Business Law – Vocabulary Flashcards (Foundation Level)

Vocabulary flashcards covering key terms, concepts, and definitions drawn from the ICAN Business Law syllabus notes.

Common law

Law developed from judicial decisions and customary practice, not statutes.

Equity

Fairness-based branch of law that supplements common law to mitigate harsh outcomes.

Doctrines of equity

Equitable remedies and principles (e.g., injunction, specific performance, rescission, rectification) used when strict application of common law is unfair.

Statutes of General Application (SOGA)

English general laws adopted in Nigeria (e.g., Sale of Goods Act) that apply unless a local statute exists.

Nigerian Constitution

The supreme law of Nigeria; establishes federal structure, fundamental rights, and the rule of law.

Hierarchy of courts

Order of court authority: Supreme Court, Court of Appeal, Federal High Court, State High Courts, and lower courts.

Ratio decidendi

The legal reasoning or principle in a case that determines the decision and binds later cases.

Obiter dictum

Comments made by judges in a decision that are persuasive but not binding as precedent.

Stare decisis

Principle that courts should follow established precedents.

Exclusive legislative list

Subjects on which only the federal (national) government may legislate.

Concurrent legislative list

Subjects where both federal and state governments may legislate; federal law prevails if inconsistent.

Residual legislative list

Subjects reserved for state legislatures alone.

Repugnancy test

A customary law must not be repugnant to natural justice, equity, and good conscience.

Incompatibility test

A customary law must not be directly or indirectly incompatible with Nigerian law.

Public policy test

Customary law must not contravene public policy.

Customary law

Rules of a community, often unwritten, applying to members of that community.

Ethnic customary law

Customary law indigenous to a specific ethnic group.

Islamic customary law

Islamic-based customary law applicable to Muslims in Nigeria.

Judicial precedent

Decision of a court that establishes a principle of law to be followed in future cases.

Ratio decidendi vs Obiter dictum

Ratio = binding reason for decision; Obiter = non-binding remarks.

Nigerian legal system (sources)

Sources include English law, Nigerian legislation, customary law, judicial precedent, and international law.

Salomon v Salomon & Co. Ltd

landmark case establishing corporate personality and separate legal identity of a company.

Corporate personality

A company is a separate legal entity distinct from its shareholders.

Limited liability

Shareholders’ liability is limited to the amount unpaid on their shares; veil protects members from company debts.

CAC (Corporate Affairs Commission)

Regulator that registers and regulates companies and business names under CAMA.

Memorandum of Association

Constitution of a company outlining external powers and objects.

Articles of Association

Internal rules governing the management of a company and relations among members.

Pre-incorporation contracts

Agreements entered into before a company is formed; may be ratified after incorporation.

Veil of incorporation

The legal distinction between a company and its members; may be pierced in certain circumstances.

Share

A holder’s equity interest in a company, with rights to dividends, voting, and transfer (subject to restrictions).

Minimum issued share capital

Legal minimum capital for registration: private company N100,000; public company N2,000,000.

25% subscription rule

At least 25% of authorised share capital must be subscribed by members at all times.

Transfer of shares

Process of transferring share ownership, subject to the company’s articles; may be refused under certain conditions.

Transmission of shares

Transfer of shares by operation of law (e.g., death or bankruptcy of a holder) to survivors or personal representatives.

Board of directors

Governing body responsible for management, fiduciary duties, and corporate policy.

Independent directors

Directors who are not involved in day-to-day operations and can provide unbiased oversight (often required in public companies).

Company secretary

Officer responsible for corporate governance, compliance, and statutory filings; qualifications vary (ICSAN, legal practitioner, etc.).

Foss v Harbottle

Indoor management rule; majority decisions bind the company unless exceptions apply (oppression, misfeasance).

Audit committee (CAMA)

A board committee of financially literate members that oversees external auditors and reporting.

Annual returns

Yearly filing with the CAC detailing company affairs; penalties for late submission.

Directors’ fiduciary duties

Duty of utmost good faith, acting in the company’s best interests, avoiding conflicts of interest, and proper use of powers.

Voluntary winding up

Winding up initiation by the company or creditors under statutory rules, often solvency-based.

Insolvency tests

Tests include inability to pay debts after demand, judgment debts, liabilities greater than assets.

Receivership

Secured creditors appoint a receiver to manage and realise the debtor’s assets.

Floating charge

An equitable charge over a class of changing assets; crystallises into a fixed charge on certain events.

Fixed charge

Charge on a specific asset; priority over floating charges for that asset.

Negative pledge clause

Covenant preventing new charges that would rank ahead of an existing floating charge.

Debenture

A debt instrument; can be secured by charges over company assets.

Transfer of ownership (minimum capital rules)

Regulatory rules about transfer of shares and capital maintenance in a company.

Discounted capital maintenance (dividends)

Rule against paying dividends out of capital; profits must fund dividends.

Lifting the veil (veil piercing)

Court action to disregard corporate personality to hold shareholders liable.

Members vs shareholders

Members of a private company vs shareholders with rights defined by the Articles.

Share classes (ordinary, preference, founders’)

Different rights and obligations attached to various classes of shares.

Pre-incorporation contract (Section 96 CAMA)

Post-incorporation ratification of pre-incorporation contracts.

Corporate governance

Systems and processes for directing and controlling companies; board oversight and accountability.

ADR (Alternative Dispute Resolution)

Group of dispute resolution methods (negotiation, mediation, arbitration) outside court litigation.

Arbitration & Arbitration Act (Nigeria, 2004)

Statute governing arbitration proceedings, consent, tribunal composition, and enforcement.

Click-wrap and shrink-wrap (e-contracts)

Electronic contracts: click-to-accept (click-wrap) and shrink-wrap licenses; differences in enforceability.

Cybercrime Act 2015

Nigeria’s law criminalising cybercrime; penalties for identity theft, hacking, cyberstalking, etc.

NITDA Data Protection Regulation 2019

Regulation governing data processing, consent, and data subjects’ rights and accountability.

Insurable interest

Legal relationship between insured and subject matter; absence makes a policy void.

Subrogation

Insurance principle where insurer steps into the insured’s rights to recover from a third party.

Indemnity

Restoring an insured to the financial position before a loss; generally monetary compensation.

Double insurance

Having multiple policies for the same risk; insurer contributions shared.

Privity of contract

Only parties to a contract have rights and duties; outsiders generally cannot sue.

Bailment

Delivery of possession of goods to another (bailee) for a purpose with return of goods.

Promissory note

Unconditional promise to pay a sum certain, drawn by a maker to a payee.

Holder in due course

A holder who takes a negotiable instrument free from defects, for value, in good faith.

Endorsement

Signing the back of a negotiable instrument to transfer rights.

Negotiation

Transfer of a negotiable instrument to another so that the transferee becomes holder.

Cheque vs bill of exchange

Cheque = order to a bank to pay; no acceptance required; payee may be crossed.

End of exam technique appendix (study tips)

Study strategies and exam-taking tips included in the Appendix for effective review.