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General Overview Business Management 2004 WASSCE
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The Nature of the Examination-Business Management 2004 WASSCE
There are two Papers in the examination, (and these are Paper 1 and Paper 2).Paper 1 is an Objective Test and Paper 2 is a written theory paper. There are 50 questions in the Paper 1. Finally, there are 10 questions in the Paper 2. The 10 questions is made up of 1 Case Study and 9 other questions. They are asked to tests the student’s general understanding of the various topics under business management. I must emphasize that, in order to pass your WASSCE questions with good answers, you need to practice critical thinking. This is because, some of the questions are tricky.
The Summary of the Paper-Business Management 2004 WASSCE
The WASSCE Business management Paper for 2004 can summarized below:
Business Management 2004 WASSCE-Past Questions and Answers Paper 1
Let me show you how to find the answers to the Business Management Questions – Paper 1. To clarify that, when you read a question, just click on this symbol (˅) that follows the question. After doing so, the answer will drop down for you. In fact, it is a very simple task. However, for the purposes of evaluating yourself, you may want to answer the before reviewing the suggested answer (or solution)
- The planning function in management involves all the following except D is the answer -Business Management 2004 WASSCE
- making decisions
- establishing objectives
- implementing courses of action
- grouping necessary activities to attain objectives
- In a co-operative society the initial working capital can be increased through A is the answer -Business Management 2004 WASSCE
- floatation of shares
- sales to members
- The predominant form of business ownership in Ghana is B is the answer -Business Management 2004 WASSCE
- sole proprietorship
- co-operative society
- private limited liability company
- One of the distinguishing features between a public limited company and a private limited company is that the latter A is the answer -Business Management 2004 WASSCE
- sells shares only through the stock exchange.
- offers all types of shares whilst the former deals with only ordinary shares
- cannot offer shares for subscription by the public
- sells shares on and outside the stock exchange
- Which of the following determines salary and wage levels in an organization? B is the answer -Business Management 2004 WASSCE
- Finance Officer
- Personnel Manager
- Board of Directors
- Managing Director
- A Del Credere agent C is the answer -Business Management 2004 WASSCE
- is one that goes between a retailer and a wholesaler
- negotiates credit facilities for his principal
- receives extra commission for guaranteeing payment to a principal
- is a factor who takes title to goods
- Which of the following is not a duty of an agent towards the principal? A is the answer -Business Management 2004 WASSCE
- He must be appointed by the principal principal
- He must not make secret profits
- He must always disclose the
- He must not have conflicting interests
- When a cheque is crossed Not Negotiable it means that D is the answer -Business Management 2004 WASSCE
- it can be transferred only by the payee
- the payee can cash it over the counter
- the payee’s title is defective
- it cannot be transferred
- A banker’s draft is A is the answer -Business Management 2004 WASSCE
- a cheque drawn by a bank on itself. commercial bank
- the goods bought on credit by a bank. bank.
