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Business Law Question Paper
Business Law
Course:B.Comm
Institution: Kabarak University question papers
Exam Year:2012
KABARAK
UNIVERSITY
UNIVERSITY EXAMINATIONS
2011/2012 ACADEMIC YEAR
FOR THE DEGREE OF BACHELOR OF COMMERCE
BMGT 313: BUSINESS LAW
DAY: FRIDAY
DATE: 3/08/2012
TIME: 9.00 – 11.00 A.M.
STREAM: Y3S1
INSTRUCTIONS:
1.
Answer 1 and any other 2 Questions
2.
Cases and examples will attract more marks
3.
Time allowed:2 Hour
1a).
The constitution of Kenya has been said to be the bedrock upon which our laws are
founded and all laws must conform with it. Also it has been said that the major work of
Parliament is to make laws.
EXPLAIN in details how the above are our sources of our laws in Kenya. (7 Marks)
b). Daniel went to Galan’s’ Supermarket. He took up a wire-basket from the stock provided
and then he filled the basket with goods from the shelves. He is about to proceed to the
cashier to pay when he remembers that he had forgotten his wallet and hence he had
no money to pay. He started replacing the goods on the shelves. Store manager stopped
him insisting that he had already bought the goods and must pay for them.
ADVISE the parties herein and give examples and cases to support your advice.
(5 Marks)
c).
Cap 31 (sale of Goods Act is the substantive Law governing the relationship between the
buyer and the seller in the contract of sale of Goods. Briefly explain the implied
conditions under cap 31 which the seller must fulfill if he wants the buyer to be bound
with that contract.
(8 Marks)
Page 1 of 4
d).
On 15th June,2012 Nyameino sent a fax to Ongoya offering to sell to him his car at Kshs.
8,000,000/= having been informed that Ongoya is looking for a car to buy. Nyameino in
his fax also indicated that his offer is open up to 30th June, 2012 and must be accepted
through fax. On 20th June, 2012 Ongoya sent an email to Nyameino stating that he
would be willing to buy the car at Kshs. 7,000,000/= and asking Nyameino if he would
accept this price. Nyameino faxed back on the same day stating that Kshs. 7,000,000/=
was not acceptable. On 24th June, 2012 Ongoya emailed Nyameino stating that he
accepted to buy the car at Kshs. 8,000,000/= to which Nyameino responded that he had
changed his mind and he was no longer selling the car. Ongoya files a suit seeking
specific performance or in the alternative damages for breach of contract.
ADVISE the parties herein supporting your advise with decided cases. You should be
guided by rules of offer and acceptance
(10 Marks)
(GRAND TOTAL: (30 Marks)
2)
Nyawoka and Nyamemiso have registered their company called Nyamemika co. ltd
which was duly registered under the Companies Act, Chapter 486 of the Laws of Kenya.
After payment of corporate tax after the first year of trading, Nyawoka has suggested
that they trade as partners to avoid paying corporate taxes because any type of business
organization is the same. Nyamemiso has refused and said they should continue trading
as a company because of its uniqueness.
Required:
(a).
Briefly explain who was right and support your explanation with reasons and
candid examples. (5 marks)
(b).
Assume they had engaged you to register their private company limited by shares
in the companies’ registry in Nairobi. Advise them on the steps they could have
taken to succeed in registering their company.
(5 Marks)
(c).
Discuss in details the contents of the Memorandum of Association of a company
(5 marks)
(d).
Kipkenei registered a company by the name Buttercup Dairy co. Limited and
started his business of manufacturing and selling dairy products. The business
did very well and Ongwae got to know about it. He too started a similar business
by the name Buttercup Margarine co. Limited. Kipkenei is very upset about it
because his business is dwindling. He has now sued Ongwae.
Briefly explain the decision you will make as a judge bring out clearly what is the
position in company law in regard to this situation.
