AVITAL COLLEGE

47, BOLAJI BANWO STREET, AGUDA, SURULERE. LAGOS

SCHEME OF WORK & LESSON NOTES

ON

COMMERCE

SENIOR SECONDARY SCHOOL 2

SECOND TERM

2023/24 ACADEMIC SESSION

PREPARED BY

AKANDE, JOHN
COMMERCE SCHEME OF WORK SS 2 SECOND TERM
WEEKS TOPICS SUB TOPICS
1 Readiness assessment  Test
test/ last term’s work  Revision
2 Credit  Meaning of credit
 Sources of credit
 Functions of credit to both buyers and sellers
 Disadvantages of credit to both buyers and
sellers
3 Trade association  Meaning of trade association
 Aims and functions of trade association
 Chambers of commerce, meaning and functions
4 Other forms of trade  Consortium, merger, syndicate, price rings etc.
association
5. Insurance Definition of insurance
Importance of insurance to individuals and
business
 Basic principles of insurance
 Types of risk
6. Insurance  Types of insurance
 Terminologies in insurance
7. Midterm assessment and BRAEK
break
8 Consumer protection  Meaning of consumers protection
 Reasons for consumers protection
 Means of consumers protection
 Rights of consumers
9 Consumer protection  Agencies responsible for consumers protection
(contd)  Government legislation that protect consumers
10 Transportation  Meaning and importance of transportation
 Forms of transportation
 Advantages and disadvantages of each form of
transportation
 Documents used in transportation
 Factors to be considered in choosing a means of
transportation
11 Revision
12 Examination
13 Examination

WEEK ONE (1)

TOPIC: CREDIT
BEHAVIORAL OBJECTIVES: At the end of this lesson, students should be able to:
i. Define the term credit
ii. State the types and sources of credit
iii. Mention the advantages of credit to both buyers and sellers
iv. List the disadvantages of credit to both buyers and seller

CONTENT

Credit can be defined as the promise by one party to pay another for money borrowed or goods received
at a later date. It can be a trade credit or a bank credit. The credit worthiness of the buyer must be taken
into consideration before granting credit so that it will not lead to bad debts.
TYPES AND SOURCES OF CREDIT
1. Mortgage 8. Debt factoring
2. Loan and overdraft 9. Club trading
3. Hire purchase 10. Conditional credit sales
4. Budget account 11. Trading cheque or voucher
5. Hiring and leasing 12. Book-me-down
6. Credit card 13. Monthly account
7. Deferred payment

1. Mortgage: This is a system of credit in which building societies or mortgage banks assist people to
buy landed property or houses by lending them a proportion of the purchase money. The building
will be used as collateral security while interest will be paid by the mortgagor i.e the borrower. The
lender is known as the mortgagee.
2. Loan and overdraft: It the sum of money borrowed by individuals, firms and governments from
financial institutions or individuals for a particular period at an agreed rate of interest. Overdraft is a
form of credit provided by banks in which a customer is allowed to draw over and above the money
in his account. In this case, interest will be paid on the overdraft.
3. Hire purchase: This is a system whereby the buyer or hire has possession and the use of the goods
while the owner retains the ownership of the goods until the final payment has been made. After the
final payment, ownership will pass to the buyer, if the buyer defaults, the seller can repossess the
goods. Hire purchase agreement must be evidenced in writing and signed by the parties involved.
4. Budget account: This is a system operated by departmental stores whereby a customer agrees to pay
a certain sum per month which enables credit up to eight times that amount to be obtained. This is
common in advanced countries and among high income earners. The customer will pay service
charge on all goods bought. The main problem with this type of credit is that choice of goods will be
restricted to a single shop.
5. Credit card: This is a card issued by some large stores to approved applicants which enables a holder
to obtain goods and services on credit at specified suppliers up to an agreed amount. The holder has
a borrowing limit. This is common in advanced countries e.g. America, Britain etc.
6. Deferred payment: This is a system whereby ownership and possession are transferred immediately
to the buyer from the seller after paying an initial deposit. Payment for the balance will be payed
later. The seller cannot repossess the goods if the buyer defaults in payment. He can only reclaim
through court action.
7. Debt factoring: This is a system whereby trade debts can be sold immediately for cash to factoring
firm (bank) for a lower amount than the actual value of the debt. The factoring firm after purchasing
the debts will then collect them as its own. The firm will by arrangement purchase the trade debt of
its client and collect them on its behalf.
8. Club trading: This is a system of credit whereby some organizations set up clubs to collect regular
contribution from members. This contribution can be withdrawn periodically in order to make
purchases at the shops.
9. Conditional credit sales: This is an agreement for the sale of goods and not hire in which title to
goods does not pass absolutely until all installments has been paid. The buyer is unable to transfer a
good title to an innocent purchaser. The seller has the right to take the title under specified condition.
It has to be witnessed by somebody.
10. Trading cheque or voucher: This provides alternative to hire purchase. Here, a voucher is issued by a
club which is formed to enable its members buy from specified local shops in the locality. A
percentage charge will be made with the actual amount paid over a certain week at an agreed rate.
11. Book-me-down: This is a system whereby customers purchase goods on credit with their names
written down as references and payments will be made anytime they receive their salary. This is
common within the low-income earners in underdeveloped countries like Nigeria.
12. Monthly account: This is a method of paying monthly for goods and services instead of paying for
each individual transaction as it arises.

ADVANTAGES OF CREDIT TO BOTH BUYERS AND SELLERS

1. ADVANTAGES OF CREDIT TO THE CREDITOR (SELLER)
i. It leads to increase sales and profits as credit prices are sometimes usually higher than cash
prices.
ii. It leads to purchase of long-term assets such as land, building and costly equipment.
iii. It helps businesses in meeting temporary need for cash e.g. retailers buy goods on credit and
manufacturers buy raw materials and other supplies on credit.
iv. It leads to reduction in risk of holding stocks for too long i.e. reduction of articles been
damaged or outdated before they are sold.

2. ADVANTAGES OF CREDIT TO THE DEBTOR (BUYER)

i. It leads to better service: A credit customer stands the chance of being served better because
if any item bought on credit turns to be unsatisfactory, there is ease of replacement
ii. It leads to higher standard of living because important items such as cars, television sets,
computers can be purchased on credit
iii. Convenience: Credit makes it convenient for the consumer to have immediate possession of
goods and services he needs even though he does not pay immediately.
iv. Credit worthiness: A credit customer who settles his bills as and when due builds a good
reputation of credit worthiness for himself which enables him to obtain good references.
v. Solution to necessity: Where there is no cash, credit purchase solves such needs.

DISADVANTAGES OF CREDIT TO BOTH BUYERS AND SELLERS

(a) DISADVANTAGES OF CREDIT TO BUYERS
1. There is temptation to overbuy articles he would not have purchased if he is buying in cash. The
user of credit can as well buy unnecessary items impulsively.
2. Buying at the wrong place or time: Credit customers are likely to become lazy shoppers unable to
seek places and time, where and when they could purchase and bargain prices.
3. Credit customers pay more: Credit customers pay more than cash customers because extra money
is being used to keep records of credit accounts. The extra costs are added to the cash price of
items.

