made by Party A (or its agent) to Party B, which induces Party B to enter a contract with Party A thereby causing Party B loss. An action for misrepresentation can be brought in respect of a misrepresentation of fact or law. There are three types of misrepresenation: fraudulent, negligent and innocent. The remedies for misrepresentation are rescission and/or damages. For fraudulent and negligent misrepresentation, the claimant may claim rescission and damages. For innocent misrepresentation, the court has a discretion to award damages in lieu of rescission; the court cannot award both (see section 2(2) of the Misrepresentation Act 1967). For more information, see Practice note, Misrepresentation.
• Common mistake (where the mistake is shared by both parties, is fundamental and directly affects the basic definition of what the parties are contracting for). The mistake will render the contract void if it robs it of all substance.
• Mutual mistake (where the parties are at cross-purposes with one another). If, from the parties’ words and conduct, only one possible interpretation of what was agreed can be deduced, the contract will still be valid. Otherwise it will be void.
• Unilateral mistake (where one party is mistaken and the other knows or ought to have known of the mistake). If the mistake relates to the fundamental nature of the offer the contract can be voided. [para] Other possible remedies in equity include rectification, ordering specific performance of the contract or rescission.
The rule of mitigation requires a claimant to take steps to minimise its loss and to avoid taking unreasonable steps that increase its loss. An injured party cannot recover damages for any loss (whether caused by a breach of contract or breach of duty) which could have been avoided by taking reasonable steps. The claimant is said to have a “duty to mitigate”. However, this is not a duty enforceable by anyone, rather it is a recognition that if the claimant fails to do so its damages recovery will be affected by that failure.
MPEG 1 (Moving Pictures Expert’s Group 1), audio layer 3. A technique designed to compress bulky files of digitised music to facilitate the ease of download and storage of music files. mp3 compression technology allows a person to quickly download near CD quality digitised sound recordings and to store them using minimal disc space. mp3 files can be downloaded from many websites and can be played using software available for most operating systems, for example, Winamp for PC, Macamp for Macintosh and mpeg123 for Unix.
Mutuality of obligation
The obligation on the employer to provide work and the obligation on the individual to accept that work. This is a necessary feature of the relationship between an employer and an employee. For an contract of employment to exist the employer must be obliged to pay and the employee must be obliged to do the work.
Rights which extend the original concept of protection of copyright in an author’s original work, such as yhe rights of performers (for example, actors, singers or musicians) to give or withhold consent to the exploitation of their performances.
Nil rate band (NRB)
The amount of a chargeable transfer on which inheritance tax (IHT) is charged at 0% (that is, on which there is no IHT to pay).
Nil rate band discretionary trust
A discretionary trust of the inheritance tax nil rate band.
A person in whose name assets (for example, a nominee shareholder of company shares) are held, but who does not have any beneficial entitlement to those assets. A nominee is a mere agent of the person who appoints them.
Normal retirement age
Under the now-repealed section 98ZH of the Employment Rights Act 1996, the age at which an employee holding a particular position normally retires in an organisation. The normal retirement age is ascertained from the reasonable expectation of the group of employees holding the same position as the individual.
In contract law, formal notification that the contract is to terminate at the end of a specified period. The contract will usually specify the amount of notice required. In employment law, the contract may also provide that the employer can pay the employee in lieu of giving notice (known as a PILON). The ERA 1996 also sets out statutory minimum notice periods based on the length of the employee’s service.
A three-way contract which extinguishes a contract and replaces it with another contract in which a third party takes up the rights and obligations which duplicate those of one of the original parties to the agreement. Consideration must be provided for this new contract unless the novation is documented in a deed signed by all the parties.
Exceptions set out in the Equality Act 2010 that employers may rely on when facing discrimination claims. An employer may discriminate lawfully in limited circumstances: where, having regard to the nature or context of the work, being of a particular sex, race, disability, religion or belief, sexual orientation or age (or not being a transsexual person, married or a civil partner) is an occupational requirement.
Actuarial tables (with explanatory notes) prepared by the Government Actuary’s Department to calculate lump sum compensation for those who have suffered future loss or consequential expenses, most commonly in personal injury and fatal accident cases.