- a loan granted by a
- a loan given by the central
- Which of the following would be used when an immediate exchange of information is required? B is the answer -Business Management 2004 WASSCE
- A cheque can be drawn only on a C is the answer -Business Management 2004 WASSCE
- deposit account
- savings account
- current account
- fixed deposit account
- In an insurance transaction utmost good faith means D is the answer -Business Management 2004 WASSCE
- parties to the transaction should believe in what they do
- claims for compensation must not be exaggerated
- only people with high levels of income are required
- all relevant information must be disclosed
- Which of the following is not considered in market segmentation? D is the answer -Business Management 2004 WASSCE
- Geographical variables
- Demographic variables
- Buyer-behaviour variables
- Price change variables
- Which of the following operates primarily as a commercial bank in Ghana? B is the answer -Business Management 2004 WASSCE
- Agricultural Development Bank
- Standard Chartered Bank
- National Investment Bank
- Merchant Bank
- Which of the following institutions is responsible for collecting personal income tax? D is the answer -Business Management 2004 WASSCE
- Prices and Incomes Board
- Customs, Excise and Preventive Service
- VAT Secretariat
- Internal Revenue Service
- An application for the position of an accounts clerk should be directed to the C is the answer -Business Management 2004 WASSCE
- chief accountant
- managing director
- personnel manager
- general manager
- Which of the following does not belong to the top management in a firm? A is the answer -Business Management 2004 WASSCE
- Works Superintendent
- Board of Directors
- Company Secretary
- Managing Director
- When a business participates actively in the effort to ensure cleaner environment, it is carrying out a A is the answer -Business Management 2004 WASSCE
- social responsibility
- government policy
- business objectives
- business commitment
- Which of the following is a short-term source of business finance? B is the answer -Business Management 2004 WASSCE
- Mortgage loans
- Ordinary shares
- Which of the following is the most reliable way of collecting government revenue in developing countries? A is the answer -Business Management 2004 WASSCE
- Direct taxes
- Flat rate taxes
- Indirect taxes
- Proportional taxes
- Which of the following is not a component of the hardware of a computer? C is the answer -Business Management 2004 WASSCE
- Disk storage devices
- Input devices
- Operating programs
- Central processing unit
- Market research is carried out by enterprises to D is the answer -Business Management 2004 WASSCE
- determine product life cycle
- Know the level of business profit
- Know the level of employment
- Know the needs of customers
- Which of the following is not a negotiable instrument? A is the answer -Business Management 2004 WASSCE
- Bill of exchange
- Promissory note
- All partners in a general partnership D is the answer -Business Management 2004 WASSCE
- have limited liability
- have equal rights
- have to be active partners
- have unlimited liability
- A person who takes part in the formation of a company is called A is the answer -Business Management 2004 WASSCE
- An offer is rejected when the B is the answer -Business Management 2004 WASSCE
- offeror revokes the offer
- Offeree makes a counter offer
- Offeree telephones to accept the offer
- Offeror posts an acceptance letter
- A debenture holder is a D is the answer -Business Management 2004 WASSCE
- part owner of the company
- shareholder of the company
- debtor to the company
- creditor to the company
- Which of the following is an example of sole proprietorship? C is the answer -Business Management 2004 WASSCE
- Acquah and Acquah Garages
- ABC Company Ltd
- Kofisco Enterprise
- Messrs Lobovi and Sons
- Which of the following is a source of funding for a public corporation? B is the answer -Business Management 2004 WASSCE
- Ordinary shares
- Government funding
- A cheque that a bank refuses to pay for lack of funds in the drawer’s account is called C is the answer -Business Management 2004 WASSCE
- crossed cheque
- stale cheque
- dishonoured cheque
- bearer cheque
- Which of the following is not true of consideration in the law of contract? A is the answer -Business Management 2004 WASSCE
- Consideration must necessarily be adequate.
- Consideration must have economic value.
- Consideration must be legal.
- Consideration must move from the promisee.
- Which of the following is not a source of finance to a sole proprietor? D is the answer -Business Management 2004 WASSCE
- Personal savings
- Bank loans
- Which of the following would be used to send the same message to different people in different firms? D is the answer -Business Management 2004 WASSCE
- Written notice
- Confidential report
- Circular letter
- A daily rated employee of a firm will receive C is the answer -Business Management 2004 WASSCE
- The tax levied on imported goods is known as B is the answer -Business Management 2004 WASSCE
- export duty
- custom duty
- income tax.