(b) DISADVANTAGES OF CREDIT TO SELLERS

 1. Risk of nonpayment: Since credit is based on trust between the creditor and the debtor, a breach of
this trust may open the creditor to suffer a loss either by taking back devalued goods or losing
them entirely.
2. Involvement in litigation: Whenever a credit trust is broken the creditor is unnecessarily drawn
into court actions which may result in additional expenses to the business.
3. Additional expenses on book keeping: Credit sales involves a lot of expenses on book keeping to
keep record of each credit sale and each payment on the account.

EVALUATION

1. Define the term credit

2. State any six types and sources of credit
3. Mention any three advantages of credit to both buyers and sellers
4. List any three disadvantages of credit to both buyers and sellers

ASSIGNMENT
State any five functions of credit to retailer and wholesaler

LESSON PLAN FOR WEEK TWO

TOPIC: CREDIT (continued)
BEHAVIORAL OBJECTIVES: At the end of this lesson, students should be able to:
i. Outline the advantages of credit
ii. State the disadvantages of credit
iii. Mention the various credit instruments

CONTENT
ADVANTAGES OF CREDIT TO SELLERS
1. It brings about increase in sales
2. It brings about increase in profit
3. It facilitates the promotion and sales of durable and expensive goods i.e. people can buy and
pay on instalment
4. It ensures continuous patronage of a seller
5. It reduces the risk and cost of holding stock

ADVANTAGES OF CREDIT TO BUYERS

1. It brings about increase in the standard of living of the people
2. It encourages bulk purchases
 3. It enables a buyer to meet other temporary needs for cash
4. It enables individuals to enjoy goods without payment

DISADVANTAGES OF CREDIT TO SELLERS

1. There is risk of non-payment
2. There is problem of bad debts which might lead a business to liquidate when there is no more
working capital
3. It leads to tying down of business capital
4. It can lead to court case
5. It leads to business liquidation when there is no working capital as a result of irrecoverable
debts.

DISADVANTAGES TO BUYERS
1. It brings about increase in price
2. The seller has the right to repossess the goods if the seller default in payment
3. Buyer may lose his right to make choice because it is on credit basis
4. It leads to excess purchase

CREDIT INSTRUMENTS
These are written or printed financial documents that serve as promises to pay or as orders to pay.
Some of them are listed below.
1. Bill of exchange 7. Hire purchase 12. Postal order
2. Promissory note contracts 13. Demand draft
3. Debentures 8. Letter of credit 14. Vouchers
4. Credit cards 9. Bonds 15. Credit sales agreement
5. Cheques 10. Money order
6. Bank notes 11. Mortgage agreement

ASSIGNMENT
Define the term trade associations and state any three of its functions

WEEK THREE (3)

TOPIC: TRADE ASSOCIATIONS
BEHAVIORAL OBJECTIVES: At the end of this lesson, students should be able to:
i. Define the term trade associations
 ii. State the aims and function of trade associations
iii. Explain the term chamber of commerce
iv. List its aims and functions

CONTENT
This is an association of traders or producers engaged in the same line of trade, whose major aim is to
protect and safeguard the interest of their members as well as their businesses. It is a group of firms
in the same line of trade. Some examples of trade associations include; Garri Sellers Association,
Idumota Spare Parts Dealers Association, Taxi Drivers Association, Yam Sellers Association etc.
AIMS OF TRADE ASSOCIATIONS
1. To ensure that members charge uniform price
2. To create uniformity in the way their members deal with people
3. To ensure that members provide good quality services
4. To promote trade in a particular line of business
5. To assist members who are in need
6. To supply members with information about developments in their line of trade
7. To defend and advance the interest of members
8. To act as pressure groups in order to influence some government policies

FUNCTIONS OF TRADE ASSOCIATIONS

1. Disseminating information to members
2. To settle disputes among members
3. To fix prices for their services or products
4. To educate members on trade activities
5. To carry out research and publish the report for members use
6. To put political pressure on government for the interest of their members
7. To provide credit facilities and assistance to members
8. To negotiate with other trade associations on collective basis
9. To carry out research and publish the report for members use
10. To draw up standard for the practice of their trade

CHAMBER OF COMMERCE
This is an association of entrepreneurs in one locality for the purpose of promoting and protecting
trade in a particular area, which may be beneficial to all members. It is a non- political and non-profit
making association. It is controlled by officers appointed by the members. The members are
manufacturers and merchants.
Examples of chamber of commerce include
1. Ibadan chamber of commerce
2. Enugu chamber of commerce
3. Oyo chamber of commerce
4. Port-Harcourt chamber of commerce
5. Lagos chamber of commerce
6. International chamber of commerce
7. London chamber of commerce

AIMS OF CHAMBER OF COMMERCE

1. To promote internal and international trade
 2. To educate members on development in their field
3. To promote business activity in a town
4. To settle disputes among members
5. To represent and protect their member’s interest
6. To influence government policies for the benefit of members

FUNCTIONS OF CHAMBER OF COMMERCE

1. To promote home and foreign trade
2. To co-operate with other chamber of commerce in the country and outside the country
3. To collect and disseminate information to members
4. To settle dispute among members
5. To educate members on new techniques and technology
6. To educate members on government legislation
7. To act as watchdogs in the administration of government laws
8. To develop commerce and trade

EVALUATION
1. Define the term trade associations
2. State any five aims and function of trade associations
3. Explain the term chamber of commerce
4. List any four aims and functions

ASSIGNMENT
List and explain any three forms of trade associations

WEEK FOUR (4)

TOPIC: OTHER FORMS OF TRADE ASSOCIATIONS
BEHAVIORAL OBJECTIVES: At the end of this lesson, students should be able to:
i. State the other forms of trade associations
ii. Explain the other forms of trade associations listed above
iii. List their features and reason for formation

CONTENT
1. Consortium: This is a group of firms working together on a project too large or too complex for
a single firm to undertake. It is a voluntary association of independent firms formed for the
purpose of executing a large project.
FEATURES OF CONSORTIUM
a) It is dissolved as soon as work ends
b) It is formed by voluntary organizations
c) It requires large capital
d) It undertakes joint project
e) It deals with large or complex projects
2. Syndicate: This is a group of people or companies who work together and help each other in
order to achieve a particular business objective
FEATURES OF SYNDICATE
a) It is a voluntary organization
b) It is set up for a particular business purpose
c) Members retain their independence

3. Price ring: This is a group of firms in an industry loosely associated together to operate a
common price policy in order to increase profit. It is formed when competitors come together
to fix uniform price for their products

FEATURES OF PRICE RING

a) Members operate a common price policy
b) Members are loosely associated
c) Competition is allowed on ground of efficiency
4. Trust: This is an amalgamation of different competing firms in different lines of business
under a single control. In trust, the firm will retain their identity but the trustee will take over
the management and control it is vertically integrated in nature and the amalgamated firms are
brought under a central control. Certificate will be issued to all members. Trust has its origin in
America.
FEATURES OF TRUST
a) It has a vertical structure
b) It has a complete amalgamation
c) Members do not retain their independence
d) Issuance of certificates to members
5. Cartels: This is a group of firms or producers whose objective is to limit competition by
centrally fixing prices or quantities or both as means of maximizing their profit. The
association has a monopoly influence on the market by artificially restricting output,
competition and raising price. Examples are Organization of Petroleum Exporting Countries
and International Air Transport Association.
FEATURES OF CARTEL
a) It is a monopolistic organization
b) Competition is limited
c) It fixes prices by controlling supply
d) Output is restricted through quotas
e) It is formed by independent organizations
f) All the members produce similar product
 FACTORS THAT ENCOURAGE FORMATION OF CARTEL
1. The need to artificially increase price of their product
2. The need to reduce the fear of competition
3. The need to increase profit by restricting output and increasing price
4. The need to eliminate waste by regulating outputs
5. The need to maintain market share by regulating output