Under the Children Act 1989, “parental responsibility” means all the rights, duties, powers, responsibilities and authority which, by law, a parent of a child has in relation to the child and his property.
Parol evidence rule
A rule of contractual construction which states that extrinsic evidence cannot be used to vary the terms of a written contract. However, this rule is little more than a presumption that the written contract contains the entire agreement between the parties. The presumption can be rebutted and the rule does not apply where rectification is being sought in which case extrinsic evidence relating to the alleged error in the contract can be adduced.
Occurs when someone dies leaving a valid will, but the will only disposes of part of their estate. The intestacy rules apply to the property that has not been disposed of in the will.
Payment in lieu of notice (PILON)
A contractual right to pay an employee a lump sum rather than require them to work out their statutory or contractual notice period. If there is no PILON clause in a contract of employment then an employer who pays an employee a lump sum payment instead of requiring them to work their notice period will be in breach of contract.
A gift of money in a will. A pecuniary legacy is usually a general legacy, but may also be specific or demonstrative.
A token or nominal rent. The name comes from leases where the rent is one peppercorn a year. Other kinds of token or nominal rents, such as £1, or a red rose each year, may also be referred to as peppercorn rents. A peppercorn rent is often found where a premium has been paid for a lease.
For each person (literally “per head”). In the context of wills, intestacy and trusts, it usually means that each member of a specified group receives an equal share of an estate or a trust fund.
This term has different meanings depending on its context: In the context of estates of a person who has dies inestate on or after 1 October 2014, this includes all “tangible moveable property” but does not include money, property used for business purposes, or property held by the deceased for investment purposes. In the context of bills of sale (as a means of transferring or securing personal property), personal chattels include: Goods, furniture and other articles capable of complete transfer by delivery; Growing crops when separately assigned or charged; Fixtures, when separately assigned or charged; and Trade machinery.
A trust set up, often for tax planning purposes, by a settlor during his lifetime with: ” • The intention that further assets will be placed in it at a later date, typically, on the settlor’s death.
• A small amount of cash.”
Also known as Polkey reduction, after the House of Lords decision in Polkey v AE Dayton Services Ltd  IRLR 503. A reduction in the compensatory award made to an employee in a successful claim for unfair dismissal to reflect the likelihood that there would have been a fair dismissal in any event. It may be expressed as a percentage reduction (up to 100% in some cases) or as a cap on future loss. In Polkey, the compensatory award was reduced to reflect the fact that certain procedural steps that had not been taken by the employer in implementing a redundancy dismissal would not have made a difference to the decision to dismiss.
An employer taking certain steps to assist protected groups which are disadvantaged or under-represented in a particular job. It is a limited exception to the prohibition on discrimination in employment.
Treating one person more favourably than another because they have a protected characteristic. It is generally prohibited under the Equality Act 2010, unless an occupational requirement applies. Positive discrimination because of a person’s disability is allowed, and may sometimes be required if there is a duty to make reasonable adjustments.
Power of advancement
A power that enables trustees to pay or apply capital to, or for the benefit of, a beneficiary. Trustees may apply capital for the benefit of a beneficiary by creating new trusts for him (a settled advance).
Power of appointment
An express power conferred by someone (the donor) to another (the donee), that enables the donee to dispose of property belonging to the donor, on terms prescribed by the donor. A power of appointment is usually seen in a trust document, although this is not always the case. A power of appointment can be a general power of appointment, a special power of appointment, or a hybrid of the two.
Power of appropriation
An express power in a trust document that enables the trustee of a trust to decide what trust assets a beneficiary should receive, in satisfaction of his or her share of the trust. Personal representatives have a statutory power of appropriation (contained in section 41 of the Administration of Estates Act 1925), which enables them to appropriate any part of the deceased’s estate in satisfaction of any legacy, or share of the residuary estate, provided it does not prejudice any beneficiary. The beneficiary must agree to the appropriation, unless the will expressly states otherwise.
Power of attorney
A document by which one party gives another person the power to act on his behalf and in his name. It may be an ordinary power of attorney, an enduring power of attorney (if created before 1 October 2007), or a lasting power of attorney. The person giving the power is called the donor, grantor or principal and the person on whom it is conferred is usually referred to as the donee or attorney.
