Legal Concepts of A Business Flashcards
- What’s a Contract?
It’s a legal agreement between two or more people.
Everybody have a mutual understanding and willing to hold it down legally.
What Makes a Contract Legit?
- Offer + Acceptance
- Competent Parties: Grown, sane, and legally allowed to sign stuff.
- Intention: Y’all meant to be serious—this ain’t no play-play deal.
- Consideration: Something valuable have to be exchanged exchanged (money, service, etc.).
What is an Offer?
An offer is a clear and definite proposal made by one party to another with the intention of creating a legal agreement if accepted.
What is Acceptance?
Acceptance is the unqualified agreement to all the terms of the offer.
What does ‘intention to create legal relations’ mean?
It means that both parties must intend for the agreement to be legally enforceable
What is Consideration?
Consideration is something of value exchanged between the parties (e.g., money, goods, services) that supports the contract.
What is the difference between an Offer and an Invitation to Treat?
An offer is a proposal that can be accepted to form a contract, while an invitation to treat is a request for offers (e.g., goods on display in a store).
. What are Special Contracts?
Special contracts are legally binding agreements that have unique terms and conditions tailored to specific circumstances, going beyond the general contract laws.
What is a Case Study in Contract Law used for?
To analyze real or hypothetical legal scenarios to determine whether a contract is valid and legally enforceable
What is Discharge of a Contract?
Discharge refers to the end of a contract and the release of parties from their obligations.
What are the methods of discharging a contract?
A contract can be discharged, or legally ended, through various methods including performance, agreement, impossibility, breach, and operation of law.
- Discharge by Performance:
This is the most common way a contract ends. When both parties fulfill their obligations as outlined in the contract, it’s discharged.
Example: A construction company builds a house according to the agreed-upon plans, and the homeowner pays the agreed-upon price.
- Discharge by Agreement:
Parties can agree to release each other from their contractual obligations.
This can be done through novation (substituting a new contract), rescission (canceling the contract), or alteration (modifying the original terms).
Example: Two parties agree to modify the price of a product in a sales contract, effectively discharging the original contract.
- Discharge by Impossibility (Frustration):
This occurs when an unforeseen event makes it impossible or impractical to perform the contract.
Examples: Destruction of the subject matter (e.g., a building burns down), legal changes rendering the contract illegal, or death or incapacitation in personal service contracts.
- Discharge by Breach:
A breach occurs when one party fails to perform their obligations under the contract.
Types of breaches include anticipatory breach (one party refuses to perform before the performance date) and actual breach (failure to perform on the due date).
Example: A seller fails to deliver goods on the agreed-upon date, breaching the sales contract.
- Discharge by Operation of Law:
Certain legal events, such as bankruptcy or death of a party, can discharge a contract.
Example: If a party to a contract dies, the contract may be discharged, depending on its nature (e.g., a personal service contract).
In summary
In summary: Contracts can be discharged through performance, mutual agreement, impossibility, breach, or by operation of law, ensuring that contractual obligations are fulfilled or terminated in a legally sound manner.
What is a Case Study in Contract Law used for?
To analyze real or hypothetical legal scenarios to determine whether a contract is valid and legally enforceable.
What is Discharge of a Contract?
Discharge refers to the end of a contract and the release of parties from their obligations.
What are the methods of discharging a contract?
By performance, agreement, breach, or frustration.
Why is Record Keeping Important in Business?
It helps in tracking performance, ensuring tax compliance, and preparing for audits.
What are Common Business Documents?
Pro forma invoice, purchase requisition, statement of account, and stock card.
What are Transport Documents?
Documents like the import license, bill of lading, and airway bill that support the transportation of goods.
What are Instruments of Payment?
Methods used to make payments, including cheque, money order, bank draft, debit card, credit card, and telegraphic transfer.
. Why is it Important to Understand Instruments of Payment?
To properly interpret details and ensure secure and accurate financial transactions.
What is Documentary Credit?
A method of payment in international trade where a bank guarantees that a seller will receive payment from the buyer.
What is the Difference Between Insurance and Assurance?
While both “insurance” and “assurance” relate to financial security, insurance is a contract for financial protection against a specific event (e.g., accident, loss),
while assurance is a broader concept encompassing the guarantee or confidence in something, often used in financial or audit contexts.
What is Pooling of Risks?
A concept in insurance where many people pay into a pool, so that losses of a few are covered by contributions from the many.
What are the Main Types of Insurance Policies?
- Life Insurance
2.General Insurance
3.Other Important Types(pet insurance,liability insurance, cyber insurance)
How Does Insurance Help in Business?
Business insurance can help protect business owners and independent professionals against everyday risks, such as mistakes, stock or premises damage, and legal costs (known as Liability insurance).
What is Documentary Credit?
A method of payment in international trade where a bank guarantees that a seller will receive payment from the buyer.
Explain How Insurance Facilitates Trade
- Explain How Insurance Facilitates Trade
Insurance is like a safety net that keeps businesses confident and protected. Here’s how it helps trade:
Reduces Risk:
Businesses can take more chances and expand, knowing they’re covered against unexpected losses (e.g., theft, fire, accidents).
Encourages Investment:
Investors are more likely to support businesses that are protected by insurance—it shows the business is prepared for risks.
Protects Goods in Transit:
Marine, air, and land transport insurance make it safer to import/export goods internationally.
Legal Requirement:
Some types of insurance are required by law (like motor insurance), helping to standardize and protect the flow of goods/services.
Stabilizes the Economy:
Insurance companies pay out claims, helping businesses recover fast from disasters and continue operations.
💡 Summary: Without insurance, trade would be a gamble. Insurance brings stability, protection, and confidence to businesses and economies.
