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Mbad 601: Business Law Question Paper
Mbad 601: Business Law
Course:Masters In Business Administration
Institution: Chuka University question papers
Exam Year:2013
CHUKA
UNIVERSITY
UNIVERSITY EXAMINATIONS
FIRST YEAR EXAMINATION FOR THE AWARD OF
DEGREE OF MASTERS IN BUSINESS ADMINISTRATION
MBAD 601: BUSINESS LAW
STREAMS: MBAD Y1S1 TIME: 3 HOURS
DAY/DATE: WEDNESDAY 24/4/2013 5.30PM – 8.30 PM
INSTRUCTIONS:
• Answer All Questions
• Do not write anything on the question paper
QUESTION ONE
(a) Adam is a second hand dealer. He places an advertisement in the Saturday edition of his local paper stating
“Once in a lifetime opportunity: a one year mileage motor special: Ksh 700,000/= cash. This is a serious offer- the car will go to the first person who accepts its – valid for one day”
When Ben sees the advert he immediately posts a letter of acceptance to Adam’s offer.
Carol also sees the advert and after inspecting the car offer Adam a cheque for Ksh 700,000/=, but he refuses to accept the cheque ad tells her she cannot have the car.
Later in the day Dave asks Adam if he will keep the offer open until he can get to his bank to arrange a loan. Adam agrees but later in the day when Eric says that he will pay ksh 800,000/= in cash for the car he agrees to sell the car to Eric.
On Monday morning Ben’s letter arrives and Dave returns to complete his purchase of the car. In the afternoon Eric phones Adam to say he has second thoughts and no longer wishes to buy the car.
Required:
Consider the above situation with respect to the rules governing creation of contract and in particular consider.
(i) The precise nature of Adams advertisement [5 Marks]
(ii) The nature of transaction with Ben [5 Marks]
(iii) Whether Carol has any right of action against Adam [5 Marks]
(iv) Whether Dave has any right of action against Adam [5 Marks]
(v) Whether Adam has any right of action against Eric [5 Marks]
(b) A proposes to have an insurance policy; B issues one to A subject to payment of premium. A does not pay premium. B files a suit to recover the premium. Will B succeed? [5 Marks]
QUESTION TWO
(a) Chelagat is a young person aged 15 years. According to the Kalenjin customary laws a girl is supposed to undergo female genital mutilation. Last week she was actually forced into the rite and she is to be married off to Kiplangat next week. She comes to you for advice on what can be done. Discuss with her the relationship between customary law and recently promulgated constitution. [5 Marks]
(b) Ben went for holiday in Mombasa and during his tour; he identified a car which he has been looking for. He instructed the seller to deliver the car to Nakuru where he was going to pay him the purchase price. The car was involved in an accident in Nairobi. Ben refused to pay. The seller wants to be paid. Decide giving reasons for your decision. [5 Marks]
(c) A exchanged his car with B but because A’s car was newer than B’s ; B had to add him Ksh 200,000 besides giving him a car. A insisted that they were bound by cap 31, sale of goods Act. B said they were not. Decide who was right and why. [5 Marks]
(d) Nyamisa had carried on a Mitumba business as a sole proprietor for some time. He then entered into a partnership with Mwenda. Their partnership agreement provided that the profits should be shared equally. When they fell out, a dispute arose concerning who owned the assets used by the business including the mkokoteni and the place where they spread their merchandize. Decide. [5 Marks]
(e) John has been recently dismissed from duty and thinks that his case is very appropriate for hearing in another forum other than ordinary courts, the industrial court and the long winding procedures of conciliation by the ministry officials through the minister of labour. Which forum does he have in mind and what are the possible ways of legally getting himself there? [5 Marks]
QUESTION THREE
(a) The Kenyan National Assembly recently enacted a law which called on residents of cities and counties not to endanger any other residents by “keeping cats, dogs, donkeys, goats, sheep and any other animal which may bring harm to the neighbor.” Karanja an enterprising MBA student in Chuka University was arrested on Friday evening after he was fond rearing a tortoise in his apartment and charged with an offence under this section of law. You are called upon as youthful legal expert, to clearly explain to whether and why the case should succeed. [5 Marks]
(b) Morrison has been an employee of Beatrice for the last five years. Beatrice summarily dismissed him on Tuesday. Discuss possible instances under which the termination of this employee’s services is lawful. [5 Marks]
(c) Peter pays Ksh. 50,000 to Abel a civil servant employed in the government department, in consideration of Abel’s promise that a government contract which is at the disposal of his department will be placed with peter. Before this can be done. Abel is transferred to another department. Peter wishes to reclaim from Abel the money paid to him, will he succeed? [5 Marks]
(d) Sasha and Shantel, students of Chuka University were very enterprising. They set up a company trading in jewelry from Congo region and were appointed as directors of the same. They have carried out the business for the last five years. They had lent the company a sum of Ksh 500,000/= on secured and priority basis. Recently Bonke lent their company a sum of Ksh 700,000. Whilst from the bank where the company withdrew the money from, the accountant was robed off all the money. The company was wound up and its assets amounted to Ksh 1,200,000, which sum has been duly paid to the secured creditors as settlement of part debt. Bonke has sued Sasha and Shantel for refund of his money because “ these crooks cannot take my money and still purport to take the little realized from their damn company”. Discuss the issues involved herein and state the relevant case law. [5 Marks]
(e) Kariuki entered Jatomy Supermarket, picked up one of shopping baskets provided and filled it with groceries from the shelves. As he was approaching the cashier he realized that his purse had been stolen and decided to replace the goods on the shelves. The manager of the supermarket who had been observing Kariuki’s movements instructed one of his assistants to approach Kariuki and tell him that the goods had been sold and he could not replace them on the shelves. Advice Kariuki accordingly. [5 Marks]
QUESTION FOUR
(a) Explain hire-purchase contract? How does it differ from a:
(i) Credit sale contract
(ii) Conditional sale contract [6 Marks]
(b) Charles buys a second-hand car from Peter after reading Peter’s advertisement in the local newspaper. Charles pays Peter in the Ksh 500,000 agreed price and takes delivery of the car. Two days later Charles is visited by a representative of the Bunter Finance Company who informs him that the car is the subject of a hire-purchase agreement with peter who has not paid all the installments. Charles refuses to surrender the car. Explain the legal position. [4 Marks]
(c) State and explain the rules governing the passing of property under contracts for the sale of goods in cases where the parties have not indicated intention that it should pass at any particular time. [10 Marks]
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