Contract of Employment: Terms of employment contract

len Alfred Ajibola - 20th October, 2022 @ 09:13 AM

Topics in Commerce

Types of specialization Specialization and Exchange Historical background of commerce in Nigeria Disadvantages of barter system Contract of Employment: Terms of employment contract Principle of Marketing: People as a marketing mix and their importance Principle of Marketing: Positioning as a marketing mix Principle of Marketing: Packaging as a marketing mix Elements of promotion in marketing mix Principle of Marketing: Promotion as a marketing mix Principle of Marketing: Place as a marketing mix Principle of Marketing: Price as a marketing mix Principles of Marketing: The seven principles of marketing mix Factors necessary for division of labour Disadvantages of division of labour Advantages of division of labour Concept of Outbound Marketing Inbound Marketing explained Types of production in commerce Commerce: Definitions and Scopes of Commerce

Academic Questions in Commerce

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In commerce, the concept of paying in advanced is termed _____.

  • A. Advanced payment

  • B. Up payment

  • C. Forward payment

  • D. Prepayment

  • E. Uphill payment

  • F. Adpayment

In commerce, the concept of 'buy now, pay later' is termed _____.

  • A. Unadventurous payment

  • B. Buy on credit payment

  • C. Deferred payment

  • D. Postponed payment

  • E. Owed payment

  • F. Future payment

In commerce, which of the following is false with regards to a commodity?

  • A. A commodity must always have a market value

  • B. Rendered services are also instances of commodities

  • C. Products applicable to commodities can be bought or sold with money

  • D. A commodity must be standardized

  • E. A commodity must be usable upon delivery

  • F. Commodities can be traded in the futures market

Whatever is being marketed must always provide value to its potential consumers.

  • A. True

  • B. False

Which of the following is not a branch of marketing?

  • A. Merchandising

  • B. Promotions

  • C. Forex

  • D. Search Media Optimization

  • E. Social Media Optimization

  • F. Copywriting

Which of the following is not a characteristics of commerce?

  • A. The only aim of commerce is to make profit

  • B. It is a discontinuous process after profit had been made

  • C. It is accompanied with challenges and uncertainties

  • D. It is 100% business and economic activity

  • E. Transaction processes are always involved in commerce

  • F. It connects the process of production and marketing

Which of the following is not a function of commerce?

  • A. Unnecessary in times of emergencies like earthquakes and wars

  • B. Facilitates mass production of goods

  • C. Influences transportation network within and outside a state

  • D. Attempts to satisfy human needs and wants

  • E. Improves the standard of living

  • F. Acts as an online business link between buyers and sellers

One of the following is a form of division of labour.

  • A. Agonistic division of labour
  • B. Antagonistic division of labour
  • C. Mutualistic division of Labour
  • D. Advanced division of labour
  • E. Solitary division of labour
  • F. Occupational division of labour

What is a Contract?

A contract is defined as a written or spoken agreement that legally binds the parties involved, thereby creating mutual obligations that is enforceable by law. Contract must be agreeable by all parties involved. The parties involved in a contract will include the following:

  • Between two persons

  • Between two or more persons

  • Between one or more persons with an organization

  • Between two or more organizations

Please read on the concept of business here

Contracts are made in various instances. These will include an agreement between the landlord and tenants, in football transfers, during an employment, at sponsorship deals, during loan collection, and so on. However, this topic will be focused on the contracts of employment, including its terms and conditions.

Please read on the concept of management  here

What is Contract of Employment?

Contract of employment refers to a written or spoken agreement that legally binds the employer who agrees to pay salary, wages or some form of reward to another person, people or organization (termed the employee) for work done or services rendered to the employer.

The employer in contract of agreement is a person, group of people or an organization who pay salaries or wages to the employees for work done or rendered services. In this regard, a written or verbal agreement to complete the process is required by both parties.

Please read on business structure here

Understand that it is not a legal necessity to have a written contract since it can also be verbal. However, the employer is still required to give their employees a written statement which covers all the terms, conditions and agreement of employment alongside the responsibilities of both parties; that is, employer and employee respectively. With this agreement, both parties understand more clearly their respective roles to each other in the business.

Please read on division of labour here

Terms of an Employment Contract

Terms of employment contract refers to the benefits, responsibilities, working conditions and penalties that an employee agrees to when they accept a job.

