WBCHSE HS Commercial Law and Preliminaries of Auditing key terms

A clear expression by one person to another of willingness to do or abstain from doing something, made with the aim of obtaining that other person's consent to it.

The unqualified agreement to every term of an offer, expressed in some usual and reasonable manner, which converts the offer into a binding promise between the parties.

Something of value given by each party in exchange for the other's promise, described in law as a price paid for the promise; it must be real, lawful and not past.

A preliminary statement or display inviting others to make offers, such as goods on a shop shelf or an auction notice; it is not itself an offer capable of acceptance.

The act of bringing the acceptor's assent to the offeror's knowledge; it is complete against the proposer when posted and against the acceptor when it reaches the proposer.

Withdrawal of an offer or acceptance before it becomes binding; an offer may be revoked any time before acceptance is complete, provided the revocation is communicated to the offeree.

The legal ability of a person to enter into a binding agreement, which the law denies to minors, persons of unsound mind and persons disqualified by law from contracting.

An agreement made by a person below the age of majority; it is void from the beginning, though a minor may be a beneficiary and the minor's estate remains liable for necessaries supplied.

Consent given by a party whose agreement was not caused by coercion, undue influence, fraud, misrepresentation or mistake, so that the resulting contract is valid and enforceable.

Committing, or threatening to commit, any act forbidden by the Indian Penal Code, or unlawful detention of property, with the intention of causing a person to enter into an agreement.

Where one party is in a position to dominate the will of another and uses that position to obtain an unfair advantage, making the contract voidable at the option of the weaker party.

A false statement of fact made innocently, without intent to deceive, which induces the other party to contract; the aggrieved party may avoid the contract and claim damages.

A false statement made knowingly, without belief in its truth, or recklessly, with intent to deceive and induce another to contract; the contract becomes voidable and damages may follow.

An agreement that is not enforceable by law at all, such as one without consideration or one by a minor; it creates no legal rights or obligations from the outset.

An agreement enforceable by law at the option of one or more of the parties but not at the option of the other, typically because consent was not free.

A contract to do or not to do something if some event, collateral to the contract, does or does not happen; performance depends on an uncertain future event.

The ending of contractual obligations, which may occur by performance, mutual agreement, impossibility of performance, lapse of time or operation of law.

Failure, without lawful excuse, to perform a contractual promise when due, or repudiation before the due date, entitling the injured party to damages or other remedies.

A sum fixed in advance by the parties as the amount payable on breach; if it is a genuine pre-estimate of loss the court may award it, otherwise only reasonable compensation.

Substitution of a new contract for an existing one, either between the same parties or with a new party replacing an old one, by mutual agreement of all concerned.

A contract by which one party promises to save the other from loss caused by the conduct of the promisor himself or of any other person.

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

The person who gives the guarantee and becomes liable to the creditor when the principal debtor fails to perform or pay as promised.

The person in respect of whose default the guarantee is given, and whose obligation the surety undertakes to meet if that person does not perform.

Delivery of goods by one person to another for some purpose, upon a contract that the goods shall be returned or disposed of according to the directions of the person delivering them.

The person to whom goods are delivered under a contract of bailment; the bailee must take reasonable care of the goods and return them when the purpose is accomplished.

A bailment of goods as security for payment of a debt or performance of a promise, giving the pledgee a right to retain the goods until the debt is paid.

The person to whom goods are pledged as security; on default the pawnee may sue for the debt or sell the goods after giving reasonable notice to the pawnor.

A contract by which one person appoints another to act on his behalf in dealings with third parties, creating a legal relationship between principal and agent.

A person employed to do any act for another, or to represent another in dealings with third persons, and who binds the principal by acts within his authority.

The person for whom an agent acts and who becomes bound by and entitled to the acts of the agent performed within the scope of the agent's authority.

A stipulation essential to the main purpose of a sale contract, whose breach gives the buyer a right to repudiate the contract and claim damages.

A stipulation collateral to the main purpose of a sale contract; its breach gives a right to claim damages but not to reject the goods or repudiate the contract.

The rule that the buyer must beware and takes goods at his own risk as to quality, subject to exceptions such as reliance on the seller's skill or a condition implied by usage.

The principle that a seller cannot transfer a better title to goods than he himself possesses; a buyer from a non-owner generally acquires no ownership, subject to statutory exceptions.

The passing of property in specific or ascertained goods from seller to buyer, which determines who bears risk of loss and who may sue third parties.

A seller to whom the whole or part of the price has not been paid or tendered, and who therefore holds rights of lien, stoppage in transit and resale against the goods.

The unpaid seller's right to retain possession of goods until payment of the price, available while he remains in possession and the buyer has not become insolvent.

The unpaid seller's right, on the buyer's insolvency, to resume possession of goods while they are in transit and before they reach the buyer.

A document promising or ordering payment of money that is freely transferable by delivery or endorsement, and whose holder in due course takes it free from defects in title.

A written instrument, signed by the maker, containing an unconditional promise to pay a certain sum to a specified person or bearer on demand or at a fixed time.

A written instrument, signed by the maker, containing an unconditional order directing a certain person to pay a certain sum to a specified person or bearer.

A bill of exchange drawn on a specified banker and payable on demand, which must be presented within its validity period for payment by the bank.

The person on whom a bill of exchange is drawn and who is directed to pay it; in the case of a cheque the drawee is always a bank.

A person who takes a negotiable instrument for value, in good faith and before maturity, and thus obtains a title free from earlier defects and equities.

An independent examination of an organisation's books, accounts and vouchers, with supporting evidence, to enable the auditor to express an opinion on the financial statements.

An audit required by a specific statute, such as the Companies Act, whose appointment, powers, duties and reporting obligations are laid down by that law.

An independent appraisal activity within an organisation that reviews internal controls, risk management and operations to help management improve efficiency and compliance.

A written, organised plan listing the audit work to be done, the procedures to be applied and the time to be spent, prepared before the audit begins.

Records kept by the auditor of the work done, the evidence obtained and the conclusions reached, forming the basis of the audit report and the support for its opinion.

All information used by the auditor in arriving at the conclusions on which the audit opinion is based, obtained through inspection, observation, inquiry and confirmation.

Applying audit procedures to less than the whole population of items so that each sampling unit has a chance of selection, enabling the auditor to draw conclusions about the population.

The auditor's formal written communication of opinion on the financial statements, stating whether they give a true and fair view in accordance with the applicable framework.

An audit opinion stating that, except for the effect of a matter described in the report, the financial statements give a true and fair view.