SQE1 key terms

The principle that a registered company is a legal person distinct from its shareholders and directors, so it owns its own property, makes its own contracts and sues or is sued in its own name.

A rare judicial step in which the court disregards a company's separate personality and imposes liability on those controlling it, usually only where the company is a mere facade used to evade existing obligations.

Liability under section 214 of the Insolvency Act 1986 for a director who allowed the company to keep trading when they knew or ought to have concluded that insolvent liquidation was inevitable, without steps to minimise creditor loss.

A claim under section 994 of the Companies Act 2006 by a member alleging that the company's affairs are being conducted in a manner unfairly prejudicial to their interests, usually seeking an order that the majority buy their shares.

A director's statutory duty to act in the way they consider, in good faith, most likely to promote the company's success for the benefit of members as a whole, having regard to long-term consequences and listed stakeholders.

Expected steps set out under the Civil Procedure Rules that parties should take before issuing a claim, such as exchanging information and considering alternative dispute resolution; non-compliance can affect the costs order.

A formal settlement offer made under CPR Part 36 with prescribed consequences for costs and interest if the other party rejects it and then fails to obtain a result at trial at least as good as the offer.

A court order requiring a party to comply with a direction by a stated date, with the consequence that their statement of case or application is automatically struck out if they fail to do so.

A procedure under CPR Part 24 by which the court decides a claim or issue without a full trial because the responding party has no real prospect of success and there is no other compelling reason for trial.

A clear statement of the terms on which the offeror is willing to be bound, which becomes a contract once accepted; it must be communicated and can generally be withdrawn before acceptance.

Unqualified agreement to every term of an offer, communicated to the offeror or shown by conduct where the offer permits, which brings the contract into existence at that point.

Something of value that each party gives in exchange for the other's promise, such as money, goods or a promise to act; it must not be past and need not be adequate in value.

A false statement of existing fact or law made by one contracting party that induces the other to enter the contract; remedies range from rescission to damages depending on whether the statement was fraudulent, negligent or innocent.

The doctrine that a contract is discharged without breach where an unforeseen event, not caused by either party, makes performance impossible or radically different from what was originally agreed.

The statutory test under the Unfair Contract Terms Act 1977 by which certain exclusion or limitation clauses are upheld only if the party relying on the clause shows it was fair and reasonable when made.

In negligence, a failure to meet the standard of care expected of a reasonable person in the defendant's position, judged by factors such as the likelihood and seriousness of harm and the cost of precautions.

Liability imposed on an employer for a tort committed by an employee acting in the course of employment, or by a person in a relationship akin to employment, even though the employer was not personally at fault.

An unlawful, substantial and unreasonable interference with a person's use or enjoyment of their land, such as excessive noise, fumes or encroachment; the claimant normally needs a proprietary interest in the affected land.

The legal reason or principle on which a court's decision rests, which binds lower courts in later cases with materially similar facts under the doctrine of precedent.

The High Court's supervisory jurisdiction over public bodies, allowing it to quash or restrain unlawful decisions on grounds such as illegality, irrationality and procedural unfairness; it is not an appeal on the merits.

The constitutional principle that Parliament is the supreme law-maker, able to make or unmake any law, with the courts having no power to invalidate an Act of Parliament.

EU-derived legislation and rights preserved in domestic law by the European Union (Withdrawal) Act 2018, as amended, so that they continue to have effect in the UK after Brexit.

The external element of a criminal offence, such as the conduct, circumstances or consequences that must be proved, alongside the mental element unless the offence is one of strict liability.

The mental element of a criminal offence, such as intention, recklessness or knowledge; the prosecution must normally prove it, and different offences require different states of mind.

The obligation to prove the facts in issue and the degree of certainty required: the prosecution must prove guilt beyond reasonable doubt, while a civil claimant must prove its case on the balance of probabilities.

A discretion for the court to exclude prosecution evidence on which it would be unfair to rely, having regard to all the circumstances, including how the evidence was obtained.

A bank account held by a solicitor for money belonging to clients or third parties, kept separate from the firm's own money and governed by the SRA Accounts Rules.

A solicitor's fees for professional work carried out for a client, as distinct from disbursements paid out on the client's behalf, usually recorded in a bill delivered to the client.

Land whose ownership is recorded in the register kept by HM Land Registry, with the register rather than title deeds being the authoritative evidence of ownership under the Land Registration Act 2002.

A promise contained in a lease, such as to pay rent, insure or repair, which may be enforceable between landlord and tenant and successors, and which is protected by notice on a registered title.

A right benefiting one piece of land while burdening another, such as a right of way, which must satisfy established characteristics and is normally protected by registration against the burdened title.

A form of co-ownership in which each owner holds the whole interest together with no distinct share, so that on death an owner's interest passes to the survivors by the right of survivorship.

Co-ownership in which each owner holds a distinct, identifiable share in the property, which can be sold or left by will instead of passing automatically to the other owners.

A trust implied by law where property is transferred to one person but another contributed to the purchase price, so that the contributor takes a beneficial share proportionate to that contribution.

A duty of loyalty owed by a person acting for another, requiring good faith, avoidance of conflicts of interest and no unauthorised secret profits; trustees, directors and solicitors owe such duties.

The requirements for a valid express trust: certainty of intention to create the trust, certainty of the subject matter held on trust, and certainty of the objects who benefit; failing these the trust may be void.

The statutory rules that distribute a deceased person's estate when they die without a valid will, giving fixed shares to a surviving spouse, children and other relatives in a set order of priority.

The court's confirmation, issued to the executors named in a will, that they have authority to administer the deceased's estate and deal with its assets in accordance with the will.