REASONS WHY CARTEL MAY NOT LIVE LONG

1. Lack of reliable data may undermine the cartel’s ability to fix prices
2. It lacks legal sanction as it is based on a gentleman agreement
3. When members produce more than the allocated quotas
4. Emergence of new products competing with the cartel’s product
5. Groups whose interest is widely affected by the cartel often work hard to undermine it e.g
USA stockpiling of oil
6. Business combination/ integration: This is used to describe an arrangement where two or more
business owned and operated as separate entities join together to become a single entity under
a single ownership and management.
7. Merger: This is the coming together of two or more companies without any of them being
superior in control or ownership, but rather they decide to come together to enjoy some
benefits from each other. They combine both human and material resources with a vision to
increase their market share and capital base e.g. Exxon Mobil (Exxon and Mobil)

TYPES OF MERGERS
a) Horizontal merger: This is the union of two or more firms within an industry. It occurs with
fusion of firms, which directly compete for sale of products e.g a merger between Avital and
oxford
b) Vertical merger: This is the coming together of two or more firms at different production stages
in the same industry. It could either be backward or forward
I. Backward merger: It is a backward merger when the company acquires its sources of raw
materials e.g. a Tyre production company acquiring a rubber plantation company
II. Forward merger: This involves the company moving toward its market in which the product
is sold, that is, a firm acquiring the distributor of its output e.g an oil refining company
acquiring a filling station.
c) Conglomerate merger: This involves the joining of firms producing unrelated products e.g. the
merging of a construction company with a super market.

FACTORS TO CONSIDER IN MERGER

a) Amount of consideration
b) Goodwill
c) Form of consideration e.g. cash or shares etc.
d) Ownership structure
e) Tax implications
f) Organizational structure
g) Technology
h) Statutory provisions
i) New policies after merger

REASONS FOR BUSINESS COMBINATION

a) To save one or all the businesses from collapse
b) To raise more fund through the capital market
 c) Tax advantages
d) Economies of scale
e) To increase their good will and give them more access to customers and profit
f) To derive the benefits associated with synergy
8. Holding company: This is a company, which holds more than half of another’s equity share
capital. A holding company appoints the directors and controls the policies of the company. It
is a modern method of bringing a number of firms under control
9. Subsidiary: This is a company controlled by another, the controlling company owing over 50%
of the ordinary shares. Subsidiary does not hold shares in its holding company
10. Associated company: This is an enterprise in which the investors have a significant influence
and which is neither a subsidiary nor a joint venture of the investors
11. Fellow subsidiary: A body corporate is treated as a fellow subsidiary of another body corporate
if both are subsidiaries of the same company but neither is the other’s subsidiary.

EVALUATION

1. State any three other forms of trade associations

2. Explain the other forms of trade associations listed above
3. List any three of their features and reason for formation

ASSIGNMENT
Discuss any five criticisms against merger
WEEK FIVE (5)

TOPIC: INSURANCE
BEHAVIORAL OBJECTIVES: At the end of this lesson, students should be able to:
i. Define the term insurance
ii. Outline the importance of insurance to individuals and business
iii. State the basic principles of insurance

CONTENT
Insurance can be defined as an agreement whereby one party promises to indemnify or pay another
party a sum of money in the event of his suffering a specified a specified loss or damages. It is a
system of providing financial compensation for the effect of loss, the payments being made from the
accumulated contributions of all parties participating in the fund or scheme.
The main principle of insurance is the pooling of risks. Insurance is one of the aids to trade. Although
it cannot cancel out the risks, it offers monetary assistance.
On the other hand, ‘” assurance” is the provision of cover against some eventuality which must occur
at some time in the future, e.g. death of a person. It deals with events which must happen; hence it is
based on possibilities.
HISTORY OF INSURANCE IN NIGERIA
Insurance as an aid to trade has been in existence before the advent of colonialism. The functional
traditional form of insurance was the organized social insurance scheme which includes the extended
family system, association of age grade and other unions. The aim behind this was to ensure a
periodic contribution from members and to rally round any member that suffer a loss such as death,
illness etc. this form of social insurance is still in existence in Nigeria among community groups.
Modern insurance actually started with the establishment of a branch of Royal Exchange Assurance
in Nigeria in 1921. In 1944, more insurance companies were established to provide a level plain
ground for competition. The first indigenous company was the African Insurance Company Limited
established in 1950. By the time Nigeria gained independence, the number of companies had risen to
about twenty-five and were mostly owned by Nigerians. The National Insurance Corporation of
Nigeria (NICON) was established in 1969 as a ploy by the Nigerian government to check the
operators of insurance business. The Nigeria Reinsurance Corporation was also established in 1977.
In the 1980’s the number of insurance companies had increased to over 100 as some reinsurance
companies were established, e.g. Universal Reinsurance Company. In addition, over 150 insurance
brokers were also registered. At present, the leading insurance company in the country is NICON,
which was formerly owned by the federal government, and it underwrites at least 35% of the total
insurance in Nigeria.
Over the years, different acts have been declared to control and regulate the insurance industry, e.g.
insurance companies Act 1961, Marine Insurance Act 1961 and Insurance decree !976. today, the
current legislation is the insurance decree 1991.
Presently, the share capital for the setting up of an insurance company has been increased and new
measures aimed at controlling the activities of the industry have also been introduced. Some
insurance companies in Nigeria are:
1. Reinsurance Corporation of Nigeria
2. Lion of Africa insurance
3. Amicable insurance
4. Industrial and General Insurance (IGI)
5. NICON

INSURABLE AND NON-INSURABLE RISKS

Insurable risks: These are risks which the insurer can make provision for or insure against because
the likelihood of occurrence can be forecast and calculated. The risks involved can be easily estimated
for the purpose of fixing the premium. e.g. Motor, Life, Marine, Accident etc.
FEATURES OF INSURABLE RISKS
1. It can be calculated
2. It can be measured
3. It can be insured against
4. Likely future losses can be estimated

Non- insurable risks: these are risks which cannot be insured because the likely future losses cannot
be estimated and calculated. it cannot be calculated due to insufficient information available to the
insurer. Examples include
 Gambling  Risks due to war
 Launching of new product  Speculation
 Loss of profit through competition  Poor location of a business
 Opening of a new shop  Loss incurred as a result of bad
 Change in fashion management
 Loss of profit through fall in demand