Pregnancy and maternity discrimination
Under the Equality Act 2010, treating a job applicant or employee unfavourably because of her pregnancy, pregnancy-related illness or maternity leave.
Publications and prior uses forming part of the state of the art at the priority date of a patent and identified by a UK Patent Office search or relied on by a party seeking to invalidate the patent.
Priority of mortgages
Where there are two or more mortgages secured on a property, the order in which the lenders are entitled to be repaid when the property has to be sold. The priority is a concern where there are insufficient funds to repay all of the lenders in full. Usually, the lender who is first in priority will be entitled to recover the whole of its debt out of the sale proceeds, before the lenders with lower priority receive anything, but this is not always the case.
Privity of contract
A common law doctrine which prevents a person who is not a party to a contract from enforcing a term of that contract, even where the contract was made for the purpose of conferring a benefit on the third party. The UK Contracts (Rights of Third Parties) Act 1999 reformed the privity of contract rule and gives a person who is not a party to a contract a right to enforce a term of that contract in specified circumstances.
A period at the start of an employment relationship during which the employee is assessed by their employer and following which time they are notified as to whether their appointment will be made permanent. The scope and terms of any probation period are governed by an individual’s contract of employment, but it will typically last three or six months and may involve either formal or informal assessments. Employees may not be entitled to all of the contractual benefits during the probationary period. Probationary periods do not affect an employee’s statutory rights.
The Equality Act 2010 is concerned with discrimination and harassment in respect of nine protected characteristics: age; disability; gender reassignment; marriage and civil partnership; pregnancy and maternity; race; religion or belief; sex; and sexual orientation (see Practice note, Discrimination in employment: overview (EqA 2010): The protected characteristics).
In relation to England and Wales or Northern Ireland, Christmas Day, Good Friday or a bank holiday in the relevant jurisdiction under the Banking and Financial Dealings Act 1971. In relation to Scotland, a day which is a bank holiday under the Banking and Financial Dealings Act 1971.
Also known as exemplary damages, retributory damages or vindictive damages. Damages awarded in excess of the claimant’s loss. They are intended to punish the defendant rather than compensate the claimant and are only available in precise and limited circumstances such as where the defendant is guilty of oppressive or unconstitutional action or has calculated that the money to be made from his wrongdoing will probably exceed the damages payable (see Rookes v Barnard  AC 1129 and Kuddus v Chief Constable of Leicestershire Constabulary  UKHL 29). “They may be awarded in cases involving deliberate torts, such as deceit and defamation, but it is not clear whether they may be available in cases involving negligence and other inadvertent torts. They are not available for breach of contract (see Addis v Gramophone Co. Ltd  AC 488).
In the context of employment law, the period of time employees must have worked continuously for an employer in order to be eligible for certain statutory rights.
Under the Equality Act 2010 (EqA 2010), reasonable adjustments may be required where premises, working arrangements or the lack of auxiliary aids put a disabled person at a substantial disadvantage compared to others. Disability discrimination occurs where there is a failure to make a reasonable adjustment for a disabled person (section 21, EqA 2010).
To revise or edit. Often used to describe the process of blanking out sensitive information in a document before disclosure. For example, as part of the disclosure process in the course of litigation, or before a commercial transaction, a party may redact irrelevant commercially sensitive or confidential material and privileged material that should not be disclosed to the other party.
A situation in which an employer decides to reduce the number of its employees, either within the business as a whole, or within a particular site, business unit, function or job role. To fall within the statutory definition of “redundancy” set out in section 139(1) of the ERA 1996, an employee’s dismissal must be “wholly or mainly attributable to” the employer: • Ceasing or intending to cease to carry on the business for the purposes of which the employee was employed by it; • Ceasing or intending to cease to carry on that business in the place where the employee was so employed; or • Having a reduced requirement for employees to carry out work of a particular kind or to do so at the place where the employee was employed to work. In the context of collective redundancies, redundancy is defined as a dismissal which is not connected with the individual worker concerned. This definition encompasses the traditional concepts of redundancy under ERA 1996 but also includes dismissals which may be regarded as being for some other substantial reason (section 188, TULRCA).
A remedy for unfair dismissal that may be ordered by an employment tribunal. Under the order, the employer re-employs the dismissed employee on new terms with no loss of continuity of employment. The tribunal must consider a re-engagement order if it considers that a reinstatement order would not be appropriate.