The terms of an employment contract may likely differ for various employers. In this regard, certain terms of employment present in one organization may become absent in another. However, there are typical terms that are present on employment contracts (or letter of employment) of most organizations. These will include the following:

  1. Job information which specifies the role, duty and responsibilities of the employee.

  2. The nature and type of employment. In this regard, the employee will be made to understand if they are to work full-time, part-time, as a contract staff or on special occasions. Insurance and tax compliance will be considered based on the type of employment.
    You can read on production here

  3. Salary, wages and allowances of the employee. The employer may choose to pay his or her employee monthly, weekly, daily or even yearly. Also, benefits may be enjoyed by the employee. Such benefits may include: holiday vacations fully sponsored by the organization, health packages, holiday bonuses, overtime packages and so on. It is important to state that the employer must categorically state the money to be received by the employee, especially on his or her salary.

  4. Duration of employment. It stipulates the date of employment resumption, and perhaps the length through which the employment will run. As an instance, a footballer may be signed to a club for three years. Interestingly, clauses are quite common in the aforementioned instance. In some organizations, employees may be given a negotiable contract employment (contract staff) while others such as full staff enjoy unlimited contracts as long as they are within the age of service according to the organization's retirement policy.
    Please read on the principle of marketing here

  5. Leave and vacation policies are usually stipulated in the contract of employment. The 'leave' may be reflected in terms of sick leave, pregnancy leave, vacation leave, festivity leave and so on. The employees are expected to be free from the organization's work during their respective leave period.

  6. Period of notice before the employees resign their job. A resigning employee who fails to let their employers know when they intend to resign their job may as well miss the various beneficial packages associated with resignation in their specific organization. This period of resignation notice may be one, two, three or even six months to one year.

  7. Termination policies are also present in contract of employment. It tells the employees those actions or omissions of theirs that can lead to their sack. When employees are sacked in an organization, that marks their contract termination.

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Amazing facts in Commerce

According to research, the problem isn't the amount of food produced; the actual problem is the distribution of these foods. In this regard, we actually produce enough food to feed everyone on earth, but their distribution remains an underlying problem


With Amazon Smile, you can donate 0.5 percent of your purchases to a charity of your choosing

Check it out here

The brewery, Sankt Gallen in Japan, produces a beer called Un Kono Kuro from elephant's dung

North Korea and Cuba are the only countries in the world where you can't buy Coca-Cola

Amazon is an e-commerce website launched in 1995. It did not make any profit for its first seven years.

Amazon's first profit was in 2003. Its founder 'Jeff Bezos' is the richest man in the world as at 2018/2019

Notable points in Commerce

The theory of international trade is guided by the principle of comparative cost. This principle was propounded by David Richards.

The principle of comparative cost states that a country should specialize in the production of goods and services in which they have a greater comparative advantage or the least comparative disadvantage.

Below is an instance on the principle of comparative cost.

Now, let us assume we have two countries producing and exporting rice and beans respectively.

  • On a daily basis, If country A produces 100 grams of rice and 300 grams of beans daily and country B produces 50 grams of rice and 150 grams of beans, then according to this principle, country A has an advantage over country B with regards rice and beans production; but better still, country A has a greater comparative advantage in the production of beans.


From the above instance, it can also be said that country B is at a disadvantage with regards to the production of rice and beans. Infact, it has a bigger comparative disadvantage with regards to beans production.

The point to note here is this: A country utilizing the principle of comparative cost will always produce quality goods and services at a cheaper cost.

No single country manufactures all the goods and services in our world. This implies that every country of the world relies on certain goods and services imported (or brought in) from other countries.

Foreign trade is defined as the exchange of goods, services and capital between two or more countries.

Foreign trade is also termed as international trade.

Please read more on foreign trade here

Division of labour can be defined as the act of splitting job process into a number of different processes such that each process is done by a different person or group of persons.

Through the process of division of labour, one worker may constantly perform a specific aspect of the job and as a result, may become specialized in that area.

The result of specialization in the different department of a job will imply the production of goods with better quality.

Please read on division of labour here

Forms of division of labour relates the various ways through which division of labour may be carried out.

Take for instance, within a country, one state may choose to specialize in the production of a cars while another specializes in a different area, let's say agriculture.

Below are the forms of division of labour

  • Complex division of labour

  • Occupational division of labour

  • Geographical division of labour


Please read more on the forms of division of labour here.

Balance of Trade can be defined as the total value of goods imported and exported by a country during a specific period; usually yearly or annually.

Balance of trade can be either positive, negative or zero

  • A positive balance of trade implies that a country exports more goods than its imports. China as a country is likely to have a positive balance of trade since it exports a variety of goods to other countries.

  • A negative balance of trade is often considered as an unfavorable balance of trade since the country's importation exceeds its exportation. Nigeria (as at 2018) is likely to have a negative balance of trade.

  • A zero balance of trade is reached when imports equal exports.

Please read on balance of trade and balance of payments here.