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Cfm 304 Banking Law And Practice Question Paper

Cfm 304 Banking Law And Practice

Course:Bachelor Of Commerce

Institution: Kca University question papers

Exam Year:2011

UNIVERSITY EXAMINATIONS: 2011/2012
YEAR 3 EXAMINATION FOR THE BACHELOR OF COMMERCE
CFM 304 BANKING LAW AND PRACTICE
DATE: APRIL 2012 TIME: 2 HOURS
INSTRUCTIONS: Answer ALL Questions
Question One
a) Explain factors which lead to the termination of the banker-customer relationship (10 Marks)
b) Explain the advantages of a holder in due course of a bill of exchange (5 Marks)
c) Explain the relevance of the law of bankruptcy to the banker (5 Marks)
d) Explain four characteristics of negotiable instruments (4 Marks)
e) Explain the application of land as a security for advances by the bank (6 Marks)
Question Two
a) Roy, a successful businessman would like to obtain some funds for expansion of his business
premises through a mortgage facility.
Roy would like to know what options would be available to the bank with regard to the proposed
security in the event of his business failing and his being unable to repay the loan. Advice him
accordingly (10 Marks)
b) Explain the various ways by which banks finance commercial dealings, with special reference to
foreign trade (10 Marks)
Question Three
a) Explain the meaning of and requirements of a valid endorsement (10 Marks)
2
b) Betty was arranging for a loan from a money lender. The proceeds of the loan would have been
used to sort out a debt which was owed by Betty to her bank. The bank somehow passed
information to the money lender on Betty’s financial liability to it which led the money lender not
to give the loan. Betty wants to sue the banker. (10 Marks)
Question Four
a) Alex is a customer at Bee Bank. Three days ago, he visited the bank and complained that he had
noticed from his bank statement that three unauthorized withdrawals had been made and his
account debited. Investigations reveal that the withdrawals were made by Charles, Alex’s office
messenger who stole Alex’s cheque book, forged Alex’s signature and subsequently received the
payments.Explain the legal position of Bee Bank. (10 Marks)
b) Linda issued a cheque in favour of Triza. However, when Triza presented it for payment it was
dishonoured and returned marked “RD”.” It now transpires that when the bank clerk was checking
on Linda’s balance he checked on the wrong account and as a result the cheque was dishonoured
under a mistaken belief of lack of funds. Explain linda’s rights against the bank. (5 Marks)
c) Onyango signed a cheque and crossed it “not negotiable.” He told Atieno, his secretary, to fill in a
certain amount and to X’s name as payee. Atieno filled in a large amount made the cheque payble
to Nairobi Harambee Secondary School and gave it to her brother to take it to the school in order to
pay the outstanding school fees. The Nairobi Harambee secondary school cashed the cheque in
good faith. Onyango wants to know his rights, if any, against the school. Advice onyango.
(5 Marks)
Question Five
Write short notes on;
a) Mareva injunctions (5 Marks)
b) Life policy as a security (5 Marks)
c) Banker’s right of set-off (4 Marks)
d) Outline the ways by which a bill of exchange may be discharged. (6 Marks)

Cfm 304 Banking Law And Practice Question Paper

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