(5 Marks)
(Total 20 Marks)
Page 2 of 4
3a). Briefly explain the Rules of Delivery and Acceptance in a contract of Sale of Goods
under cap 31 Laws of Kenya.
(4 Marks)
b).
A sold a car to B. B has now sold the same to C. The sale between A and B was
discovered not to be a legal sale because A was a minor. Now A wants to recover the car
from C as he is claiming that he had not passed ownership to B and hence B can not pass
the same to C. C is saying that the car belongs to him as he rightly bought it from B.
Basing your Judgment on Cap 31, make a reasoned judgment about the same. (4 Marks)
c). Onyancha advertised his car for sale in a local Newspaper and then went to
Suneka for a Holiday leaving his car in the drive way. While Onyancha was away, Ruto
having seen the advertisement, went to assess the car and decided to make an offer for it.
Onyancha’s neighbour Kamau, pretending to act with Onyancha’s authority, entered into
negotiations with Ruto and eventually accepted Ruto’s offer on Onyancha’s behalf.
Kamau had no authority to act in this way. Onyancha came from holiday, wrote to Ruto
saying that he was ratifying Kamau’s act.
ADVISE Ruto whether he is bound by the contract and then proceed to explain
requirements of agency by ratification.
(4 Marks)
d).
A wanted to purchase paint from B. He went to B’s hardware and was shown the samples
of paint in 20Kg containers. He examined them but did not open even one of them
although they were openable. He made an order for 50 containers. On delivery the paint
proved to be of wrong quality. He refused to accept. They have come before you as a
Judge.
DECIDE their rights under Cap 31.
(4 Marks)
e).
Kirui wanted to insure the household goods of his house and appointed Nyangau as his
agent to effect a policy instructing him to insure “all furniture against all loss and
damages Nyangau took out insurance policy with Nakuru Insurance Company Limited.
Later vandals broke into Kirui’s house and did substantial damage to his furniture. They
did not steal anything. Kirui claimed but Nakuru Insurance refused to pay as the policy
covered loss by theft or fire not damage by vandals.
ADVISE Kirui whether he can recover the value of damaged furniture from Nyangau,
taking into consideration rights and duties between agent and principal. (4 Marks)
( Total 20 marks)
4).
EXPLAIN in the context of Employment Law:-
(a).
The common duties as imposed on employers
(5 Marks)
(b).
The Grounds upon which dismissal may be fair.
(5 Marks)
Page 3 of 4
(c).
The Grounds upon which dismissal will be automatically unfair
(5 Marks)
(d).
When an employer can be liable for Torts committed by employee (5 Marks)
(TOTAL MARKS 20)
5 (a). Discuss how an offer may be terminated.
(5 Marks)
(b). Explain the conditions which must be fulfilled in order for a Court to apply African
Customary Law.
(5 Marks)
c) On Friday 24 JUNE, 2011 there was a notice on daily Nation stating there will be an
auction of several vehicles at Nakuru Afraha Stadium.
Mr. Kirui who saw a Car he has been looking for being among the vehicles to be sold
traveled from Mombasa to come and buy the same. When he arrived, he found that the
auction had been cancelled. He had to sleep at Nakuru before returning to Mombasa.
Now he wants to go to Court to claim all damages and expenses he incurred as he is
alleging that the Auctioneer had breached his contract.
Taking into account the definition and requirements of an offer, advice Mr. Kirui
whether he can succeed. (5 Marks)
(d). Chirchir and Wellington are Business partners, Wellington supplies Chirchir with goods
from London to Nairobi. They expressly provided in their Agreement that their contract was not
subject to any Legal jurisdiction of either Country even if either party breached the Agreement.
Wellington has failed to supply the goods Chirchir has taken him to Milimani Commercial
Court, Nairobi. Briefly explain whether he can succeed taking into account the operation of the
requirement of intention to create legal relations.
(5 Marks)
(Total 20 marks)
Page 4 of 4
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