- excise duty
- A manager who gives part of his legitimate duties to a subordinate is practicing A is the answer -Business Management 2004 WASSCE
- span of control
- unity of command
- A decision taken at the supervisory level of management is called C is the answer -Business Management 2004 WASSCE
- strategic decision
- tactical decision
- operational decision
- basic decision
- A company that winds off its activities after paying all its creditors is said to D is the answer -Business Management 2004 WASSCE
- have high liquidity ratio
- be bankrupt
- be sold out
- go into liquidation
- The rules setting out the objects of a company and the manner in which its business shall be conducted is called A is the answer -Business Management 2004 WASSCE
- certificate of incorporation
- certificate to commence business
- A sleeping partner in a partnership is one C is the answer -Business Management 2004 WASSCE
- whose liability is limited
- who takes decisions about the business
- who does not take active part in the business
- who only lends his name to the business
- Establishing standards, monitoring results and correcting deviations are activities relating to B is the answer -Business Management 2004 WASSCE
- Activities involved in leading as a management function include C is the answer -Business Management 2004 WASSCE
- forecasting the future situation
- setting objectives for the organization
- breaking work into duties and grouping them into positions
- communicating and explaining objectives to subordinates
- Decision making involves A is the answer -Business Management 2004 WASSCE
- choosing a course of action from among alternatives
- setting standards of performance
- measuring performance against standard
- identifying and analyzing a specific problem
- The level of centralization in an organization C is the answer -Business Management 2004 WASSCE
- decreases as the organization expands
- increases as the number of line managers increases.
- decreases as more decisions are taken at lower levels
- increases as more decisions are taken at lower levels
- The intended audience of any form of communication is referred to as C is the answer -Business Management 2004 WASSCE
- Which of the following is a form of non-verbal communication? A is the answer -Business Management 2004 WASSCE
- Dress and general appearance
- Policies and procedures
- Memos and notices
- Letters and announcements
- The legal ability to enter into a contractual relationship is known as B is the answer -Business Management 2004 WASSCE
- mutual assent
- The difference between a country’s visible exports and visible imports over a period of time is called D is the answer -Business Management 2004 WASSCE
- balance on current account
- terms of trade
- balance of payments
- balance of trade
- Entrepreneurs are often described as A is the answer -Business Management 2004 WASSCE
- risk takers
- purchasers of goods
- preference shareholders
- hard bargainers
- A complaint made by an employee about a job condition that creates dissatisfaction is called D is the answer -Business Management 2004 WASSCE
I’m sure you are going to evaluate your performance with regards to the objective questions above. Let me emphasize again that the answers to the objective questions can be found by clicking on the symbol (˅) just after the question.
Business Management 2004 WASSCE-Past Questions and Answers- Paper 2
This paper a case study and nine other theory questions. Please read the case carefully before attempting the questions. As I have always,said, this Business Management questions and answers needs critical reading and understanding of the questions, most especially, the case. As I have always said, it is better to first answer the questions on your own before referring to the answer from the drop-down symbol.
Let me show you how to find the answers to the Business Management Questions – Paper 1, Section B. When you read a question, just click on this symbol (˅) beside it, and the answer will drop down for you. It is a very simple task.
Read the following case and answer the questions that follow:
WHITE ROSE COMPANY LTD.
White Rose Company Ltd. has been in the floral business for the past twenty years. It started as a manufacturer of artificial flowers of all kinds for all occasions. With a workforce of 150, the company was able to satisfy the needs of its customers and also make a reasonable profit.
After ten years of, operation in the nation’s capital, Mr. Koyo, the Managing Director decided to open sales outlets in all the regional capitals in the country. Sales increased as a result and the company recorded a 200% increase in sales figures over a three-year period.
The company has a dynamic and proactive management team which is committed to the success of the company. The management of the company maintained an open-door policy whereby employees’ contributions and suggestions for running the company were valued.
Three years ago, the company decided to expand its operations by growing and selling natural flowers in addition to the artificial.ones. This has increased the profits of the company. Mr. Kumi, the former assistant manager in charge of operations was placed in charge of the cultivation of the fresh flowers. He recently started a training school for horticulturists. This has given the company more popularity and goodwill. The White Rose Company Ltd. is now the leading floral company in the country.
1. (a) Explain three factors that contributed to the success of White rose Company Ltd.