A remedy for unfair dismissal that may be ordered by an employment tribunal. The order requires the employer to treat the employee as if they had never been dismissed: this involves re-employing the employee on the same terms of employment with no loss of pay, pension rights or continuity of employment, and with the benefit of any pay rises or other improvements that they would have enjoyed if they had not been dismissed. If a reinstatement order is not appropriate, the tribunal may consider a re-engagement order.
Also known as wasted expenditure. It is one of the losses that may be recovered for breach of contract. It refers to the expenses incurred by the claimant in reliance of the contract being performed. The aim of damages for reliance loss is to put the claimant in the position he would have been in had the contract never been made. Although Expectation loss is the normal measure for assessing damages for breach of contract a claimant may claim reliance loss where it is not possible to calculate what his profits would have been if the contract had been performed, or if he made a bad bargain and expectation based damages would not lead to a substantial recovery. It has been held that expectation loss and reliance loss are mutually exclusive to prevent double recovery.
An interest in a trust (or under the terms of a will), where the beneficiary’s possession and enjoyment of the trust assets is postponed by a prior interest in the same assets. For example, Doreen dies and in her will leaves her husband, Alf, a life interest in Rose Cottage. The will provides that, on Alf’s death, Rose Cottage is to pass to Doreen’s son, Cedric, outright. Cedric has a remainder interest in Rose cottage – taking possession only when Alf dies.
A beneficiary of a trust who has a remainder interest.
The term remoteness refers to the legal test of causation which is used when determining the types of loss caused by a breach of contract or duty which may be compensated by a damages award. Legal causation is different from factual causation which raises the question whether the damage resulted from the breach of contract or duty. Accordingly, once factual causation is established, it is necessary to ask whether the law is prepared to attribute the damage to the particular breach, notwithstanding the factual connection. Damage which is too remote is not recoverable even if there is a factual link between the breach of contract or duty and the loss.
A breach of contract that gives the aggrieved party the right to choose either to end the contract or to affirm it. In either case, the aggrieved party may also claim damages. A breach of condition is normally repudiatory, as is breach of an intermediate term that deprives the other party of substantially the whole benefit of the contract. A contract may also be repudiated before the time for performance has arrived.
Residence nil rate band (RNRB)
An amount of a chargeable transfer of value on death on which inheritance tax (IHT) is charged at 0% (that is, on which there is no IHT to pay). It can be claimed where the deceased dies on or after 6 April 2017 and disposed of his interest in a residence to a lineal descendant (for example, a child or grandchild). The RNRB is applied before the nil rate band and transferable nil rate band.
The rest of a deceased person’s estate which is left after the payment of specific gifts, debts, funeral expenses and inheritance tax.
Residue (of an estate)
The rest of a deceased person’s estate which is left after the payment of specific gifts, debts, funeral expenses and inheritance tax.
A remedy based upon the principle of unjust enrichment. For the claimant to bring a restitutionary claim, the defendant must have been unjustly enriched at the expense of the claimant. A restitutionary remedy seeks to reverse that unjust enrichment, by restoring the relevant benefit or enrichment to the claimant. Claims in restitution are frequently contrasted with claims (in contract or tort) for compensatory damages, which focus upon the damage suffered by the claimant, rather than the unjust enrichment of the defendant.
Damages which aim to strip from a wrongdoer gains made by committing a wrong or breaching a contract. The benefit gained by the wrongdoer may exceed the detriment or loss to the person wronged. It is common in claims in tort for interference with property or trespass, but it is only awarded in exceptional circumstances for breach of contract.
Restraint of trade
The principle that an individual should be free to follow his trade and use his skills without undue interference, thereby rendering a contractual term purporting to restrict an individual’s freedom to work for others or carry out his trade or business void unless it is designed to protect legitimate business interests and no wider than reasonably necessary.
A negative covenant that restricts the way in which a party can act, for example the way in which land may be used or what an employee can do. Used in employment contracts to protect the employer’s business by restricting the activities of an employee, generally after the employment has ended.
