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KASNEB CPA Law and Economics Key Terms

Contract law, company law, sale of goods and economics definitions for the KASNEB CPA foundation level.

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1
Offer
A definite promise to be bound on specific terms, made to a person who can accept it.
2
Invitation to treat
An invitation for others to make offers, such as goods displayed in a shop.
3
Acceptance
Unqualified agreement to the terms of an offer.
4
Counter-offer
A reply that changes the terms. It rejects the original offer.
5
Consideration
Something of value given in return for a promise.
6
Past consideration
Something done before the promise was made. It is not valid consideration.
7
Postal rule
Acceptance by post is complete when the letter is posted.
8
Void contract
A contract with no legal effect from the start.
9
Voidable contract
A contract that one party may set aside, for example for misrepresentation.
10
Specific performance
A court order that a party must carry out the contract.
11
Frustration
A later event makes a contract impossible to perform, and the contract ends.
12
Privity of contract
Only parties to a contract can sue or be sued on it.
13
Separate legal personality
A company is a legal person distinct from its members (Salomon v Salomon).
14
Limited liability
A shareholder's loss is limited to the amount unpaid on the shares.
15
Caveat emptor
Let the buyer beware.
16
Bill of exchange
An unconditional written order to pay a fixed sum to a named person.
17
Cheque
A bill of exchange drawn on a bank and payable on demand.
18
Holder in due course
A holder who took a negotiable instrument in good faith, for value and without notice of defects.
19
Negligence
Breach of a duty of care that causes damage.
20
Vicarious liability
An employer's liability for torts of employees acting in the course of employment.
21
Law of demand
As price rises, quantity demanded falls, other things being equal.
22
Price elasticity of demand
Percentage change in quantity demanded / percentage change in price.
23
Substitute goods
Goods that can replace each other. A rise in one price raises demand for the other.
24
Complementary goods
Goods used together. A rise in one price lowers demand for the other.
25
Opportunity cost
The value of the next best alternative given up.
26
Marginal cost
The extra cost of producing one more unit.
27
GDP
The value of all final goods and services produced in a country in a year.
28
GNP
GDP plus net property income from abroad.
29
Multiplier
1 / (1 - marginal propensity to consume).
30
Progressive tax
The tax rate rises as income rises.
31
Comparative advantage
The ability to produce a good at a lower opportunity cost than others.

KASNEB CPA Foundation Level (Kenya) in Kenya

In Kenya, KASNEB CPA Foundation Level (Kenya) is part of: National exams in Kenya.

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