Factors that contributed to the success of White Rose Co. Ltd. include:-
- The drive and initiative of the Managing Director, Mr. Koyo. His decision to
open sales outlets in all the regional capitals in the country contributed to the success of the company. The company recorded 200% increase in sales figures over a three-year period.
- The management team was dynamic and proactive. A competent and committed management team therefore led to the success of the company.
- The flexible management style of the company by which employees are encouraged to contribute to the success of the business. The open-door policy whereby employees contributions and suggestions for running the company were valued, motivated them to work hard.
- Diversification The company expanded its operations by growing and selling natural flowers in addition to the artificial ones.
1. (b) What type of business unit is White your answer.Rose Company Ltd.? Give reasons for
It is a limited liability company because the name of the business organization ends with the word “Limited”.
1. (c) State three characteristics of the bu siness unit you have identified in (b).
- It cannot raise capital by making invi or it cannot be listed on the stock exctation to the general public to buy shares hLang
- It is a separate legal entity and can the market. It can therefore sue and be sued.
- Liability of members is limited to the amount invested.
- Difficulty in transferring shares.mount they have invested.
1. (d) Mention two other means of upwar cl communication that the employees of the company could use to offer suggestions.
- Suggestions box
- Durbar or meetings
- Reports Letters
1. (e) What two contributions did Mr. Kumi make towards the success of the company?
- He was successful as the company’s operations manager.
- He was instrumental in securing export markets for the company’s fresh flowers to earn foreign exchange.
- His initiative led to the establishment of the training school for horticulturists which gained the company more popularity.
1. (f) If the company’s sales amounted to 36,000,000.00, which is a 200% increase from the previous year, calculate the sales figure for the previous year.
Previous year’s sales % = 100%
Percentage increment = 200%
This year’s sales = 36,000,000 which is equivalent to 300% (i.e. 100%+200%)
Therefore, this is how to find the answer:
100/300 x 36,000,000
Therefore the previous year’s sales was 12,000,000.00
2. (a) State three uses of downward communication in business organizations.
- It enables a manager/superior to give instructions or orders to his subordinates.
- It makes it possible for a manager to inform subordinates about promotion or transfer.
- It enables a manager to inform subordinates of appraisal results.
- It also makes it possible for managers to communicate company policies and address grievances of subordinates.
2. (b) Explain six ways by which a manager can improve his communication with subordinates.
- He must avoid the use of technical jargons and be clear in the message he sends to his subordinates.
- He must provide an opportunity for his subordinates to express their feelings.
- The information should always be disseminated at the right time to the recipient to be effective.
- The purpose or objective of the communication must be established. Before
information is sent, it is important to determine whether the message is to seek information, convey information or instruct some one to take action.
- The manager should select the right and appropriate channels of
He should use formal channels rather than the grapevine. He should also hold regular meetings with his subordinates to teach them about how to communicate effectively and efficiently.
- He must communicate the message at the right time and at the right place.
He must not overload the receiver. In other words, information given to a subordinate should not be too much for him/her to absorb.
- He must provide all the necessary facts and avoid the distortion of information.
3. (a) What is a contract of insurance?
A contract of insurance is a contract in which one party called the insurer in consideration of a periodic payment called the premium undertakes to indemnify the other party called the insured in the event of loss or damage arising out of the event insured against.
3. (b) Mention and explain any four principles on which insurance is based.
Utmost good faith (Uberrima Fide):- This is a principle which requires both the insured and the insurer in an insurance contract to make full disclosure of all material facts. The insured must answer all questions put to him by the insurer in truthfulness without hiding any material fact and the insurer too must explain to the insured the terms of the insurance concerning the exact cover. Failure on both parties to do this will render the contract null and void.
