Contracts

Question 1

Define consideration

Answer 1

Consideration refers to the exchange of values and benefits between parties

Question 2

Define Contract

Answer 2

Contract refers to the legal binding between parties

Question 3

What is a specialty contract

Answer 3

A specialty contract is defined as a contract that is signed, sealed and delivered.

Question 4

Contractual Capacity

Answer 4

Capacity refers to the ability to preforms ones obligations therefore, a minor, a person with mental illness or a drunk person cannot sign a contract.

Question 5

What are the necessary elements of a contract

Answer 5

Offer and Acceptance

Consideration

Intention to make legal relegation’

Capacity

Question 6

Define the difference between the offeror and the offree

Answer 6

The offerer is the party that makes the offer and the
offeree is the person that the offer is being made to.

Question 7

For an acceptance to be valid it must be?

Answer 7

unqualified

Question 8

What is a breach in a contract?

Answer 8

When one party has failed to comply with the agreement

Question 9

In contractual terms, an offer may be

Answer 9

verbal, written or implied

Question 10

QUESTION: What is the advantage of signed written agreement as
opposed to verbal or implied?

Answer 10

ANSWER: The parties involved cannot dispute
either the existence of the contract or its
content.

Question 11

QUESTION: Is a contract enforceable by law?

Answer 11

ANSWER: Yes, which is what makes it different from a
simple agreement between people.

Question 12

Define the term “offer”

Answer 12

An offer is an indication by one party of their
willingness to enter into a contract on the terms that
he/she has put forward.

Question 13

An offer can come in various forms. State 5 ways

Answer 13

▪A letter
▪A fax
▪An e-mail
▪A conversation
▪Even someone’s behaviour

Question 14

If either the offerer or the offeree dies what happens to the offer?

Answer 14

It is terminated

Question 15

State four ways an offer may be terminated

Answer 15

▪Rejection by the offeree
▪Death by either party
▪Insanity of either party
▪Counteroffer
▪Destruction of a key
element required for the
performance of the
contract
▪Expiration of the
specified time
▪Revocation of the offer

Question 16

What does unqualified mean?

Answer 16

Acceptance must be
unqualified, meaning the offeree
cannot introduce new terms to
the contract in the acceptance.

Question 17

Can acceptance be vague?

Answer 17

No. Acceptance must be
certain, meaning, no room
for doubt.

Question 18

Define catalogue

Answer 18

A document that gives detailed descriptions of products such as size, colour, quality, quantity, price and the reference # for each.

Question 19

A letter of enquiry

Answer 19

This is used when a person/organisation wishes to find out information about a
product(s)e.g. prices, specifications etc.

Question 20

What is a quotation

Answer 20

This is usually issued as a result of an inquiry. It includes:
Prices
Trade discounts
Cash discounts
Description of goods
Transport cost

Question 21

An invoice defines as

Answer 21

One of the most important documents which goes from the seller to the buyer,
informing the buyer of what he owes. It includes:
Quantity supplied
Individual prices
Total owed
Taxes e.g. VAT( where necessary)
Any terms and conditions

Question 22

What is a pro-forma invoice

Answer 22

This is like a bill sent before sending out items. Once payment is received, the items are sent. It’s used when the seller is unsure if the buyer will pay.

Question 23

Credit note

Answer 23

A credit note is to reduce the amount owed due to goods being damaged or an overcharge

Question 24

Debit note

Answer 24

A note issued to adjust the accounts and increase the amount owed by the customer as a result of a sum being omitted in the original invoice.

Question 25

Delivery note

Answer 25

A written document from supplier to customer that accompanies the delivery of goods giving details of quantity and type of goods.

Question 26

Tenders

Answer 26

A competitive quotation to win a contract

Question 27

Statements of
accounts

Answer 27

It is the document sent by the creditor or supplier to the debtor or purchaser giving a summary and balance of the purchasing debtor’s transactions with the creditor or supplier over a given period of time.

Question 28

Stock or inventory
cards

Answer 28

Is a document that shows a record of all goods and products