32 cardsCA Foundation
Business Laws and Accounting: Key Rules
Thirty-two cards with the key sections of business law and the main accounting rules for the CA Foundation papers.
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Contract (Section 2(h))
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Terms in this deck (32)
1
Contract (Section 2(h))
An agreement enforceable by law.
2
Essentials of a valid contract (Section 10)
Free consent, competent parties, lawful consideration and object, and not expressly declared void.
3
Void and voidable
Void: not enforceable by law. Voidable: enforceable at the option of one party.
4
Minor's agreement
Void from the beginning (Mohori Bibee v Dharmodas Ghose, 1903).
5
Age of majority
18 years; 21 if a guardian has been appointed by a court.
6
Coercion, undue influence, fraud, misrepresentation
Sections 15, 16, 17 and 18.
7
Mistake
Mutual mistake of fact makes the agreement void (Section 20); mistake of Indian law does not (Section 21).
8
Past consideration
Valid in India, because Section 2(d) says 'has done or abstained from doing'.
9
Privity of contract
Only a party to the contract can sue on it.
10
Agreements void by statute
Restraint of marriage (26), restraint of trade (27), restraint of legal proceedings (28), uncertainty (29), wagers (30).
11
Contingent contract
Depends on an uncertain event collateral to the contract (Section 31).
12
Postal rule
Acceptance is complete as against the proposer when the letter is posted.
13
Damages for breach
Section 73: compensation for loss arising naturally from the breach.
14
Indemnity and guarantee
Indemnity: promise to save from loss (Section 124). Guarantee: promise to discharge a third person's liability (Section 126).
15
Bailment
Bailor delivers goods; bailee receives them (Section 148).
16
Sale and agreement to sell
Sale transfers property at once; an agreement to sell transfers it later or on a condition.
17
Condition and warranty
Breach of a condition allows repudiation; breach of a warranty gives damages only.
18
Implied condition as to title
The seller has a right to sell the goods (Section 14).
19
Caveat emptor
Let the buyer beware (Section 16).
20
Nemo dat quod non habet
No one can give a better title than he has (Section 27).
21
Unpaid seller
Lien, stoppage in transit and resale.
22
Partnership
Relation between persons who agree to share profits of a business carried on by all or any of them acting for all.
23
Partners' liability
Joint and several, and unlimited.
24
Registration of a firm
Optional, but an unregistered firm cannot sue to enforce a contractual right.
25
Straight-line depreciation
(Cost - scrap value) / life.
26
Written-down value method
Depreciation = rate x opening book value.
27
Goodwill
Average profit x years' purchase; or super profit x years' purchase.
28
Sacrificing ratio
Old share - new share.
29
Accounting equation
Assets = Liabilities + Capital.
30
Real, personal and nominal accounts
Real: debit what comes in. Personal: debit the receiver. Nominal: debit expenses and losses.
31
Bills of exchange
Maturity date = due date + 3 days of grace.
32
Bank reconciliation
Cash book balance + cheques issued not presented - cheques deposited not credited = pass book balance.
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