CA Foundation Business Laws flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Contract

An agreement enforceable by law under section 2(h) of the Indian Contract Act, 1872; it requires offer, acceptance, consideration, capacity, free consent and lawful object.

Consideration

An act, abstinence or promise done at the desire of the promisor; it may move from the promisee or any other person, but not from a stranger to the contract.

Counter-offer

A reply that varies the terms of the original offer; it operates as a rejection of the original offer and creates a new offer that the original offeror may accept or reject.

Revocation of proposal

Withdrawal of an offer before acceptance is complete against the offeror; it must be communicated to the offeree and takes effect when it reaches them.

Minor's agreement

An agreement by a person below 18 years is void ab initio; the minor cannot be held liable, though necessaries supplied may be recovered from the minor's estate.

Undue influence

Consent obtained by a party who is in a position to dominate the will of another and uses that position to obtain an unfair advantage; the contract is voidable.

Wagering agreement

An agreement under which money is payable on the happening or non-happening of an uncertain event; it is void under section 30, but collateral transactions may be enforceable.

Contingent contract

A contract to do or not do something if some collateral event happens or does not happen; it becomes void if the event becomes impossible before the contract is performed.

Quasi contract

An obligation imposed by law, not by agreement, to prevent unjust enrichment; examples are necessaries supplied to an incapable person and money paid by mistake.

Anticipatory breach

Repudiation of a contract by a party before the time fixed for performance; the aggrieved party may sue immediately or wait until the performance date.

Supervening impossibility

Performance becomes impossible after formation due to an unforeseen event beyond the parties' control, such as destruction of subject matter or change of law; the contract becomes void.

Liquidated damages

A sum named in the contract as payable on breach; under section 74 the court awards reasonable compensation not exceeding that sum, whether it is a genuine pre-estimate or a penalty.

Quantum meruit

A claim for payment of a reasonable sum for work done or services rendered where no complete contract price is payable, as on part performance accepted by the other party.

Contract of guarantee

A contract to perform the promise or discharge the liability of a third person in case of default; it involves a principal debtor, a creditor and a surety.

Pledge

A bailment of goods as security for payment of a debt or performance of a promise; the pawnee may retain the goods and sell them after notice on default.

Bailment

Delivery of goods by one person to another for a purpose upon a contract that the goods be returned or disposed of as directed; the bailee must take reasonable care.

Agency by ratification

An act done by a person without authority may be adopted by the principal, who then becomes bound as if the act had been authorised from the beginning.

Agreement to sell

A contract under which transfer of property in goods is to take place at a future time or subject to a condition; it is not a sale and creates only personal rights.

Condition versus warranty

A condition is essential to the main purpose of the contract and its breach allows repudiation; a warranty is collateral and its breach gives damages only.

Caveat emptor

Let the buyer beware: the buyer takes goods at their own risk unless relying on the seller's skill, or the seller's conduct amounts to fraud or concealment.

Unpaid seller

A seller who has not been paid in full or whose negotiable instrument has been dishonoured; he has rights of lien, stoppage in transit and resale.

Partnership

A relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all, governed by the Indian Partnership Act, 1932.

Implied authority of partner

Authority to do acts in the ordinary course of the firm's business; it does not extend to submitting a dispute to arbitration or opening a bank account in the firm's name.

Dissolution of firm

The termination of the partnership relation among all partners; assets are applied to third-party debts, then partners' advances, then capital, and the residue is shared.

Designated partner

An individual partner designated as such under the LLP agreement and responsible for compliance with the LLP Act; at least two are required, one resident in India.

LLP agreement

A written agreement among the partners of an LLP setting out mutual rights and duties; it must be filed with the Registrar within 30 days of incorporation.

Prospectus

Any document inviting the public to subscribe to securities of a company; a red herring prospectus omits the price and a shelf prospectus may be filed by specified issuers.

Certificate of incorporation

The certificate issued by the Registrar on registration of a company; it is conclusive evidence that the company has been duly incorporated and exists.

Charge registration

A charge created on a company's property must be registered with the Registrar within 30 days of creation; failure makes the charge void against the liquidator and creditors.

Unpaid dividend account

Dividend not paid within 30 days of declaration must be transferred to this account within 7 days; amounts unclaimed for 7 years go to the Investor Education and Protection Fund.

Holder in due course

A person who takes a negotiable instrument for consideration, in good faith and before maturity, and thereby obtains a title free from prior defects.

Section 138 notice

A demand notice issued to the drawer within 30 days of receipt of the bank's return memo for a dishonoured cheque, giving 15 days to pay; a complaint follows within one month.