- Insurable interest:- The basis of this principle is that the one insuring (owner) must suffer a loss or damage on the happening of the event stipulated in the contract. To have an insurable interest, one must be in danger of suffering some loss or incurring some liability should the thing concerned be destroyed or damaged in anyway. Therefore one can insure his own life and property but not that of his friend. This principle therefore prevents policyholders from profiting out of the insurance company.
- Indemnity:- This principle refers to the restoration of the insured to his former position or as nearly as possible but not over. The concept of indemnity as regards to insurance is that, the insured party should be put to the exact financial position he would have occupied if an accident had not occurred.
Subrogation:- The word “subrogate” means “to step into the place of’. Under this principle, after the insurance company has paid compensation on a property, it has the right to takeover the property concerned, so that the insured does not make a gain through the process.
Contribution:- According to this principle, an insured who has taken one insurance policy with more than one insurer (insurance company) cannot be compensated by all of them separately in the event of an accident but rather they are to contribute to compensate him or restore him to the position in which he was before the accident.
- Proximate Cause:- This principle says that if we insure against a certain eventuality (risk), we are entitled to compensation only if that eventuality is the immediate cause of the loss. Anything excluded from the contract which turns out to be the proximate cause of an unfortunate event would not make the insurance company liable. In simple terms, proximate cause is a situation where an insured cannot claim compensation if a property which he has insured against fire has been stolen.
4. Mention and explain the steps to be followed by a Personnel Manager when recruiting workers for a firm.
Advertisement in Newspapers/Notice Boards etc.: This translates the contents of the job description and job specification into an advert which is inserted in the newspapers/notice boards. It may state the job title, qualifications, age, closing date, etc. it may also state the relevant documents to be submitted. It may state the method of submission of application etc. copies of the adverts may be placed on the Company’s Notice Board(s).
Short-Listing: All applications received within the period must be screened and all documents attached should be scrutinized. It involves the sorting out or elimination of those applications judged unqualified for the job. Those who appear qualified are short-listed and written to, inviting them to appear on a given date for an interview.
Interview: An interview panel is constituted and furnished’with an interview plan (programme). Applicants appear before the interview panel and are interviewed. All documents tendered in by the applicants are inspected and assessed. Interviewing is a crucial part of the selection process because it gives the organization an opportunity to assess the applicants directly. The interview may include written or practical test, where necessary.
Medical Examination: Applicants who pass the interview are made to undergo a Medical Examination either by the Company’s own Doctors (Medical Board), or by a recognized hospital, to determine their fitness for the job and whether they have any hidden disease. Applicants who might have contagious diseases will be rejected.
Selection and Placement: Applicants who pass the interview and medical examination are selected and written to. The appointment letters indicate the conditions of service and the contract of service. Unsuccessful applicant may be written to.
- Induction/Orientation: Subsequently, an induction course is organized for the candidates appointed. The induction course is meant to familiarize the workers with their new place of employment. It takes the form of introducing new employees to existing staff, visits to the plant and other departments, informing them of their duties and responsibilities etc.
5. Explain five advantages and four disadvantages that may arise from the use of computers in a business organization.
Advantages of the use of computer include:
- Computers maintain a high standard of accuracy and efficiency in processing and analysing data.
- A computer can carry out complex and complicated exercises at a very high speed than can be done manually.
- Computers relieve qualified and entrepreneurial manpower from routine work.
- With the use of a computer, data security can be maintained through the use of passwords.
- Computers ensure timeliness in the processing and production of data and other information.
- It saves cost through storage and economic use of time and space.
- Flexibility and ease of effecting corrections and adjustments to data.
Disadvantages of the use of computer include:
- Large capital is required to be invested in the purchase an installation of a computer. It also involves high maintenance and repair cost.
- There is scarcity of qualified computer experts with the requisite training to operate the computer effectively and efficiently.
- Computers render some clerical staff redundant. Displacement of clerical staff leads to fear and resentment among staff and therefore possible low morale.
- In the event of computer breakdown, work slows down and back log of work is created which could take time to get done.
