Financial and contractual aspects

Question 1

What is a contract?

Answer 1

An agreement between two or more people in which one person offers to do something in return for a valuable benefit.

Question 2

What is a breach of contract?

Answer 2

When one party fails to perform the obligations specified in the contract, that party breaches the contract.

Question 3

What is a warranty?

Answer 3

A written agreement promising to repair or replace an article if it breaks or does not work within a specified period.

Question 4

What is a guarantee?

Answer 4

An assurance that the product will remain in working order for a particular length of time. A promise from the manufacturer that they will sort out problems with the service or product within a fixed period of time.

Question 5

What are grey goods?

Answer 5

Items that a manufacturer doesn’t want sold in a particular country but end up there through unofficial distribution channels. It is not illegal.

Question 6

What is direct marketing?

Answer 6

To approach someone in person or by mail or electronic communication, for the direct or indirect purpose of promoting or supplying goods in the ordinary course of business or requesting a donation.

Question 7

What is a cooling-off period?

Answer 7

The amount of time the law gives a consumer who has signed a contract to cancel it without a reason or financial implications.

Question 8

What are exemption clauses?

Answer 8

Provision in a contract under which one party (usually the one which drafted the agreements) is protected from being sued by the other party for damages, loss, negligence, non-performance, etc.

Question 9

What are scams?

Answer 9

Dishonest schemes that involve an unsuspecting consumer who is cheated into paying an excessive amount for goods and services offered while there are no real goods or services. The consumer loses money and gain nothing in return.

Question 10

What are pyramid schemes?

Answer 10

A get-rich-quick money making scheme that takes the form of a pyramid by promising members payments for enrolling more members in the scheme.

Question 11

Why are pyramid schemes illegal?

Answer 11

They are an unsustainable business model in which members are paid to recruit new members, rather than to sell goods and services.

Question 12

What is an employment contract?

Answer 12

The employer offers an employment opportunity and the employee accepts the conditions for a certain salary/wage.

Question 13

What is an insurance contract?

Answer 13

The insurance company offers to compensate the consumer in the event of a loss of insured items in return for a monthly payment of a specified premium.

Question 14

What is a credit contract?

Answer 14

A legal agreement where a credit provider offers to give the consumer money to buy a certain asset if the consumer repays the loan over a set period of time at a set interest rate.

Question 15

What is a business contract?

Answer 15

An agreement made when two entities start a business together.

Question 16

Name 3 requirements for a contract to be legal.

Answer 16

1.Terms that fall within the law must be offered and accepted for a specified legal consideration of value.
2. All parties must be over 18 and mentally sound without the use of force or coercion.
3. The contract must be in writing and signed in front of witnesses.

Question 17

What are the consequences of contract breech?

Answer 17

You can be taken to court and legal consequences can be imposed from a fine to jail time depending on the nature of the contract.

Question 18

Give 5 examples of unfair business practices.

Answer 18

Taking advantage of customers; misrepresenting a product; faking endorsements and guarantees; giving misleading price information; failing to disclose pertinent information.

Question 19

What is a charity scam?

Answer 19

When a thief poses as a real charity in order to get money from you in the form of donations.

Question 20

What is a debt collection scam?

Answer 20

Scammers who pose as debt collectors to get you to pay for debts you don’t owe or have already paid off.

Question 21

What are grandparent scams?

Answer 21

If you get a call from someone who sounds like a grandchild or relative asking for money or gift cards to help them out, it could be a scam.

Question 22

What is a romance scam?

Answer 22

When a new love interest tricks you into falling for them when they really just want your money.

Question 23

What is identity theft?

Answer 23

The crime of obtaining the personal and financial information of another person to use their identity to commit fraud, such as making unauthorised transactions or purchases.

Question 24

What are 419 scams?

Answer 24

A scam is a scheme in which a sender requests help in facilitating the transfer of a sum of money, generally in an email and from a Nigerian.

Question 25

What is phising?

Answer 25

An online scam where the scammer pretends to be someone they are not to trick you into giving them your personal information which they then use to open fraudulent credit cards and accounts in your name. You get stuck paying the debts you never made.

Question 26

What is a lottery scam?

Answer 26

An email claiming you have won a large sum of money in a lottery but you need to make a small payment to facilitate the transfer of your winnings. The scammer leaves with your money.

Question 27

What is a credit card scam?

Answer 27

The unauthorised use of a credit card to fraudulently obtain money or property. People steal your credit card to do this.

Question 28

What are work from home scams?

Answer 28

Deceitful people create false job listings to benefit themselves by stealing your personal information or financial assets.

Question 29

What is a stokvel?

Answer 29

An invitation only club of 12 or more people serving as rotating credit unions or saving schemes in SA where members contribute fixed sums of money to a central fund on a regular basis.

Question 30

What is multilevel marketing?

Answer 30

A legal form of a pyramid scheme where you sell a physical product AND enrol new members to also sell the same physical product so the people at the top can make more money.