PRINCIPLES OF INSURANCE
1. Insurable interest: This principle states that, one can only insure properties that will bring loss
or liabilities to him upon destruction. The properties of a neighbor or friend cannot be insured
by the individual. Any insurance without this principle is void and destitute of any legal
effect.
2. Utmost Good Faith: This principle states that in any insurance contract, all relevant
information that will affect the validity of the agreement must be disclosed by the parties
involved. The true value of the property must not b under or over stated e.g. in a life assurance,
if the assured did not disclose to the insurance company that he has a terminal disease before
the signing of the agreement, when he dies, the insurer may refuse to honour its own part of
the contract.
3. Indemnity: This is the compensation given to the insured by the insurer in the event of his
suffering a loss. Under this principle, the insured will be restored to his former position before
the loss occurred. All the other types of insurance are insurance of indemnity except life
assurance. E.g. if a man loses a car he will be compensated for it.
4. Abandonment: This principle states that property that has been insured may be abandoned in
certain cases if its actual loss appears to be unavoidable or if the cost of repairing the damaged
 property will exceed their value. In such cases, the insured will inform the insurer that he
wishes to abandon the good, e.g. as a constructive total loss under marine insurance.
5. Subrogation: Under this principle, once the insurer has given an indemnity for loss, he can
take over the subject matter of the insurance and the rights relating to it. i.e. the principle
implies that the insurance company can take over the rights of the insured once he has been
compensated. Example motor insurance. Mr. Kamal’s car had an accident and he has been
compensated. The car is no longer his own, the insurer can sell the scrap.
6. Proximate cause: This principle states that only the losses or liabilities which arise from the
direct and immediate case of the event insured against are indemnified. E.g. Mr. Tobi insured
his car against fire and not accident. The insurance company can only compensate if it is fire
and not accident.
7. Contribution: This principle states that where a person has insured a certain risk with many
insurance companies, he cannot claim compensation in full from each of the insurance
companies. i.e each of the insurance company will pay a certain proportion of the loss. The
insured cannot make gain or profit. If he has been settled by one insurance company, he is not
entitled to receive contribution from other insurance firms.

IMPORTANCE OF INSURANCE
1. It gives a businessman the confidence to embark on any kind of risk
2. It contributes to economic development
3. It provides a ready means of indemnity in case of loss to property
4. It facilitates foreign trade more especially marine and exports credit insurance
5. It encourages the growth of commercial activities in a country
6. Life assurance policy can be used as collateral security to obtain loans from financial
institutions
7. Life assurance can provide for old age and disability
8. It ensures that mobilized funds from savings can be invested
9. Group insurance policy also serves as motivation to worker
10. By making periodic and regular payment as premium the insured is encouraged to save for the
future day.

EVALUATION

1. Define the term insurance

2. Outline any five importance of insurance to individuals and business
3. State and explain any five basic principles of insurance

ASSIGNMENT
State and explain any four types of insurance

WEEK SIX (6)

TOPIC: TYPES OF INSURANCE
BEHAVIORAL OBJECTIVES: At the end of this lesson, students should be able to:
i. State and explain the various types of insurance
ii. Differentiate between underwriting and underwriter
iii. Explain the terminologies in insurance

CONTENT
1. Bad debts insurance: These are debts that are difficult to collect. i.e., bad debts insurance covers
debts that may not be paid by the debtors to the business. The risk of non-payment is the subject
matter of this type of insurance. Here, the insurance company will guarantee to protect the
business against irrecoverable debts.
2. Goods in transit: This type of insurance covers the risk of losing goods during transportation from
one location to another. Goods sent by any means of transportation should be covered by this
policy. The value of the goods will determine the premium to be paid
3. Group insurance: This is taken to cover a group of employees when they lose their lives or get
injured while in the service of the company. It is used to cover a number of people instead of
issuing each person with a separate policy
4. Cash in transit: This provides compensation to the insured in the event of cash being stolen either
from the business premises, home or while it is being carried to or from the bank. It covers cash
taken outside to purchase goods and cash brought into the office for workers’ salaries. It may
provide compensation to employees who may provide compensation to employees who may be
injured during a robbery operation.
5. Fidelity Guarantee Insurance: This is the kind of policy, which is to protect the organization
against losses that may arise from employee’s deliberate action, stealing or misappropriation of
fund. This covers sensitive employees of business who may be handling cash or are put in
position of trust e.g. cashier
6. Export credit guarantee insurance: This is taken to cover exporters against risks of bad debt as a
result of foreign trade. The exporters will be indemnified if the buyer refuses to pay for goods
delivered to him. It guarantees credit sales in foreign trade. It offers exporters in return for a fee,
insurance against bad debts incurred as a result of sales to foreign buyers
7. Glass, plate insurance: This covers accidental damage to glass plates, windows, doors and shelves.
It guarantees to cover for the replacement of plate-glass windows in the event of damage.
8. Agricultural insurance: This is the type of insurance which provides relief to farmers for losses
suffered on their crops as a result of drought, pest and diseases.
9. Burglary, Theft and robbery: This policy provides compensation for losses which may arise from
goods or property stolen or damaged through breaking into a shop or business premises. An
individual can also take this policy against the risk of losing his house property to thieves. As a
matter of necessity, it must be proved that thieves have actually broken into the house and carted
away the property under consideration.
10. Consequential loss insurance: This policy covers losses to commercial firms after a fire incident,
resulting in interruption of business activities and stoppage of production. It covers loss of profit
arising from the stoppage of the production processes.
11. Contractor all risk: This insurance provides for contractors in the event of any damage being done
to the construction work from a wide range of dangers. The risk is that the project may sustain
severe damage and this would delay the completion of the project.
12. Employers Liability insurance: This ensures that the employer does not suffer financially but is
compensated for any money he may have to pay in respect of a claim to provide compensation if
any employee was injured or killed. It gives the employee some protection.
13. Aviation insurance: This includes all risks associated with the use of aircraft as a means of
transport it covers the aircraft and the liabilities to passengers
14. Accident insurance: This guarantees the payment of compensation in the event of an accident,
causing death or injury. It covers protection for death or injury arising from accidental, violent,
external and visible means. It can cover personal accident, sickness, etc.
15. Motor vehicle insurance: This provides liability for death or bodily injury to any person arising
from the use of vehicles on the road. Compensation will be paid to victims injured in road
accidents, i.e. injury to the body.
 The insurance companies base their premiums on the types of cover provided, the size, value
of the vehicle, etc. most drivers have either third party insurance, third party fire and theft and
comprehensive policies.
 The Third-Party Fire and Theft: It covers damages to the vehicle as a result of fire and theft.
The policy holder will be compensated in the event of losses suffered from fire and theft of
the vehicle
 Comprehensive insurance: This covers the driver, the insured vehicle, third parties and
sometimes the contents of the insured vehicle. It covers virtually all accidental damages to the
insured vehicle and losses arising from fire or theft. The comprehensive policy attracts high
premiums.
16. Marine insurance: This is a branch of insurance which covers losses or liabilities relating to ship
and their cargoes against the dangers of the sea. It is the oldest form of insurance. The dangers of
the sea include storm, tempest, collision, theft and fire.

Marine insurance policy is compulsory in international trade so that all goods passing through the
sea, including the ships must be covered by marine insurance. Lloyds of London is considered as the
largest marine insurers in the whole world.
FEATURES OF MARINE INSURANCE
i. It covers against risk associated with sea voyages
ii. The can also cargo be insured
iii. The ship owner can insure his ship against loss as a result of fire, storm or collision
iv. The ship owner can insure a ship for one voyage or for a specified period of time.