In trust law terms, a reversionary interest is an interest that reverts back to the settlor of a trust once a beneficiary’s interest has come to an end. For example, Bob gives a life interest in Rose Cottage to his mother Judy, and on Judy’s death the cottage is to revert back to Bob. Bob has a reversionary interest (also known as an interest in “reversion” or as a “reverter to settlor”).
Root of title
This is the deed to which title to a property is ultimately traced to prove that the owner has good title so it must show a description of the property, deal with all of it and not contain anything that casts any doubt on the title.
Rule against perpetuities
The rule against perpetuities (also known as the rule against remoteness of vesting) requires that future trust interests (that is, interests that do not take effect immediately) must be certain to vest within a defined period of time known as the perpetuity period. For example, Catherine creates a trust to pay income to her husband, Colin, for life, then to hold the capital for her son, Charles, if he survives Colin. Charles’ contingent interest must be certain to vest within the perpetuity period that applies to the trust. If it is not certain to do so, it is void at common law.
A secret trust arises when a testator makes a gift in a will to a donee, intending that the donee should receive the gift as trustee for an ultimate beneficiary or beneficiaries, under an express or implied agreement between the testator and the donee, made outside the will. One reason for creating a secret trust is to keep the identity of the ultimate beneficiary outside the will, which is a public document.
Seed Enterprise Investment Scheme (SEIS)
A scheme introduced to encourage equity investment in start-up trading companies.
The act of settling (giving) property to a trust (called a settlement) for successive beneficiaries.
A trust for successive beneficiaries, created by a settlor. For certain income tax, capital gains tax and inheritance tax purposes, the above general definition of settlement may be extended in the legislation.
In civil litigation, an agreement to settle a dispute or provide a release or waiver of claims. In employment law, an agreement (formerly known as a compromise agreement) whereby an employee or worker agrees not to pursue certain statutory employment tribunal claims against a respondent or potential respondent to a claim. Commonly used to record an employee’s terms of departure where they are to receive a termination payment in return for the waiver of all actual and potential statutory (and usually common law) claims against the employer. For a valid waiver of statutory employment rights, certain statutory conditions must be met such as being in writing, the employee has received independent legal advice.
A person who sets up a trust and settles or transfers the trust property on or to the trustees for the benefit of the beneficiaries.
An agreement to record the terms of an employee’s departure, and the payments to be made to the employee, in return for a waiver of claims against the employer. A severance agreement will only be effective in respect of common-law claims, not statutory employment rights, unless it also meets the statutory conditions for a valid settlement agreement.
Some other substantial reason (SOSR)
One of the five potentially fair reasons for dismissal under section 98 of the ERA 1996. It is a residual “catch-all” potentially fair reason for dismissal. If the employer’s reason for dismissal falls outside section 98(2) of ERA 1996, it must fall within the SOSR category if it is to qualify as a potentially fair reason at all.
Special power of appointment
An express power of appointment conferred on a individual or, more commonly, the trustees of a trust, that enables them to direct (or redirect) given assets in favour of a particular beneficiary (or beneficiaries). The power is usually seen in discretionary trusts (where the beneficiaries do not have an automatic right to the income or capital of the trust fund), but can also be found in interest in possession (also known as life interest) trusts; it often allows the trustees to redirect the income or capital of the trust away from (or in favour of) the life tenant.
Also known as a specific legacy. A gift of a particular asset (or assets) in a testator’s estate to one or more beneficiaries in a will. Examples are jewellery, paintings or even cash in a desk drawer.
An equitable remedy available for breach of contract. A decree by the court to compel a party to perform its contractual obligations. In the High Court, it may be granted in addition to or instead of damages. Unlike damages which are available as of right, specific performance is granted at the court’s discretion.
In the context of determining whether a deceased person’s estate is an excepted estate for inheritance tax purposes, a “specified transfer” is: a gift of money, personal belongings, quoted shares or securities, an outright gift of land or buildings to individuals. A gift of land to a trust is not a specified transfer. For an estate to qualify as an excepted estate, a specified transfer made within seven years of a person’s death cannot exceed £150,000.
Spousal bypass trust
A pilot trust set up by a settlor in his lifetime to benefit a surviving spouse after his death. It is usually set up to receive death benefits from a pension scheme or life assurance policy death benefits on the settlor’s death. It is also, typically, drafted as a discretionary trust with the surviving spouse as one of the beneficiaries. The aim of the spousal bypass trust is to prevent death benefits falling into the settlor’s or the surviving spouse’s estate on death where they could be potentially subject to inheritance tax (IHT).