- Virus infection may lead to loss of information or data.
- Continuous use of the computer creates boredom.
- There is a constant need to update the computer software.
- Rapid change of technology renders computers obsolete in no time.
- Work comes to a halt when there is power failure. It cannot be used in areas where there is no electricity.
6. (a) Give six reasons for conducting a job interview.
- It enables the interviewer or the employer to determine a candidate’s level of intelligence.
- It enables the employer to give sufficient information about his organisation, the job and the existing employees. This will enable the applicant to make a decision whether to accept or reject the job if offered.
- It enables both the employer and the candidate to explain further, the information supplied under the application forms or blanks.
- It provides the opportunity to negotiate pay.
- It gives the employer an opportunity to obtain more information about the applicant and to assess his suitability for the job.
- It provides the applicant an opportunity to know more about the organization, the job he has applied for and the employees of the organization.
- It enables the employer to cross check the applicant’s original documents or educational certificates.
- It enables the employer to have a critical view of the physical appearance of the applicant and his level of intelligence.
6. (b) Identify and explain four reasons why new products sometimes fail after a short period of introduction.
Reasons why new products fail:
- Lack of effective promotion effort: Consumers must always be informed when new lines of products are introduced on the market. If promotion or advertising is inadequate or ineffective, the products are likely to fail since consumers will not be aware of their existence.
- Inadequate Market Survey: Inadequate market survey may include wrong estimation of expected sales volume of new products, inability to determine buying motives, and habits, and misjudgment on what products consumers prefer most.
- Wrong Timing of Introduction: New product is likely to fail if it is introduced on the market at a wrong time. Examples are seasonal goods like Christmas decorations, toys for children etc.
- Competition: New products normally fail as a result of keen competition they face with other rival products.
- Poor Products/Product Deficiencies: If new products are inferior or sub- standard, customers might not patronize them and the products are likely to fail.
- High Production Cost: Sometimes the cost of production and other expenses are greater than anticipated. If this happens, it may lead to higher unit selling price in relation to those of other competitors. It may, therefore, lead to lower sales volume and subsequently lower profit.
- Poor distribution policy or stunting/failure to use appropriate channels.
7. (a) Explain the term organizing in management.
Organizing is the grouping of activities necessary to attain organizational objectives, the assignment of each group to a manager with authority and responsibility to supervise it and making provision for vertical and horizontal co-ordination in the enterprise structure or it is the division and grouping of activities of the enterprise and the allocation of duties, responsibilities and authority to carry them out.
7. (b) State and explain any five principles of good organization.
- Unity of Command: Every person should be immediately responsible or accountable to one person, but not to several supervisors. This is to ensure that a worker is not confused by receiving conflicting instructions from several different supervisors at the same –
- Parity of Authority and Responsibility: Authority granted should be commensurate with responsibility in order not to kill worker-initiative, and to forestall frustration.
- The Principle of Specialization/Division of Labour/Division of Work: Maximum use must be made of specialization. Make maximum use of special skills of workers.
- Distribution of Work: There should be even and fair distribution of work
among the workers.
- The Span of Control: The span of control should be appropriate according to
the quality of staff, variety of work and the supervisor’s ability. Span of control refers to the number of subordinates whose work or activities a manager directly supervises. A number of subordination under a supervisor must be restored.
- Unity of Objective: Members of the organization should work toward a common goal.
- Chain of Command: There should be clear line of authority and responsibility from the top to the bottom of the organization.
- The number of levels of management should be kept at a minimum so as to ensure good lines of communication.
8. (a) Explain the term collateral security as used in banking.
A collateral security is any asset or property of reasonable monetary value offered by a prospective borrower to a lending financial institution (bank) as a guarantee of the repayment of the loan. The bank may fall on the collateral security and realize it in the event of the borrower’s failure to repay all or part of the loan.
8. (b) Describe any five functions of a commercial bank.