TYPES OF MARINE INSURANCE

Marine insurance risks may be classified under the following:
a) Hull insurance: This is a policy which covers the ship against damages which may result from
the dangers of the sea. i.e., damages by storm, collision and fire. It may be for a specific time or
journey.
b) Cargo insurance: This policy is entered into to cover goods or cargoes carried by a ship. It covers
loss arising from damage to cargo while in transit.
c) Ship owners’ liability: This covers all risks or losses for which the owner of the ship or its
employees are liable to either from his negligence or that of his employees. The liabilities
include damage to the cargoes, passenger, crews and installations at the port, which is caused by
the ship.

TYPES OF MARINE INSURANCE POLICIES

i. Time policy: This policy covers the ship and cargo for a specific period, usually a year. In case
the policy expires on sea, there will be a continuation clause to cover it until the ship arrives at
its destination
ii. Voyage policy: This covers the risk between one port to another or for the duration of a
particular voyage e.g. Lagos to New York
 iii. Floating policies: This is a policy used by traders who make frequent shipments of cargo. The
cover applies to any shipment made by the holder who makes a declaration as to the precise
amount involved with individual shipments.
iv. Valued policy: This specifies the value of the goods, and the holder of such a policy receives
specified sum in the event of total loss, irrespective of its value at the time of the loss.
v. Unvalued policy: This provides for claims based on the value of the goods at the time of loss.
The policy does not state the original value of goods
vi. Fleet policy: This is a policy which covers a fleet of ships under one ownership
vii. Mixed policy: This policy covers the subject matter for the voyage and a period of time
thereafter, e.g. while in ports.
viii. Construction policy: This policy covers the construction of a marine vessel
ix. Open cover policy: This is a form of insurance in which the insurer agrees to insure all
shipments of cargo made during an agreed period.

MARINE LOSSES
Marine losses can be classified into total loss and partial loss
(a) Total loss: This occurs where the subject matter (goods) is completely destroyed. Total loss can
be subdivided into:
(i) Actual total loss: This type of loss occurs when the goods ae completely destroyed by fire,
when a ship sinks after collision or when the goods have been affected by sea water such that
they are no more fit for the purpose intended.
(ii) Constructive total loss: This occurs where the objects insured have to be abandoned because
what is left is beyond economic repairs, i.e., the cost of repair is more than the value
(b) Partial loss: This occurs when there is damage to a portion of the ship or its cargo. It can be
grouped into:
(i) General average loss: This is a partial loss which occurs when the ship master, for the interest
of the parties, deliberately and reasonably throws overboard some of the cargoes in order to
lighten the ship so as to reduce loss. The expenses will be borne by all parties concerned e.g.
during storm.
(ii) Particular average loss: This occurs when the cargo or ship suffers partial loss or damage.
The loss here is accidental. It occurs when loss which is accidental is not suffered for the
general benefit of all on board a vessel. E.g. collision between ships or when the propeller
blade is damaged. In this case, loss is borne by the owners of the object affected.
17. LIFE ASSURANCE: This is a branch of insurance which is taken as a protection against loss
caused by the death of a person. The policy covers human beings and not properties. The risk
covered will inevitably occur but the time of occurrence is what is not known.
TYPES OF LIFE ASSURANCE
1. Term assurance: This is the oldest form of assurance policy. In this policy, payment will be made
to the assurer if the life assured dies within the specified period. There are different types if term
assurance, they include: decreasing term, convertible term and family income benefit assurance.
It is the cheapest form of assurance.
2. Whole Life Assurance: This type of life assurance will last for the life time of the life assured, and
the sum assured is payable only at death. The assured will pay premium throughout the duration
of his life.
3. Endowment policy: This is a type of policy which provides for the sum assured to be paid either
after a fixed number of years or death, depending on which one occurs first it’s a convenient and
profitable way of preparing to meet some future financial commitment such as old age.
4. Annuities. This is a form of pension in which an insurance company, in return for a certain sum
of money(paid in a lump sum or by instalments), agrees to repay this money plus the investment
income that it is able to earn over the expected life time of the investor or for a specified period.

REASONS FOR TAKING LIFE ASSURANCE

i. It provides for one’s dependent in the event of death
ii. It makes provision for permanent disability
iii. It makes provision for repayment of capital on the death of a partner
iv. It makes provision for old age
v. It provides for a lump sum of money on retirement, and it is a means of saving for the future
vi. It is a source of loan repayment in the event of death
vii. It serves as a collateral security to obtain loan from banks
18. Fire insurance: This type of insurance provides cover for loss or damage caused by burning.
However, the insurer can only be compensated if the fault was not caused by him. Fire
insurance may be taken with average or without average clause.
a) Fire insurance with average clause: If the policy contains average clause, it will be based on the
actual value of the building, the amount for which it was insured and the total loss suffered.
The compensation would be calculated as:
Amount insured x Actual loss
Value of the property
Example
Insured amount: #10,000
Actual value #30,000
Actual loss #15,000

= 10, 000 x 15,000

30,000 = #5000
b) Fire insurance without average clause: Here, the insurance company will only be liable for the
estimated amount of the loss. i.e. if the property is #30,000, and the insured amount is #15,000
and the loss is assumed to be #10,000, the insured will only receive #10,000 as compensation

UNDERWRITING AND RE-INSURANCE

UNDERWRITING: This is a process whereby a merchant of insurance company undertakes to cover,
underwrite a portion of risk or assume part of a risk. It’s common in marine insurance because of the
huge cost involved which cannot be borne by one insurance company
UNDERWRITER: This is a marine insurer who offers to cover, underwrite or assume a portion of a
risk. The underwriter would write under the details of the risk, his name, and the proportion he has
accepted. E.g. Lloyd’s Underwriters. Their main business is to cover a portion of a risk.
RE- INSURANCE: This relates to an agreement between an insurance company and another
reinsurance company whereby the re-insurer agrees to assume responsibility for a certain fixed share
of a risk depending on terms outlined in the agreement. By spreading risks, losses will be greatly
reduced.
EVALUATION
1. State and explain any five types of insurance
2. Differentiate between underwriting and underwriter
3. Explain any four terminologies in insurance

ASSIGNMENT
Give a reason why life assurance is so called?

WEEK EIGHT (8)

TOPIC: CONSUMER PROTECTION

BEHAVIORAL OBJECTIVES: The end of this lesson, students should be able to:
i. Define the term consumer protection
ii. State the reasons for consumers protection
iii. State the rights of consumer protection
iv. Mention the means of consumer protection

CONTENT
These are actions and efforts of governments and other organized bodies in response to users’
complaints about goods and services in order to ensure that they derive satisfaction. The consumer
should be given protection in order to ensure that the standard and quality of goods purchased are high
and that the goods are not harmful.
WHO IS A CONSUMER?
A consumer is an individual who purchases goods for his personal use. He buys goods and services and
uses them for his satisfaction. Consumer is one who makes final use of goods and services provided by a
firm.
CONSUMERISM
This can be defined as the organized efforts or actions of consumers or individuals to protect themselves
against the unfair practices of businessmen. It can also be defined as a protest against business injustices
and the efforts to correct such injustices.

