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Bcom 303: Business Law Ii Question Paper
Bcom 303: Business Law Ii
Course:Bachelor Of Commerce
Institution: Chuka University question papers
Exam Year:2013
CHUKA
UNIVERSITY
UNIVERSITY EXAMINATIONS
THIRD YEAR EXAMINATIONS FOR THE AWARD OF DEGREE IN BACHELOR OF COMMERCE
BCOM 303: BUSINESS LAW II
STREAMS: BCOM Y3S2 TIME: 2 HOURS
DAY/DATE: WEDNESDAY 17/4/2013 2.30 PM – 4.30 PM
INSTRUCTIONS:
Answer questions one and any other two.
Do not write anything on the question paper.
QUESTION ONE
(a) Peter runs and owns a small garage next to Nyayo National Stadium in Nairobi. When Peter booked his three week annual holiday at Mombasa, he arranged that his foreman Joe, would run the garage while he was away. Joe was told that he could sell any car on the forecourt as long as he got at least 90 per cent of the rice displayed on the car. He was told not to buy any cars at all, no matter what was the circumstances.
While Peter was away Joe sold a car to Sasha for 85 per cent of the price shown on the car. Sasha thought that Joe owned the business.
Shantel, who regularly did business with Peter, bought a car for 75 per cent of the price shown on it. She knew that Peter usually instated on at least 90 per cent of the price shown, even when the buyer was, in the motor trade. She asked Joe whether he was sure he could sell the car at 75 per cent of the price shown, Joe, untruthfully, said that Peter had told him to do this if the buyer was motor dealer. Shantel therefore bought the car and paid for it. At the same time, Joe bought a car from Sheila because he was that it was such a bargain that peter would want it. Peter examined the car when he returned for his holiday and considered it a good buy. Sheila has discovered that the car was worth more than she thought. Hearing from Joe that she should not really have sold the car, Sheila intends to reclaim the car. However, peter has telephoned her to say that she will not be able to claim the return of the car he has definitely bought it. Sheila refuses to accept that she cannot reclaim the car.
Peter does not want to be bound by the contracts which Joe made with Sasha and Shantel. Nor is he willing to let Sheila reclaim the car which she sold.
Advice Peter of his legal position in respect of transactions entered with Sasha, Shantel and Sheila. [20 Marks]
(b) C agreed with M that M would put on a play at C’s theatre. C was to have 60% and M 40% of the gross box office receipts. C paid the expenses of the theatre and M paid the expenses on the play. During a performance the claimant, who was in audience, was accidentally shot by one of the actors. Claimant sued C alleging that C was M’s partner and was jointly liable with M. Decide. [5 Marks]
(c) Under a contract for sale of goods, it is very important to know who has the “property in goods” at any given time. Briefly explain why this is important. [5 Marks]
QUESTION TWO
(a) Ben went for holiday in Mombasa and during his tour; 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 at Nairobi. Ben refused to pay. The seller wants to be paid. Decide giving reasons for your decision.
[5 Marks]
(b) A traffic police officer, thinking that the driver of a bus was drunk, ordered him to leave the bus. The bus conductor asked a man in the street to drive the bus to its destination a kilometer away. The man drove the bus negligently ad one of the passengers sustained injuries. Is the owner of the bus liable to pay to the injured passengers? [5 Marks]
(c) Njenga and Namwamba are business Law II students at Chuka University. After their class, they had an arguments as to whether a seller can ever sell what he does not own. Njenga said it is not possible at all. Namwamba said that at some instances it is allowed to sell what does not belong to you and yet pass a good title to the buyer. Briefly explain who was right and instances which support your explanation. [10 Marks]
QUESTION THREE
(a) Explain the conditions and warranties implied in Hire Purchase Agreement.
[10 Marks]
(b) A, to meet the claims of his creditors, borrowed Ksh 10,000/= from B. to protect his interest, B, takes out an insurance policy on the life of A. A pays the entire amount to B and then dies. Can B recover on policy? Give reasons for your answer. [5 Marks]
(c) Nyamisa had carried on a mitumba businesses 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]
QUESTION FOUR
(a) Otieno wishes to buy his son a car as a birthday present. Kamau a dealer offers to sell to Otieno a second hand car explaining that the brakes need attention and that he would reduce the price to take account of this. Kamau says that he will take no responsibility for this or other defects. Oteino drives away the car but because of defects, it fails to negotiate a bend in the road. The car losses control, hits a wall and is written off. Advice Otieno of his rights, if any against the Kamau.
(b) The sale of goods Act states that it is the duty of the seller to deliver goods and of the buyer to accept and pay for them in accordance with the terms of the contract of sale.
(i) Explain the meaning and effects of this Act. [4 Marks]
(ii) Describe the seller’s duties in connection with delivery and indicate what constitutes acceptance by the buyer. [6 Marks]
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