A forward contract is an agreement between two parties where, one party agrees to buy second party asset on a particular future date at a fixed price. This is a type of derivative financial instrument. It has right and obligation to be executed.In this contract, a buyer is called LONG and seller is called SHORT. Banks, investors and hedge funds use forward contracts. Here, both parties will hold their position till contract expires.Components of forward contractsAsset − underlying asset which is specified in contractExpiration date − date at which asset is delivered and paidQuantity − amount or size of asset which ... Read More

ConsentWhen two or more persons agree upon same thing and in same sense, it is consent.If a contract to be valid the consent of parties should be genuine. Consensus-ad-idem principle followed by parties in contract. Parties should have same understanding on subject matter in contract. Mere consent is not enough, free consent is necessary for a contract to be enforceable. Factors which invalidate consent are coercion, undue influence, fraud and misrepresentationFree consentIf consent is not caused by a) coercion (section 15), b) undue influence (section 16), c) fraud (section 17), d) misrepresentation (section 18) or mistake (sections 20, 21, 22).According ... Read More

In forward contract, terms are negotiated between parties. In this, parties trade underlying asset a certain or agreed price at particular future time. This contract differs from future contract (standardized form of forward contract) whereas in future contract parties buy or sell underlying financial asset at particular rate in future time. Future contracts are traded in exchanges and forward contract are in over the counter (OTC).By seeing their overview both contracts look same but when you go deep or dig further then you can see in what aspects they will differ and their grounds. Before digging deep into contracts let ... Read More

Job costing is a costing method which is executed the work according to specifications of the customer. This production process depends on orders received from customers. This cost is ascertained for each job separately and it vary from customer to customerObjectivesAscertain cost, profit & loss of each jobProfitable and non-profitable jobs are identifiedCost controllingActual cost to estimated cost are comparedCharacteristicsAdopted by both non0manufacturing and manufacturing concernsGoods produces according to customer specifications follows this methodWork is analyzed in different jobsSeparate account is maintainedEach job is treated separatelyProduction is not continuous and intermittentProfit & loss made on each job is found separatelyAdvantagesGives ... Read More

Terms Bid and offer (offer also called as ASK) is a two-way price which indicates best price at which securities can be bought and sold at point of time. Bid price is the minimum price whereas offer price or Ask price is minimum price where securities can be bought and sold. Difference between bid price and ask price gives the price called spread. Spread and liquidity are inversely proportional that means if spread is smaller then liquidity will be greater for a given securityFor example, Market maker quoting a price of $13.50/$13.75 for XYZ company stock. Mr. x Ask for ... Read More

The main function of a contract is to record transactions between entities that exist between parties legally. Contracts can be as simple as handshake between people or as complex deal between companies (which takes months of negotiations and preparation of pages of legal terms with help of team of lawyers). Components of contract are Offer (promiser made an offer to promisee), Acceptance (Promisee accepts the offer made by promisor), Capacity (ability of promisee and promisor to fulfill offer and acceptance), Consideration (Obligation are created and made accepted), creating legal Document (agreement enforced by court of law), Certainty (No ambiguity) and ... Read More

If an agreement has legal enforceability then those are called as Contracts. Contracts are categorized into executed and executory contract. In executed contract, parties involved in contract have performed their obligation and nothing is left. Whereas executory contract, obligations of parties are yet to complete. Unilateral contract and bilateral contracts comes under executory contractAs the name suggest in unilateral contracts obligation of party is due whereas in bilateral contracts obligations are both parties are due.Unilateral contractIt is one side contract. One party already performed his part at the time of contract and only one party or remaining party in the ... Read More

Traditional commerce is part of a business that has all activities that facilitate exchange. Trade and auxiliaries of trade are kinds of traditional commerce whereas e-commerce refers to the exchange of goods & services, funds/information between customer and business by means of an electronic networkThe major differences between Electronic commerce (E-commerce) and traditional commerce are as follows −E-commerceTraditional commerceIt is cost-effective.It is less cost-effective than E-commerce.No role of middlemen.Middlemen have a role to play in traditional commerce.Less overhead cost.High overhead cost than E-commerceTakes less time.Takes more time.Better connectivity.No better connectivity.Size of business is easily expandable.Size of business is not easily ... Read More

Offer and invitation to offer are two different terms having separate meanings. An offer is a proposal and invitation of offer is to invite some body to make a proposal. Offer leads to enter into contract while invitation of offer leads to offer.Now let us understand the meaning of both separatelyOfferIt is the expression of person to show their willingness to another to do something or not to do something. Offer must be certain, complete and define in their respects. Offer is legally bind and acceptance of offer results in valid contract.Types of offersGeneral offerCross offerCounter offerStanding offerSpecific offerInvitation to ... Read More

Before going for differences, first let us understand the difference between contract and agreement and their typesAgreementAgreement is commitment made or proposal made by a person or a promisor to offer something to another person or a promisee and that promisee accepts that proposal with same considerations. Then it is called as agreement.Types − some of types of agreements areVoid agreementIllegal agreementImplied agreementExpress agreement etc.ContractIf an agreement is legally enforceable for doing or for not doing then it is called as contract. Contract must contains offer, acceptance, unconditional considerations and adequate. These are also called as elements of contract.Types − ... Read More