RIGHTS OF A CONSUMER
1. Right to safety
2. Right to be informed
3. Right to be heard
4. Right to choose between alternatives
5. Right to live in a healthy environment
6. Right to get or receive value for their money
7. Right to good things of life
8. Right to seek redress to correct any injustice

REASONS FOR CONSUMER PROTECTION

1. False and misleading advertisements
2. Substandard goods or low-quality goods
3. Deceptive weights and measures
4. To ensure maximum or adequate satisfaction
5. Unreasonably high prices
6. Protection against harmful and dangerous goods
 7. Regular and uninterrupted supply of goods
8. Inadequate instructions or directions
9. Awareness on certain laws e.g. hire purchase laws
10. Credit purchase agreement i.e. consumer should be protected against false credit facilities, e.g.
Hire purchase

MEANS OF CONSUMER PROTECTION

1. Self-regulation of business: Every firm insists to have a strong consumer base which means that
more and still more people should buy their products. This is possible only when the consumers
are fully satisfied with the products of the firm. Many firms have set up their customers’ service
and grievance cells to redress the problems and grievances of their customers.
2. Business associations: They prepare code of conduct for businessmen based on how they should
behave with consumers.
3. Consumer’s awareness: Every consumer should be alert in the matter of his rights i.e. consumers
should protect themselves as alert consumers alone can demand his rights from sellers.
Consumers must ensure to raise their voice against unfair practices of the sellers.
4. Consumer organizations: They play an important role in educating consumers about their rights
and providing protection to them. These organizations can force business firms to avoid
malpractices and exploitation of consumers.
5. Government: Interests of the consumers are protected by the government by enacting various
legislations.

EVALUATION

1. Define the term consumer protection

2. State any five reasons for consumers protection
3. State seven rights of consumer protection
4. Mention four means of consumer protection

ASSIGNMENT
Outline any five agencies responsible for consumer protection

WEEK NINE (9)

TOPIC: CONSUMER PROTECTION CONTROL

BEHAVIORAL OBJECTIVES: The end of this lesson, students should be able to:
i. State the different agencies responsible for consumer protection
ii. Explain: Government legislations that protect consumers;
a) Government legislation in food and drug act 1955
b) Weight and measure Act of 1963
c) Price control decree of 1970
d) Trade description Act of 1968 etc.
 CONTENT
AGENCIES RESPONSIBLE FOR CONSUMER PROTECTION:
The agencies responsible for consumer protection are:
1. Consumers Association 6. Standard Organization of Nigeria (SON)
2. Manufacturers Association 7. Environmental Protection Agency
3. Rent Tribunals 8. Public Health Department/Unit
4. Price Control Board 9. Professional bodies
5. Food and Drug Department of Ministry of 10. Ministry of Trade and Industry
Health

CONSUMER ASSOCIATION
Consumer associations are formed by consumers to protect their rights and interests. They study the
prices and the quality of goods sold in their locality and make recommendations to their members.
Examples of consumer associations include: Tenants association, consumer co-operative association and
association of electricity consumers.
OBJECTIVES OF CONSUMER ASSOCIATION
1. To educate consumers about their rights
2. To check arbitrary increases in prices of goods
3. To promote and protect the interest of consumers
4. To act as a check against exploitation of consumers by the manufacturer
5. To ensure the correct usage of weights and measures
6. To act as a guide against deceptive and misleading advertisement
7. To protect their members against consumption of harmful or dangerous goods
8. To pressurize the producers to produce high quality goods

MANUFACTURERS ASSOCIATION
This is an association of producers who come together to ensure that the quality of goods produced is
high and that the members comply with their professional ethics, e.g. Manufacturers Association of
Nigeria (MAN).
FUNCTIONS OF MANUFACTURERS ASSOCIATION
1. To protect the interest of their members
2. To serve as links between their members and government
3. To ensure uniformity in prices of goods
4. To inform their members about the latest development in commercial fields
5. To ensure that members abide with their professional ethics
6. To ensure high quality goods and services
7. To sponsor some of their members on trade mission to foreign countries.

RENT TRIBUNALS
The tribunals are set up to regulate the activities of landlords and agents in order to prevent the
exploitation of tenants.
FUNCTIONS OF RENT TRIBUNALS
1. To settle disputes between tenants and landlords
2. To curtail the activities of estate agents
3. To fix rent for houses
 4. To ensure compliance with the rent edict
5. To prosecute and punish offenders
6. To protect the tenants from exploitation

PRICE CONTROL BOARD

This was established by the price control decree of 1970. The Price Control Board performs the following
functions.
1. To protect low income groups
2. To protect the customers from paying exorbitant prices
3. To stabilize general price levels and contain inflationary measures in the economy
4. To fix prices for some essential commodities
5. To prevent hoarding by sellers who refuse to sell at controlled price.

FOOD AND DRUG DEPARTMENT OF MINISTRY OF HEALTH

The food and drug administration department whose duty is now handled by the National Agency for
Food and Drug Administration and Control (NAFDAC) is charged with administering the provision of
the food and drug decree. The department has field offices where consumers can report cases of
contaminated or adulterated food and drugs.
FUNCTIONS OF FOOD AND DRUG DEPARTMENT
1. To regulate and monitor advertisements in the media
2. General administration and control of foods and drugs
3. To wage war against production of fake and dangerous dugs
4. To enforce various regulations of hygiene and sanitation e.g. pure water
5. To prevent the importation of expired food and drugs

STANDARD ORGANISATION OF NIGERIA (SON)

The Standard Organisation of Nigeria was established by the Federal government of Nigeria in 1971. The
functions of the organizations are:
1. To advise the Federal government on national policy on standards and quality control
2. To test products to ensure that minimum specifications are met
3. To standardize methods and products in companies
4. To provide measure for quality control of products
5. To ensure compliance with government policy of standardization

ENVIRONMENTAL PROTECTION AGENCY

The environmental protection agency is a parastatal of the Federal Government. Its main objectives are:
1. To ensure that regulations and rules concerning environmental sanitation and hygiene are strictly
adhered to (This is also extended to goods within the country).
2. To ensure disposal of refuse
3. To maintain clean sewage system
4. To ensure the treatment of polluted water and payment of compensation to inhabitants by the
company that caused such pollution
5. To ensure proper treatment of waste
PUBLIC HEALTH UNIT (SANITARY INSPECTORS)
Public health unit or department is the government organ that deal with complaints on dirty
environments, shops, restaurants and food items that are not fit for consumption. They enforce the rules
on sanitation of consumable goods and healthy environment.
PROFESSIONAL BODIES
These are bodies set up to regulate and monitor the professional activities of their members. The Nigeria
Medical Association, Institute of Economists and Institute of Chartered Accountants of Nigeria are set up
to make sure that members follow the ethics of their professions.
FUNCTIONS OF PROFESSIONAL BODIES
1. To give licenses and certificates to members before they can practice
2. To educate their members on latest happenings in their profession
3. To regulate the professional activities of their members
4. To ensure compliance with the ethics of their profession
5. To protect the interest of their members
6. To punish any member found wanting

MINISTRY OF TRADE AND INDUSTRY

The Ministry of Trade and industry in collaboration with other organs administer government laws and
regulations relating to trade and industry in a country.
FUNCTIONS OF THE MINISTRY OF TRADE AND INDUSTRY
1. It ensures that most goods imported or exported are regulated
2. It enforces laws on trade and industry
3. It monitors the setting up of business
4. It ensures compliance with various acts, e.g. Trade Description Act

LEGISLATIONS
In order to check the unfair practices of producers and middlemen, various legislations or laws have
been enacted by the government. Some of the laws to protect the consumers are:
1. Food and Drug Act 1955
2. Weight and Measures Act 1963
3. Price Control Decree 1970
4. Trade description Act 1968
5. Standard Organisation Decree 1971
6. Hire Purchase Act 1975
7. Sales of Good Act 1893
8. Rent Edict

