CIMA BA4 key terms

A situation in which a person must choose between options that each involve some conflicting moral principle, so that no available course of action satisfies every obligation fully.

An approach that judges whether an act is right by looking at its consequences, so the morally correct choice is the one producing the best overall outcome.

An approach holding that certain duties and rules bind us regardless of outcome, so an act can be wrong even when it produces good consequences.

A consequentialist theory requiring the choice that creates the greatest good for the greatest number, weighing every affected party's welfare equally in the calculation.

A test of moral rules requiring that you act only on principles you could will to become universal laws, and treat people as ends rather than merely as means.

A tradition focusing on the character traits of the decision maker, asking what a person of practical wisdom and good character would do in the circumstances.

A reporting framework that evaluates organisational performance across three dimensions, namely profit, social impact and environmental impact, rather than financial results alone.

The view that a business should account for the interests of everyone affected by its activities, including employees, customers, suppliers and communities, not only shareholders.

Disclosing wrongdoing inside an organisation, either internally to management or externally to a regulator or the public, typically by an employee seeking to stop harm.

A protected report of malpractice made under statute, giving the discloser legal protection from dismissal or detriment where the disclosure meets specified conditions.

A formal statement of the values and behavioural standards an organisation expects of its people, used to guide decisions and to signal commitment to ethical conduct.

A set of specific, often rule-based requirements describing acceptable and unacceptable behaviour, frequently covering conflicts of interest, gifts and use of company assets.

A situation where a person's private interest, or a duty owed to another party, could improperly influence decisions made in their professional role.

The signals senior leaders send through their own behaviour and priorities, which strongly shape whether an ethical culture actually takes hold below them.

The system of rules, practices and processes by which a company is directed and controlled, allocating authority and accountability among owners, board and management.

The risk that managers, acting as agents for shareholders, pursue their own interests rather than the owners' interests, creating costs of monitoring and control.

A arrangement in which one party, the principal, delegates decision-making authority to another, the agent, whose actions the principal cannot observe perfectly.

The body elected by shareholders to oversee strategy, appoint and supervise senior executives and ensure the company is run in the owners' long-term interests.

A board member who also holds a management position in the company, bringing operational knowledge to the board but potentially weakening independent oversight.

A board member without day-to-day management responsibilities, expected to provide independent judgement and to challenge executive proposals constructively.

The state of being free from relationships, financial interests or pressures that could compromise a director's or auditor's objective judgement.

A board subcommittee of independent directors responsible for overseeing financial reporting, internal controls and the relationship with external auditors.

A board subcommittee that sets pay and incentives for executive directors, aiming to align rewards with long-term shareholder interests and avoid conflicts of interest.

A board subcommittee that identifies and recommends candidates for board appointment, helping maintain an appropriate balance of skills, experience and independence.

The doctrine that directors should manage the company primarily to maximise long-term shareholder value, treating other parties' interests as subordinate.

A regulatory approach in which companies must either follow a governance code's provisions or publicly explain why they have departed from them.

A set of principles and provisions issued by a regulator or stock exchange setting out recommended standards for board leadership, effectiveness, accountability and remuneration.

The division in a listed company between shareholders who own it and managers who run it, which creates the need for governance mechanisms and monitoring.

A previous court decision that later courts must follow where the material facts and legal issues are sufficiently similar, forming the basis of common law.

The legal principle or reasoning on which a court's decision actually rests, and which therefore binds lower courts in later cases.

Remarks made by a judge that are not essential to the decision, so they are persuasive only and do not create a binding rule.

The body of law developed through judicial decisions in the courts rather than through statutes passed by a legislature.

A law enacted by a legislature, such as an Act of Parliament, which takes precedence over case law where the two conflict.

Rules made by a body other than the legislature under powers granted by a statute, such as regulations issued by a government minister.

A clear expression of willingness to contract on stated terms, made with the intention that it becomes binding once the other party accepts it.

Unqualified agreement to all the terms of an offer, communicated to the offeror, which brings a binding contract into existence.

An indication that a party is open to receiving offers, such as goods displayed in a shop, without itself being capable of acceptance.

Something of value given by each party in exchange for the other's promise, such as money for goods, which is required for a contract to be enforceable.

The requirement that parties intend their agreement to have legal consequences, presumed in commercial dealings but generally not in social arrangements.

The rule that only the parties to a contract can enforce it or have obligations imposed on them under it, subject to limited statutory exceptions.

Failure by a party to perform an obligation owed under the agreement without lawful excuse, entitling the innocent party to remedies.

A monetary award compensating the innocent party for loss caused by a breach, aiming to put them in the position they would have occupied had the contract been performed.

The test limiting recoverable damages to losses that were reasonably foreseeable at the time of contracting or within the parties' actual contemplation.

A clear refusal or inability to perform a contractual obligation, or a breach so serious it goes to the root of the contract, allowing the innocent party to terminate.

A false statement of fact made by one party that induces the other to enter the contract, which may give the misled party rights to rescind or claim damages.

Automatic discharge of a contract when an unforeseen event makes performance impossible or radically different, without fault of either party.

A contractual provision listing events beyond the parties' control that excuse or suspend performance, reducing reliance on the strict doctrine of frustration.

The agreement between employer and employee setting out terms such as pay, hours, duties and notice, which forms the legal basis of the employment relationship.

The legal classification of a worker as an employee, which brings statutory rights such as unfair dismissal protection and redundancy pay that other workers may not receive.

Termination of employment that is not for a permitted reason or is handled unreasonably, giving the employee a right to complain to an employment tribunal.

Dismissal in breach of the employment contract, typically where the employer fails to give the required notice or follow contractual procedures, remedied by damages.

A resignation treated in law as a dismissal because the employer's serious breach of contract, such as a fundamental change to terms, forced the employee to leave.

Dismissal because the employer's need for employees to do particular work has ceased or diminished, which can be a fair reason if a proper process is followed.

Treating a person less favourably because of a protected characteristic such as sex, race, age or disability, which is generally unlawful in employment.

Unwanted conduct related to a protected characteristic that violates a person's dignity or creates an intimidating, hostile, degrading or offensive environment.

Detrimental treatment of someone because they brought, supported or gave evidence in a discrimination complaint, which is separately unlawful.

Applying a neutral provision, criterion or practice that puts people with a protected characteristic at a particular disadvantage without objective justification.

Changes an employer must make to premises, equipment or working arrangements to remove disadvantages faced by a disabled employee or applicant.

A period during notice when the employee remains employed and paid but is told to stay away from work, protecting the employer's confidential information and client relationships.

A clause in an employment contract limiting what an employee may do after leaving, such as soliciting clients, enforceable only so far as reasonable to protect legitimate interests.