Business Studies 6 Marks Question

The principle of utmost good faith has been violated as Gauri didn't mention about the commercial use of the home while taking the policy. The principle of utmost good faith is described below:
i. An insurance contract is a contract of uberrimae fidei as it is based on utmost good faith which should be displayed by both the parties involved therein, i.e., the insurer and the insured.
ii. The insurer should make full and accurate disclosure of all material facts related to the subject matter of the proposed insurance. The insurer should at the same time make all the terms and conditions of the contract clear.
iii. The contract of insurance will be voidable at the discretion of the insurer if the insured does not disclose any facts which are likely to affect the mind of a wise insurer in fixing the amount of premium or the decision to accept the proposal of insurance.

Difference between Owner's Fund and Borrowed Fund:

S.No.	Basis	Owner capital	Borrowed capital
1.	Meaning	Consist of the amount contributed by owners and their profit reinvested in the business.	It includes funds available in the form of loans or credit.
2.	Permanent	It remains permanently invested.	It is not a permanent source of investment.
3.	Risk	It carries the risk of the business.	The debts of the company are secured.
4.	Control	Control rests with providers of owners' capital.	No control rests with providers of borrowed funds.
5.	Security	Not secured by any assets.	It is backed by the security of assets.
6.	Reward	The reward is dividends.	Interest is paid as a reward.
7.	Priority	The reward is paid after payment of interest on borrowed funds.	Payment of interest gets priority over payment of dividends.
8.	Nature of return	The rate of dividends may fluctuate year to year.	The rate of interest is fixed on funds.

Memorandum of Association defines the objects for which the company is formed. This is the main document of the company and is subordinate to the Companies Act.
Memorandum of Association defines the relationship of the company with outsiders.
Every company has to file a Memorandum of Association.
The various clauses of a memorandum of association are:
i. The name clause: This clause states the name of the company which has already been approved by the Registrar of Companies.
ii. Registered office clause: This clause contains the details of the registered office of the proposed company. However, thirty days of the grace period is given by the Registrar of Companies in case the promoters have not been able to decide about the location of the registered office at the time of filing of the documents for the registration.
iii. Object clause: This clause defines the purpose for which the company is formed. Therefore, it is considered to be the most important clause as any activity of the company beyond this clause is considered to be illegal.
iv. Liability clause: This clause restricts the liability of the members-only to the extent of the amount unpaid on the shares owned by them.
v. Capital clause: The maximum amount of capital which the company will be authorised to raise through the issue of shares is mentioned in this clause along with its face values. The said company cannot issue share capital in excess of the amount mentioned in this clause without making amendments in the Memorandum.
vi. Association clause: This clause contains the list of people who have agreed to become signatories to the Memorandum of Association and also purchase qualification shares. The Memorandum of Association must be signed by at least seven persons in case of a public company and by two persons in case of a private company.

International business refers to business activities that takes place across international frontiers. International business involves not only trade in goods and services but also other operations such as production and marketing of goods and services in foreign countries. International Business is also known, called or referred to as a Global Business or an International Marketing.
Differences between International Business and Domestic Business are summarized below:

Basis	International Business	Domestic Business
Nationality of buyers and Sellers	People of different nationalities	People of one nationality
Nationality of other stakes- holders	Employees, suppliers, customers, shareholders, partners, middlemen, etc. belong to different nationalities in international business.	Employees, suppliers, customers, shareholders, partners, middlemen, etc. belong to the same nationality in domestic business. Exceptions are possible.
Political Systems	International business is subject to the political system of many nations.	Domestic business is subject to the political system of one country.
Risk	Degree of risk is higher	The degree of risk is lower.
Mobility of factors of production	Less across countries.	More within the geographical boundaries of the country.
Consumer's taste and preferences	International markets are heterogeneous	Domestic markets are more homogeneous
Currency	Use foreign currency.	Use domestic currency.
Business regulations and policy	International business is subject to rules laws, policies, and taxation system, etc. of multiple countries.	Domestic business is subject to rules, laws, policies, and taxation system, etc. of a single country.

The importer or the C&F agent appointed on his behalf undertake the following steps for getting the customs clearance and release of goods:
i. When the ship arrives at the port, the shipping company either issues a delivery order or makes the endorsement for delivery on the back of the bill of lading in order to authorize the importer to take the delivery of goods.
ii. In case the freight charges have not been paid by the exporter, the importer is expected to clear these dues.
iii. The importer then submits two copies of a duly filled in 'application to import' form to the 'Landing and Shipping Dues Office' for the payment of charges levied by the dock authorities for services provided by them. After payment of dock charges, the importer is given back one copy of the application as a receipt. This receipt is known as 'port trust dues receipt'.
iv. After this, the importer fills in a 'bill of entry' form for assessment of customs import duty. After the documents have been examined by the appraiser an examination order is issued and the importer is expected to pay the import duty.
v. The bill of entry is then presented to the dock superintendent who in turn forwards the goods to an examiner for physical examination. The examiner gives his report on the bill of entry which is later on shown to the port authority.
vi. Finally, the importer or his C&F agent receives the release order after paying the necessary charges to the port authority.