Legal Aspects Of a Business Flashcards
What is a contract?
A contract is a legal binding agreement between two or more persons that is enforceable by law
What is a simple form
A simple form requires no special forms and may be written or oral
What is a speciality contract?
A speciality contract that is also called a deed or a contract under seal
What should a speciality contract must have
Seal
Signature of party
Deliver to all parties involved
Characteristics of simple contract
Offer and acceptance,an offer has to be made and there must be a clear unconditional acceptance
Parties of a contract
Offeror
Offeree
Explain offeror
The person who makes the offer
Explain offeree
The person who accepts the offer
What is form of consideration
Is the exchange of one thing of value for another
Under consideration contract they are two types of agreement,what are they
Bilateral agreement and unilateral agreement
Explain bilateral
Where both parties exchange promise with each other
Explain unilateral
One party make a promise in exchange for performance
Persons who cannot sign a contract
Person of unsound mind
Person under the influence
Alien
Minors
What is good faith in the contract
There should be no fraud
What is genuiness in a contract
The party must agree to the contract on their own free will
What is possibility in a contract
The party must be able to deliver on the agree up on contract
Characteristics of a speciality contract
Signing
Sealing
Rules of offer and acceptance
The offer must be communicated by the other party
The offer must be general and must be accepted by the specific person that you offer
The offer can be Revoked at any time before acceptance
Several ways that a contract is terminated or discharged
1.mutual agreement
2.breach of contract
3.performance
4.impossibility
5.death
6.bankruptcy
7.lapse of time
Mutual agreement
This is when both parties agreed to cancel the agreement before it is performed 
Reach of contract 
One party side of the contract
Performance
When a contract is not fulfilled and completed
Impossibility
This is where one or both parties find it humanly impossible to comply with the contract
Death
This is where one of the party involved in the contract dies
Bankruptcy
When one party loses all their money and assets and to uphold the contract
Lapse of time
This is where non-performance of one party has a breach in the contract during a specified time. Period.
Letter of enquiry
This is used when people are organization wishes to find information about a product
Invoice
One of the most important documents is an invoice. This document goes from the seller to the buyer, informing the buyer of what he or she holds
Factors of production
Land(natural resources)
Labour(Human Resources)
Capital(man made resource)
Enterprise
What is production
Production is the creation of goods and services to satisfy the needs n wants
Define productivity
A measure of how efficiently resources are combined and utilized in the firms for achieving the desired outcome
What is capital
Capital is anything that is money which is use to start or secure a business
Eg of capital
Money,loan or personal assets
What is a small business
A privately owned corporation partnership or sale partnership that has fewer employees and less annual revenue than a corporation or regular sized business
Micro enterprises has how man employees
Fewer than 10 employees
Small enterprises has how many enployees
10-49
Medium sized enterprise has how many employees
50-249
Large enterprises have how many employees
250 or more people
Functions of a small business
Supplying goods and services that satisfy demand
Creating employment
Making a profit
Advantages of a small business
Increase competition for larger firms
Generate employment and income
Introduced new products and ideas
Disadvantages of a small business
The business lacks enterprise in certain areas
Limited ability to service customers due to unavailable resources
Owner find it difficult sourcing finance from financial institution
Three benefits of having a partnership business
Responsibilities can be shared
Easy to manage
Emotional support
What is an entrepreneur
person who sets up a business or businesses, taking on financial risks in the hope of profit.
What is enterprise
This refers to the taking of risks in establishing a business
Loss
When total sales are not enough to cover all expenses
Organization
A social arrangement which pursues collective goals such as the production of goods and services.
Economy
The system within a country which determines the production, exchange and consumption of goods and services.
Exchange
The voluntary trade of goods and services.
Market
Any place where buyers and sellers meet to engage in trade. It is also referred to as the demand for a product.
Market
Any place where buyers and sellers meet to engage in trade. It is also referred to as the demand for a product.
Commodity
Any final good used for some purpose.
Capital
Money which is used in the organisation to acquire assets. It also refers to items (factories, equipment, machinery etc.) used to create final products.
Labor
This is the physical and mental contribution of individuals to the creation of goods and services.
Specialization
This is the division of labour into specific tasks. A whole process is divided
into several tasks. This helps to speed up the process and may result in an increase in productivity and a decrease in unit cost.
Characteristics of money
To be divisible
To be durable or long lasting
To be portable and easy to carry around
Cheques
Payment represented on paper to be taken from consumer’s bank account.
Sole trader
A person who owns his or her business
Characteristics of sole trader
Easy to set up
Financed by the owner
Bears all risk and keep all profits
Advantages of sole trader
Takes all profit
Decision can be made quicker
Disadvantages of sole trader
Lack of specialized staff
Long working hours
Business usually dissolves if owner dies
Partnership
An association between 2- 20 people operating a business with the common goal of making a profit.
2 types of partnerships
Ordinary
Limited
Advantages of partnership
Easy to set up
Shared work load
Business will not end if one partner dies
Disadvantages of partnership
Unlimited liability
Difficulty in raising capital
Personalities of partners may cause difficulties in decision making.
