Persons

Definitions matter on exams that focus on the legal side of finance. A rule only applies when the situation fits the rule’s definitions, so you need to know exactly what key terms mean. For example, highway speed limits apply to automobiles. That sounds straightforward - until you ask what counts as an automobile. Does an ambulance? A fire truck? A motorized skateboard?

One of the first definitions to know is person.

In everyday English, a “person” usually means a human being. In legal and regulatory questions, person is broader. A human being is a person, but so are many organizations and government bodies. For example, the U.S. government can be a person under this definition, and so can a large corporation.

A helpful way to think about it is this: a person can be a natural person or a legal entity that can enter into legal contracts.

There are also important examples of non-persons to know. The following parties are never considered persons:

• Minors
• Incapacitated
• Deceased

A common reason for non-person status is the inability to enter into legally binding contracts.

• Minors: Minors can technically enter into contracts, but those contracts are generally unenforceable, and the minor can void the contract.
• Incapacitated: Incapacitation means someone can’t manage their own affairs or well-being, which can prevent them from entering binding contracts. Common causes include dementia, mental illness, and a sustained lack of consciousness (e.g. in a coma).
• Deceased: A deceased person can’t enter into contracts.

This definition may feel a bit technical, but it shows up repeatedly on the Series 63 exam.