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Mbad 601: Business Law Question Paper
Mbad 601: Business Law
Course:Master Of Business Administration
Institution: Chuka University question papers
Exam Year:2013
CHUKA
UNIVERSITY
UNIVERSITY EXAMINATIONS
EMBU CAMPUS
EXAMINATION FOR THE AWARD OF DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
MBAD 601: BUSINESS LAW
STREAMS: MBA Y1S1 TIME: 3HOURS
DAY/DATE: WEDNESDAY 7/8/2013 5.30 P.M. – 8.30 P.M.
INSTRUCTIONS:
• Answer question one and any other three.
• 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: Kshs 700,000/= cash. This is a serious offer – the car will go to the first person who accetpts 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 Adman a cheque for
Ksh 70-0,000/=, but he refused to accept the cheque and 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 Kshs 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 that 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 a 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 nay 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]
QUESTION TWO
(a) AdviseMwita whether an action for negligence is likely to succeed against each of the parties in the following cases, explain the relevant principles of law involved.
(i) Davide, a practicing accountant, upon whose advice Mwita made an investment which proved to be worthless. [5 marks]
(ii) Jane, a lawyer, who represented Mwita in recent case and conducted the case badly. [5 marks]
(b) Sasha, Wasike and Moses entered into a partnership to execute contracts contract work. Sasha secured a partnership work estimated at a cost of 10 million shillings. She obtained the said contract upon payment of Ksh.500,000/= to a person in authority and debited the sum in the account books of the partnership as an item of expense. Wasike and Moses objected to the item. How would you decide the dispute? [5 marks]
(c) 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 the 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]
QUESTION THREE
(a) A, to meet the claims of his creditors, borrowed KSh.10,000/= from B, to protect his interest, B, takes out an insurance policy o the life of A. A pays the entire amount to B and then dies. Can B recover on the policy? Give reasons for your answer. [5 marks]
(b) 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 Kshs 700,000 whilst from the bank where company withdrew the money from the accountant was robbed off all the money. The company was wound up and its assets amounted to Kshs 1200,000, which sum had 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]
(c) 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]
(d) 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 and one of the passengers sustained injuries. Is the owner of the bus liable to pay the injured passenger? [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 the Kshs 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 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 an intention that it should pass at any particular time. [10 marks]
QUESTION FIVE
(a) Harry and Thuku agreed to meet for a business lunch at a restaurant in town. During the lunch, Chuma one of Thuku’s friends joined the two and begun to participate in the discussion. Chumatole Harry that he was Thuku’s agent to which Thuku did not object. A week later, Chuma obtained goods on credit from Harry, allegedly on behalf of Thuku. Chuma has since disappeared and Harry is demanding payment from Thuku. Decide
[5 marks]
(b) A person form your home area has died. It is being said he died intestate. Explain to your family what that means and who is a dependant as per the law of succession.
[10 marks]
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