An injunction to prevent a former employee who has used confidential information to their own advantage from gaining a head start in competition with their former employer. An ordinary injunction would not be effective in such circumstances as the information has been published and is no longer confidential.
State of the art
Any matter relating to an invention (whether a product, a process, information about either, or anything else) which has been made available to the public (in the UK or elsewhere) before the priority date of that invention, whether by written or oral description, by use or in any other way.
Statutory dispute resolution procedures
The procedures under the Employment Act 2002 resolve disputes between employers and employees, comprising dismissal and disciplinary procedures (DDPs) and grievance procedures (GPs). The Employment Act 2008 repealed the procedures with effect from April 2009.
Statutory minimum notice period
The minimum period of notice required to terminate a contract of employment under section 86 of ERA 1996. Employees with continuous employment of at least one month but less than two years are entitled to at least one week’s notice from the employer. Employees with two years’ continuous employment or more are entitled to one week’s notice for each complete year, up to a maximum of 12 weeks’ notice. The minimum notice to be given by an employee with at least one month’s continuous employment is one week. The parties may agree longer notice periods. In the absence of express agreement, the common law will imply a reasonable notice period, which cannot be shorter than the statutory minimum.
Statutory redundancy payment
A statutory payment due to an employee with two years’ continuous employment who is made redundant. The amount of the payment is calculated in the same way as the basic award, according to a formula based on the employee’s age, length of service and week’s pay (subject to a statutory limit).
A will executed by an attorney or a deputy on behalf of someone who lacks mental capacity under the Mental Capacity Act 2005. A statutory will must comply with the precedent provided by the Court of Protection and must be approved by that court.
See Compensatory damages.
Suitable alternative employment
An offer of alternative employment in a redundancy situation that extinguishes the right to a statutory redundancy payment if it is unreasonably refused by the employee. If an employer dismisses an employee for redundancy without making a reasonable search for and offer of alternative employment, the employee may have been unfairly dismissed.
Immediate dismissal of an employee without notice. This will be a wrongful dismissal unless it is in response to the employee’s gross misconduct or another repudiatory breach of contract by the employee.
Survivorship (assets passing by)
Assets in joint ownership can either be held as joint tenants or as tenants in common. When joint owners hold an asset as joint tenants, on the death of one of the joint owners the asset passes to the surviving owner (or owners) automatically, irrespective of the deceased joint owner’s will. This is what is meant when assets are said to pass by “survivorship”.
Tenancy in common
Joint ownership of property where each owner owns a separate share in the property. On the death of one of the tenants, their share passes to their beneficiaries in accordance with their will or intestacy. It is one of two main types of joint ownership of property. The other is called a joint tenancy. For these purposes, the word “tenancy” simply means ownership.
In the context of employment, an agreement recording the terms of termination of an employment contract and any payments to be made, usually in return for a waiver of claims. An agreement to waive claims under most statutory employment rights must comply with the statutory conditions for a settlement agreement.
A severance payment made to employees on termination of their employment.
The estate of a person who has died, leaving a valid will.
There is no statutory definition of “testamentary and administrative expenses” in the Administration of Estates Act 1925, but case law provides guidance, considering them to mean expenses attendant on the proper performance of a personal representative’s (PR) duties (as to which, see Practice note, Rights of a beneficiary and duties of a personal representative). The term includes the costs of obtaining the grant of representation, collecting in and preserving the deceased’s assets and administering the estate.
An individual who has executed a will. A woman who has executed a will is sometimes called a testatrix.
The term sometimes used for a woman who is a testator.
The name given to the branch of law that imposes civil liability for breach of obligations imposed by law. The most common tort is the tort of negligence which imposes an obligation not to breach the duty of care (that is, the duty to behave as a reasonable person would behave in the circumstances) which the law says is owed to those who may foreseeably be injured by any particular conduct.
