CMA Foundation Fundamentals of Laws and Ethics Syllabus

Fundamentals of Laws and Ethics syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Fundamentals of Laws and Ethics in CMA Foundation, not a summary of it.

1. 1

   Indian Contract Act, 1872

   7 topics

   • Nature and Kinds of Contracts
   • Offer and Acceptance
   • Consideration
   • Capacity of Parties
   • Free Consent
   • Legality of Object and Consideration
   • Void Agreements
2. 2

   Sale of Goods Act, 1930

   5 topics

   • Formation of Contract of Sale
   • Conditions and Warranties
   • Transfer of Ownership
   • Performance of Contract of Sale
   • Unpaid Seller
3. 3

   Negotiable Instruments Act, 1881

   5 topics

   • Types of Negotiable Instruments
   • Parties to Negotiable Instruments
   • Negotiation and Endorsement
   • Dishonor of Negotiable Instruments
   • Noting and Protest
4. 4

   Company Law

   7 topics

   • Introduction to Company Law
   • Types of Companies
   • Formation of a Company
   • Memorandum and Articles of Association
   • Prospectus
   • Share Capital and Debentures
   • Company Meetings
5. 5

   Ethics

   4 topics

   • Introduction to Ethics
   • Importance of Ethics in Business
   • Corporate Governance and Ethics
   • Corporate Social Responsibility

Fundamentals of Laws and Ethics flashcards for CMA Foundation

22 of 69 cards from the Fundamentals of Laws and Ethics deck — real questions with worked answers.

1. What is a contract under the Indian Contract Act, 1872?

   A contract is an agreement enforceable by law (Sec. 2(h)). It is an agreement (offer + acceptance) that creates legal obligations between the parties.

2. State the formula/relationship between agreement and contract.

   Contract = Agreement + Enforceability by law. An agreement = Offer + Acceptance. Thus all contracts are agreements, but all agreements are not contracts.

3. On the basis of enforceability, what are the kinds of contracts?

   Valid, Void, Voidable, Illegal, and Unenforceable contracts.

4. Distinguish between a void contract and a voidable contract.

   A void contract ceases to be enforceable by law (no legal effect). A voidable contract is valid but can be set aside at the option of the aggrieved party (e.g., consent obtained by coercion/fraud).

5. What is an express contract versus an implied contract?

   An express contract is made by words spoken or written. An implied contract arises from the conduct of the parties or circumstances, not by words.

6. What is a quasi-contract?

   A quasi-contract is not a real contract but an obligation created by law to prevent unjust enrichment, treating parties as if a contract existed (e.g., Sec. 68-72, supply of necessaries, payment by an interested person).

7. Define an offer (proposal) under Sec. 2(a) of the Indian Contract Act.

   When one person signifies to another his willingness to do or abstain from doing anything, with a view to obtaining the assent of the other to such act or abstinence, he is said to make a proposal/offer.

8. What are the essential rules of a valid acceptance?

   Acceptance must be absolute and unqualified, communicated to the offeror, in the prescribed/reasonable manner, given while the offer is alive, and made by the person to whom the offer was made.

9. Distinguish between an offer and an invitation to offer.

   An offer is a definite proposal that becomes a contract on acceptance. An invitation to offer (e.g., goods displayed in a shop, advertisements, tenders, auction notices) merely invites others to make offers.

10. When is communication of an offer and acceptance complete (postal rule)?

    Communication of an offer is complete when it comes to the knowledge of the offeree. Acceptance is complete as against the offeror when the letter is posted, and as against the offeree when the letter reaches the offeror.

11. Define consideration under Sec. 2(d) of the Indian Contract Act.

    When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, does or abstains from doing, or promises to do or abstain from doing something, such act, abstinence or promise is called consideration.

12. What are the essentials of valid consideration?

    It must move at the desire of the promisor, may move from the promisee or any other person, may be past/present/future, must be real and lawful, and need not be adequate.

13. State the general rule and exceptions regarding 'No consideration, no contract.'

    General rule: an agreement without consideration is void (Sec. 25). Exceptions: natural love and affection (written & registered, near relatives), compensation for past voluntary service, promise to pay a time-barred debt (written & signed), completed gifts, and agency.

14. Who are incompetent to contract under Sec. 11?

    A minor, a person of unsound mind, and a person disqualified by law (e.g., insolvent, alien enemy, convict) are incompetent to contract.

15. What is the legal status of an agreement with a minor?

    An agreement with a minor is void ab initio (void from the beginning). A minor can be a beneficiary, cannot ratify on majority, and is liable for necessaries supplied (from his estate).

16. When is a person said to be of sound mind for contracting (Sec. 12)?

    A person is of sound mind if, at the time of making the contract, he is capable of understanding it and forming a rational judgment as to its effect upon his interests.

17. Define free consent under Sec. 13 and 14.

    Consent means two parties agreeing upon the same thing in the same sense (consensus ad idem). Consent is free when not caused by coercion, undue influence, fraud, misrepresentation, or mistake.

18. Distinguish between coercion and undue influence.

    Coercion (Sec. 15) is committing/threatening an act forbidden by IPC or unlawfully detaining property to obtain consent. Undue influence (Sec. 16) is dominating the will of another due to a relationship to gain an unfair advantage.

19. What is fraud under Sec. 17?

    Fraud is a false representation of a material fact made knowingly, or without belief in its truth, or recklessly, with intent to deceive the other party and induce him to enter the contract (includes active concealment and false promises).

20. How does fraud differ from misrepresentation?

    Fraud is an intentional false statement made to deceive. Misrepresentation (Sec. 18) is an innocent/unintentional false statement believed to be true. Both make a contract voidable; only fraud gives a right to claim damages.

21. What is the effect of a bilateral mistake of fact on a contract?

    A bilateral (mutual) mistake of essential fact makes the agreement void (Sec. 20). A unilateral mistake of fact generally does not affect the contract's validity. A mistake of law of the country is no excuse.

22. What is meant by lawful object and lawful consideration (Sec. 23)?

    The consideration or object is unlawful if it is forbidden by law, defeats the provisions of any law, is fraudulent, involves injury to person/property, or is immoral or opposed to public policy. Such agreements are void.

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