What are “smart contracts”?

In a nutshell, smart contracts are self-executing contracts. Computer scientist Nick Szabo first coined this term in 1996, when he used a ‘distributed ledger’ (a collection of data shared and controlled in multiple digital locations with no centralised administrator) to store and execute contracts.

0 Comments

What is “arbitration”?

If you have a legal issue that needs resolved, who are you gonna call? (Hint: it’s not the Ghostbusters). You might instigate judicial proceedings, bring a claim against the other party or, increasingly, opt to use a method of dispute resolution that does not involve a court. One of these alternative methods is known as arbitration. With roots dating back thousands of years to the dawn of commerce itself, arbitration is a procedure where the parties agree to submit their disagreement to a neutral third party. After hearing the facts of the dispute, these independent adjudicators (known as “arbitrators”) will then deliver a binding decision. This is different from mediation, where a mediator assists the parties in reaching a solution but their guidance is non-binding.

0 Comments

What is a “dividend”?

A dividend is the distribution of profits by a company to its shareholders, usually in the form of cash. This is how the shareholders of a business, who are its owners, receive a reward for an investment they’ve made.

0 Comments

What is “administration”?

Administration as we know it today started out as “administrative receivership”. If a company owed a debt that it couldn’t pay, the person or company it owed the debt to would appoint a person, known as an administrative receiver, to take control of the company. The administrative receiver usually sold the company’s assets, to make as much money as possible for the creditor. This typically led to the winding up of the company. In 1982, the Cork Committee found that many companies were being wound up unnecessarily because of the administrative receivership procedure. Acting on this, the Enterprise Act 2002 was passed, introducing modern administration which focuses more on rescuing companies.

0 Comments

What is a “legal fiction”?

The term “legal fiction” can be traced all the way back to ancient Rome where there was a strict requirement that every family needed a male heir. In the absence of a male heir, the legal fiction of adoption was used to circumvent the situation. A legal fiction can be defined as a “statement which is accepted as true in a legal context, but is not necessarily true or in fact proven” and is usually applied by the courts. At first, it may seem shocking to think that the courts have adopted a principle which seeks to overcome legal obstacles by simply denying their existence, but its application to various bewildering legal issues has shown its uses and misuses.

0 Comments

What is a “dark pool”?

In 2017, according to the CFA Institute, 40% of stock trades in the US occurred off public stock exchanges. This represented a surge, from the 2010 level of 16%. A significant portion of this happened within ominous sounding dark pools, so named for their lack of transparency.

0 Comments

What is the “Stock Connect”?

The Shanghai-Hong Kong Stock Connect was launched in November 2016, as a way to link the markets of mainland China with that of Hong Kong. It has since been extended to include the tech-heavy Shenzhen Stock Exchange, in 2016. Hong Kong has, since being returned to China by the United Kingdom in 1999, been ruled under a “one country, two systems” model. This has allowed Hong Kong for much of that period to be much more independent and pro-democracy than mainland China, though this has changed significantly over the last few years. Similarly, it has allowed its markets to attract more foreign investment, as they have been more open and less subject to party control.

0 Comments

What is (legal) “frustration”?

Frustration is a contract law doctrine that was first formally recognised in the 1863 case of Taylor v Caldwell. Imagine you’ve hired a village hall to have a concert in, but a few days before your hire date, the place burns down. Frustrating, right? But in legal terms, Taylor v Caldwell essentially established that when the subject matter of a contract ceases to exist, the contract cannot go ahead. In other words, a contract is frustrated due to an occurrence that makes it impossible for one party to perform their contractual obligations.

0 Comments