The terms “trade mark” and “brand” are often used interchangeably. Both can refer to a sign which distinguishes the goods (or services) of one trader from those of another. The sign could be, for example, a word or phrase, logo, picture, shape, sound, jingle or smell. The main function of a trade mark is to enable customers to recognise the goods or services as originating from a particular trader. Trade marks can be registered nationally or EU-wide. A registered trade mark is infringed if it is used without the consent of the owner, so the owner of the mark has a monopoly over the its use for the goods and/or services for which it is registered. This monopoly can be maintained indefinitely.
Trade mark licence
An agreement where an owner of a registered trade mark authorises another party to use the trade mark.
Transfer of value
A technical term used in the Inheritance Tax Act 1984 to describe gifts and other voluntary dispositions of property from one person to another. Inheritance tax (IHT) is charged on “transfers of value”, which can occur during lifetime (for example, a gift from one individual to another) or on death. A transfer of value can be a chargeable transfer or an exempt transfer. If a transfer is chargeable, there may be reliefs available to reduce the amount of IHT payable.
Transferable nil rate band (TNRB)
A widely used, if somewhat misleading, shorthand for the inheritance tax provisions that enable the estate of a surviving spouse or civil partner to benefit from the unused nil rate band of the first of the couple to die. Every individual, whether single, married or in a civil partnership has their own nil rate band. Where the first of a married couple or civil partners dies and all or part of their nil rate band is unused when their estate is distributed (whether in accordance with their will, on intestacy or under a deed of variation), the personal representatives of the survivor can claim a percentage increase in the survivor’s nil rate band equivalent to the unused percentage of the first spouse’s nil rate band, provided that the survivor dies on or after 9 October 2007.
Heads the Government Legal Department (GLD) (formerly the Treasury Solicitor’s Department), which is the largest legal team in the government legal service. It provides legal services to central government departments and other publicly funded bodies in England and Wales, and by collecting bona vacantia on behalf of the Crown.
A trust is a legal relationship created (in lifetime, or on death) by a settlor when assets are placed under the control of a trustee for the benefit of a beneficiary, or for a specified purpose.
A company that carries out trust business or acts as a corporate trustee, or whose name includes the words “trust corporation” or “trust company”, does not necessarily have trust corporation status.
A legal document (which may be a deed or other instrument) that creates a trust. The trust document appoints the trustees and states the terms of the trust, including who the beneficiaries are and the trust property that will be subject to the trust. In England and Wales the trust document usually takes the form of a trust deed. If the trust deed is created by the trustees (which may happen if the trustee is also the settlor, or if the settlor does not wish his name to appear on the trust deed), it is called a declaration of trust.
Trust for a disabled person
A trust for a disabled person. If the conditions are met, it can qualify as a disabled person’s interest for inheritance tax purposes and a trust for a vulnerable person for income and capital gains tax purposes.
Trust for a vulnerable person
The Finance Act 2005 (sections 23 to 45) introduced a new income and capital gains tax regime for trusts for vulnerable persons. The special tax treatment is to ensure that the amount of tax charged on income and gains arising to the trustees is no more than it would have been had the income and gains arisen directly to the vulnerable person. To obtain the special treatment, the trustees and the vulnerable person need to make a joint vulnerable person election.
Trust for bereaved minors
A trust for the benefit of a person aged under 18, at least one of whose parents has died, and who will become absolutely entitled to the whole of the trust property on or before his 18th birthday (section 71A, Inheritance Tax Act 1984 (IHTA 1984)).
Assets (whether capital or income) held by the trustees of a trust for the benefit of one or more beneficiaries.
The assets given by a settlor to a trust (and the assets that from time to time represent them) to be held by the trustees under the terms of the trust, including any accumulated income.
Computer systems designed to prevent copying of the digital work and may be either hardware or software. The hardware and software are designed to follow certain rules, called usage rights, which specify the cost and a series of terms and conditions under which a work can be used. A trusted computer, for example, would refuse to make unauthorised copies or to play audio selections if a user had not paid for them.
Once property has been transferred under a trust to the trustees by the settlor, the trustees become the legal owners of the trust property. Thus trustees, unlike directors of a company, deal with the property themselves not on behalf of or authorised by the trust. In general, any individual, company or other corporation may be appointed as a trustee.
A written promise offered as security for the performance of a particular act required in a legal action.
An undertaking with adequate security is a bond. The term is used in a general sense to refer to any type of promise or stipulation.