FOOD AND DRUG ACT 1955

The law makes provisions for the regulation of the manufacture, sales and advertisement of food, drugs
etc. The Act provides that:
1. Goods sold must be properly labelled and advertised
2. Goods sold must follow the prescribed standard
3. All goods both foods and drugs must be fit for human consumption
4. Food or drugs which is adulterated must not be sold
5. Foods and drugs should be stored under the best sanitary condition
 WEIGHTS AND MEASURES ACT 1963
The provisions of the Act are as follows:
1. The consumers must be protected against exploitation in weights and measures
2. The standard weights and measures must be used
3. Some goods like sugar, milk etc. must be packaged in prescribed quantities

PRICE CONTROL DECREE 1970

This was introduced in 1970 by the military government of Nigeria to regulate the price of goods and
services. The provisions f the decree are as follows:
1. Stabilization of general price levels
2. To protect consumers from paying high prices
3. Imposition of price control on some goods
4. To prevent hoarding of goods

TRADE DESCRIPTION ACT 1968

The Act was introduced because of the following:
1. To prevent misleading reduction in price
2. To prevent false claims for a product
3. To prohibit misleading description of goods as to quality

STANDARD ORGANISATION DECREE 1971

The Standard Organization of Nigeria was established in 1971 to ensure the following:
1. To regulate standard of goods
2. To carry out test to ensure that manufacturers comply with the required standard
3. To be in charge of quality control
4. To ensure compliance with government specifications

HIRE PURCHASE ACT 1975

The Act introduced minimum requirements into the contract of hire purchase. The various provisions
are as follows:
1. Declaration of cash price and hire purchase price
2. The right of the hirer to terminate the agreement
3. Rights of repossession
4. The statutory obligations of the owner are covered by the Hire Purchase Act
5. The obligations of the owner
6. Where the hire purchaser defaults, after he has paid at least one third of the hire purchase price,
the seller cannot reclaim the article except by court order
7. The hirer’s right in determining the terms of agreement
8. How payments will be effected

SALES OF GOODS ACT

This was introduced to regulate the respective rights and duties of the vendor and purchaser. The
provisions provide that:
1. The seller has the right to sell in any contract of sales
2. The goods are fit for the purpose for which they are required
 3. The goods must correspond with description
4. There is an implied warranty that the buyer will enjoy quiet possession
5. The goods must be of merchantable quality
6. The bulk of the goods must correspond with the samples.

RENT EDICT
The rent edict was introduced to settle disputes between the landlords and tenants. The provisions are
stated below:
1. To control rents charged by landlords
2. To fix rents for certain categories of houses, having taken into consideration the areas where they
are located
3. To curtail the activities of caretakers and agents
4. To ensure the rights of the tenant
5. To ensure compliance with the edict.

EVALUATION

1. State any five agencies responsible for consumer protection

2. Explain the agencies mentioned above

ASSIGNMENT
Define the term transportation and state any three forms of transportation.

WEEK TEN (10)

TOPIC: TRANSPORTATION
BEHAVIORAL OBJECTIVES: The end of this lesson, students should be able to:
i. Define the term transportation
ii. State the importance of transportation
iii. List the forms of transportation
iv. Mention the advantages and disadvantages of each choice of transportation
v. Outline the documents used in transportation

CONTENT
Transportation is one of the aids to trade. It is the process of conveying goods and people from one place
to another either through water, road, rail or air. It is simply the movement of goods and people from
one place to another.
IMPORTANCE OF TRANSPORTATION
1. It ensures movement of goods and people from one place to another within and outside the
country
2. It enhances international trade
3. It leads to expansion of the market for goods and services
 4. It brings about employment opportunities as a great number of people are gainfully employed in
transportation sector
5. It brings improvement in the standard of living by making available opportunities of choice of
goods
6. It leads to development of industries as goods produced can now be transported to many places
including rural areas, leading to increase in demand.
7. It encourages specialization as improvement in transport system is essential to greater division of
labour and specialization of production, leading to mass production of goods.
8. It ensures efficient distribution system of goods from one place to another
9. It influences the development rates of rural areas i.e. rural areas are linked with urban areas
through transportation.
10. It influences the location of industry as the existence of good transport networks do help in the
location of industries
11. It prevents wastage of perishable goods as goods will be taken to where they are needed on time
to prevent wastage

FORMS OF TRANSPORT
There are four major forms of transport, namely:
1. Land transport
2. Rail transport
3. Air transport
4. Pipeline transport
5. Water transport

LAND TRANSPORT
This is the movement of goods and people from one destination to another using road and rail as means
of transportation.
a) Road transportation: This is the movement of goods and passengers on road by motor vehicles:
buses, trailers, cars, motorcycles, bicycles, tricycles etc. it is the most extensively used of all the
means of transportation.
ADVANTAGES OF ROAD TRANSPORT
1. There is low cost of maintenance
2. It is quicker for short distance i.e. Lagos to Ibadan
3. It is readily available
4. It is adaptable to any climatic condition
5. There is no fixed time table
6. It is flexible i.e. it can be used to deliver goods at the doors of customers, i.e. door to door.
7. There is low cost of road construction towards railway lines or airport
DISADVANTAGES OF ROAD TRANSPORT
1. It is slow for long distance
2. It is prone to accident
3. It results in traffic congestion which is severe in all major cities and towns
4. It is not suitable for carrying heavy and bulky goods like machinery, coal etc.
5. It is not suitable for fragile goods
b) Rail transportation: This is the means off conveying goods and passengers from one place to
another by train. Heavy and bulky goods are carried on train. A train cannot move on ordinary
road but has special routes. It moves on iron tracks known as railway lines. In Nigeria, the
Nigerian Railway Corporation manages the rail system. There are two types of train namely the
passengers train and the goods train.
 I. The passenger train: This is used for carrying passengers from one place to another. A train
has first, second- and third-class compartments. Present day rail system has television and
canteen services.
II. Goods train: This is used for conveying goods within the country. They can carry large amount
of heavy and bulky goods e.g. agricultural products, minerals, vehicle’s spare parts, metals etc.

ADVANTAGES OF RAIL TRANSPORT

1. It is suitable for long distance
2. It is very cheap i.e. it is the cheapest means of transportation
3. It has standard rate of charges for goods
4. It is suitable for heavy and bulky goods
5. It has a high capacity of carrying more passengers/goods than motor vehicles
6. It is not usually affected by traffic hold up which is common in cities
7. It operates on schedules
8. It is less prone to accidents
9. It provides welfare services like toilet facilities, canteen services, television programs, video and
film show etc.
DISADVANTAGES OF RAIL TRANSPORT
1. It is not flexible because it requires special facilities like tracks and terminals
2. The cost of purchasing, constructing and maintaining the train and its track is very high
3. It is not suitable for perishable goods because it is too slow.
4. It is slow on short distance
5. It is not convenient as it cannot provide door to door services
6. There is much delay as trains stop in almost all stations
AIR TRANSPORT
This is the system of moving goods and passengers through the air by aeroplane, helicopters etc. Air
transport is very fast and comfortable but it is expensive. Air transport has contributed immensely to
commercial activities in international trade.
ADVANTAGES OF AIR TRANSPORT
1. It is very fast
2. It is suitable for perishable and fragile goods
3. It is the most comfortable and luxurious means of transportation
4. It is suitable for long distance
5. It moves on schedule
6. It can be used on multiple usage i.e. taking aerial photographs, surveying and spraying of crops
with insecticides
7. It is a powerful instrument of war