The following functions are performed by Commercial banks:
- Commercial Banks accept deposits from the general public including savings
account, Deposit account and current account. They therefore provide a safe place for keeping customer’s money.
- Commercial banks grant credit facilities to their customers in the forms of
loans and overdrafts. They therefore provide businessmen with money to finance their activities.
- Commercial banks apart from keeping money also keep customers valuables
such as wills, certificates, life policies, securities as well as title deeds.
- Commercial banks make payments on behalf of their customers upon the
written consent of the customers. They also receive dividends and other monies on behalf of their customers.
- Commercial banks serve as trustees and referees for their customers, recommending such customers when necessary to other banks.
- Commercial banks also reduce unemployment by employing people.
- They also provide export advice on investment and business opportunities to their customers.
9. (a) Identify any six stakeholders of a business organization.
- Creditors Labour Unions
9. (b) Explain the responsibilities that a business stakeholders.has towards each of them
- The State/Government: It is the organization to abide by all the laid-down business operations and pay their taxes.
- Consumers: To contribute to the growth goods and services at reasonable prices. responsibility of every business government regulations relating to of the economy by offering quality
- Employees: Employees must be treated fairly by going according to the provisions of the Collective Bargaining Agreement and adjusting some of the bad provisions where applicable or management of every business has the responsibility to ensure that its employees are .satisfied by providing them with attractive working conditions and other incentives such as free housing, medical care and training.
- Community: An, organization must contribute to the immediate environment
in which it operates. It can do this by developing certain infrastructure like schools, hospitals etc. and employing some of its staff from the locality.
- Shareholders: Shareholders are the owners of a business. Organizations must pay a fair return on investment to their shareholders as incentive and provide them with up-to-date information.
- Competitors: Competitors are business rivals who operate similar
Every organization is expected to ensure that its activities do not undermine that of its competitors.
- Suppliers: Suppliers are trading partners who sell goods or services either for cash or on credit to businesses. Businesses are expected to discharge certain responsibilities to their suppliers such as paying for credit purchases on due dates or promptly paying for supplies.
- Labour Unions: These are associations of employees who come together to protect their interest. It is therefore the responsibility of a business organization to relate cordially to the union in the industry in which it operates.
10. (a) State and explain six essential elements of a valid contract.
- A contract is a legally enforceable agreement, and must be made either by deed or for a valuable consideration. For a contract to be valid, the following important elements must be present.
- There must be agreement between the contracting parties:- One party must make an offer to the other indicating his willingness to be bound by the contract and the other must also indicate acceptance without any conditions being stipulated.
- Intention to create legal relations: – The agreement must be intended to be subject to an action in a court of law. That is the parties to the contract must intend that, where one party fails to perform his promise under the contract, the other can sue him for damages or be compelled in the law court to perform it.
- Consideration: – Each party to the contract must give valuable consideration. This means that each party must give up something or make a promise in return for a benefit received or the other party’s promise.
- Legality: – All contracts must be made legally. The contract must not be for an illegal purpose or contain terms, which are considered to be contrary to public policy.
- Formality: – Formality is one of the elements of a valid contract and it refers to the form in which the law requires the contract to take. All speciality contracts must be made formally. They must be written, signed, sealed and delivered.
- Capacity: – Both parties must have contractual capacity. Each party to a contract must be of age that is 18 years and above, soundness of mind and other requirements for entering into the contract. The law therefore prohibits children, the insane, drunken persons from entering into a valid contract.
10. (b) Under what six circumstances would a cheque be dishonoured?
- When the words and figures of the amount on the cheque do not agree.
- When the drawer has no sufficient amount in his account.
- Where there is a different signature on the cheque.
- When there is no signature at all on the cheque.
- When there is no date on the cheque.
- When the bank has been informed of the drawer’s death or bankruptcy.
- When there is an alteration on the cheque without proper endorsement.
- When the cheque is stale.
- When payment has been stopped by the drawer
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