A dismissal of an employee in contravention of section 98 of the ERA 1996. For a dismissal to be fair it must be for one of the five potentially fair reasons in the ERA 1996 (conduct, capability, redundancy, breach of a statutory restriction or “some other substantial reason”), the employer must follow a fair procedure, and the decision to dismiss must be within the range of reasonable responses open to an employer in the circumstances.
Vest in interest
See vested interest.
Vest in possession
See vested interest.
A beneficiary of a trust has a vested interest if he does not have to meet any conditions for his interest to take effect. The interest may be:
• Vested in possession, if it is a “present right to present enjoyment”, such as an immediate right to income. • Vested in interest, if it is a “present right to future enjoyment”, such as a right to capital which is ready to take effect when another beneficiary’s interest ends. For example, Brian creates a trust to pay income to his daughter, Beatrice, for life and then to hold the capital for Beatrice’s children on her death. Beatrice’s interest is vested in possession, and her children’s interests are vested in interest. If a child dies before Beatrice, his share of capital passes to his estate. If a beneficiary has to meet a condition (such as surviving to a certain age, or surviving another beneficiary) he has a contingent interest, not a vested interest. When he meets the condition, his interest vests.
In employment law, an employer’s liability for the acts of its employees. At common law an employer is vicariously liable for the tortious acts of its employees, and other persons in a relationship akin to employment, if they are carried out “in the course of employment”. Under discrimination legislation, discriminatory acts done by an employee in the course of employment are treated as having been done by the employer. The employer will not be liable for discrimination if it can show that it took such steps as were reasonably practicable to prevent the employee from doing the discriminatory act.
Where a person (A) treats another person (B) unfavourably because A knows or suspects B has done or intends to do a protected act. Protected acts include bringing discrimination proceedings, giving evidence or information in connection with discrimination proceedings, making an allegation of unlawful discrimination, or doing anything else under, or by reference to, discrimination legislation.
See Punitive damages.
In general, a vulnerable person is either a minor or someone who, for physical or mental reasons, is unable to look after themselves or their finances. For income and capital gains tax purposes (specifically, in relation to the taxation of trusts and the vulnerable person election) a vulnerable person has a specific technical definition, and is either a disabled person or a bereaved minor. See also a vulnerable person.
Vulnerable person election
The new regime took effect from 6 April 2004. The aim of the special tax treatment is to protect trusts with vulnerable beneficiaries by ensuring that the amount of tax charged on income and gains arising to the trustees is no more than it would have been had the income and gains arisen directly to the vulnerable person. The election is made using form VPE1 and must be made by both the trustees and the vulnerable person, for each tax year in which they would like the election to apply.
The voluntary relinquishment or abandonment of a legal right or advantage. Also the instrument by which a person waives such a right or advantage.
Whole agreement clause
See Entire agreement clause.
A legal document in which a person (the testator) declares their intention as to what should happen to their estate after their death, and which is executed in accordance with certain legal formalities.
Under the law of England and Wales, a will must be executed in accordance with the Wills Act 1837 (as amended by subsequent Acts). In order to be valid, a will must be:
• Made by a person who is 18 years old or over.
• Made voluntarily and without pressure from any other person. “
• Made by a person who is of sound mind.
• Made in writing.
• Signed by the testator in the presence of two witnesses.
• Signed by the two witnesses, in the presence of the testator (and in the presence of each other), after the testator has signed the will. A witness, or the spouse or civil partner of a witness, cannot benefit from the will. If a witness of the will is also a beneficiary (or the spouse or civil partner of a beneficiary), the will is still valid, but the beneficiary will not be able to inherit under the will.
A trust created by a will.
An individual who has entered into or works under: • A contract of employment; or • Any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.
The dismissal of an employee by an employer in breach of the contract of employment. Unlike in an unfair dismissal claim, fairness is not an issue: the sole question is whether the terms of the contract have been breached. The employee will have a claim in damages if the employer, in dismissing them, breached the contract and thereby caused the employee to suffer loss.
The dismissal of an employee by an employer in breach of the contract of employment. Unlike in an unfair dismissal claim, fairness is not an issue: the sole question is whether the terms of the contract have been breached. The employee will have a claim in damages if the employer, in dismissing them, breached the contract and thereby caused the employee to suffer loss.