DISADVANTAGES OF AIR TRANSPORT

1. It is expensive
2. It is vulnerable to climatic changes i.e. weather may disrupt flight
3. It is not flexible since it travels on schedule
4. It is unsuitable for heavy and bulky goods like machinery
5. It is prone to accident
6. It involves high operational cost
PIPELINE TRANSPORT
This is a system of transporting gases and liquid products from one place to another through the use of
pipelines. Pipelines are constructed or laid underground as means of carrying water, gases and
petroleum products. In Nigeria, pipelines are constructed to transport crude oil from Warri to Kaduna
refinery.
ADVANTAGES OF PIPELINE TRANSPORT
1. It involves low operating and maintenance cost
2. It is the fastest and safest means of transporting liquids
3. It reduces road congestion
4. It is not affected by climatic change
5. There is no delay in movement
DISADVANTAGES OF PIPELINE TRANSPORT
1. It is prone to leakages and unauthorized tapping by the people
2. It involves high cost of construction
3. It can be easily damaged
4. It is limited in scope i.e. to liquid goods alone e.g. water. Solid goods cannot be transported by
pipeline
5. It is vulnerable to climatic change
WATER TRANSPORT
This is the means of conveying goods and people from one place to another through the rivers, seas or
oceans, by ships, canoes etc. This facilitates international trade between different nations because goods
and passengers can be easily transferred.
TYPES OF WATER TRANSPORT
1. Inland water transport: This is a type of water transport in which goods and people are moved
from one place to another through the rivers, canals, creeks and lakes. This type of water transport
operates within a nation’s borders. The rivers must be navigable e.g. Rivers Niger and Benue etc.
Boats, launches, canoes and ferry are some of the means of transportation in inland transport.
2. Sea transport: This ensures that cargoes and people are moved from one country to another. This
is associated with seas and oceans. Since one port is connected to another, it aids international
trade. The means of transportation by sea are: Ocean liners (passenger and cargo) tramp liners,
coaster liners and special purpose ship.
a) Ocean liners: This sail through the high seas and oceans in all the continents of the world. E.g.
Atlantic, Indian and Pacific oceans etc. It is divided into: Passenger liners and cargo liners and
they charge standard rates.
I. Passenger liners: These are ocean liners which convey passengers from one place to another on
a definite or specific route. They normally move on scheduled time table. They are luxurious,
thereby passengers derive maximum pleasure they can also be used to carry mails.
II. Cargo liners: These are ships which carry heavy and bulky goods from one place to another on
the high seas and oceans. Cargo liners operate on a specific time table and they normally run
on definite routes. They can also carry few passengers.
CHARACTERISTICS OF OCEAN LINERS
1. They are luxurious ships
2. They operate on schedules
3. They maintain regular service
4. They are used for conveying passengers and cargoes
5. They operate on specific time table
6. Their freight charges are normally fixed by the shipping companies
b) Tramp liners: These are usually owned by individuals or private firms they are cargo ships that
do not operate on specific routes. Tramp liners are referred to as sea taxis. It can go where ever
they want and have no fixed time table.
 FEATURES OF TRAMP LINERS
1. It operates as sea taxis
2. It has no fixed time table
3. There is no fixed rate of charges
4. They handle cargoes
5. They do not operate on specific routes
6. They go wherever they find cargoes
c) Coaster liners: These are vessels which convey goods from one port to another. Coaster liners also
carry goods from the coaster areas for onward delivery to the ports they sail from port to port
along the coast.
FEATURES OF COASTER LINERS
1. They ply coaster areas
2. They can also go through creeks
3. They are used to convey goods from port to port
d) Special purpose ships/ship tankers: These are specially built ships for conveying particular
cargoes. They are designed and constructed to carry items like petroleum and other petrochemical
products on the seas.
FEATURES OF SHIP TANKERS
1. They are specially built
2. They are specially designed for a particular cargo
3. They are used for conveying crude oil or gas
ADVANTAGES OF WATER TRANSPORT
1. It is a very cheap means of transport for conveying bulky goods
2. It is a safe means of transportation
3. It is a convenient means of transportation because recreational services like canteen services and
games are available
4. It facilitates international trade as it is used to carry imported and exported goods from one
country to another
5. Refrigeration and other equipment are provided for perishable goods
6. There is no hold up or congestion
7. It is suitable to convey heavy goods
8. There is no cost of construction of routes
DISADVANTAGES OF WATER TRANSPORT
1. It is very expensive to maintain ship and other port facilities
2. It requires other means of transportation to be complete
3. It is prone to perils of sea like storm, collision, tempest etc. i.e. it is affected by climatic condition
4. It is limited in operation i.e. to areas where there are rivers, oceans, lakes, creeks, seas
5. It is slow over long distance i.e. a ship sail from Nigeria to New York for more than three months

DOCUMENTS INVOLVED IN TRANSPORTATION

1. Consignment note: This is a document made out by the sender of goods, handed to the carrier,
and countersigned by the consignee on delivery as proof that goods has been delivered.
2. Bill of lading: This is a document which enables the holder to claim ownership of goods
transported. The name of ship is indicated on it.
3. Delivery note: This is a document sent by the seller to the buyer for signature when goods are
delivered to him and it will serve as an evidence that delivery has been made.
4. Manifest: This is a form to be completed by the captain of a ship showing the details of passengers
and goods on board of a ship.
5. Certificate of insurance: This is a document which shows that the goods have been insured against
risks or loss by the exporter.
 6. Shipping note: This is a document containing instructions for transporting the goods. It is sent to
the shipping agent by the exporter.
7. Airway bill: This is a document made out by the consignor of goods to be transported by air. It
shows the names of consignor and consignee, the airports of loading and the value of the goods.

TERMINOLOGIES USED IN THE TRANSPORTATION INDUSTRY

1. Freight: This is the term used for the cost of shipping a particular cargo for a specific voyage
2. Dead freight: This is the freight paid on unoccupied space in the ship. If there is empty space left
in the ship, the person that charter must pay for the space not used
3. Consignment: These are goods that are conveyed from one place to another, a shipment or
delivery of goods
4. Consignee: This is the person or organization to which good are transported to through a carrier.
5. Consignor: This is the owner who sends goods to the consignee
6. Charterer: This is the person or firm that hires or charters a ship for a specific purpose
7. Demurrage: This is an extra charge or penalty which the charterer pays for exceeding the period
originally agreed upon. It is used in connection with charter party. Demurrage is normally
calculated as a certain charge for each day a performance is delayed. It is the charge paid for
failing to off-load a ship within a stipulated time.
8. Demise charter: This is a form of charter party where the charterer of a ship makes all the
arrangements for working it, so in effect for a period it is owned by him, i.e. the period of charter.

EVALUATION

1. Define the term transportation

2. State any four importance of transportation
3. List five forms of transportation
4. Mention any three advantages and disadvantages of each choice of transportation
5. Outline any five documents used in transportation

ASSIGNMENT
State and explain any five factors to be considered in choosing a means of transportation.