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Insurance Question Paper

Insurance

Course:Certificate In Accounting And Finance

Institution: Strathmore University question papers

Exam Year:2006

STRATHMORE UNIVERSITY
EXAMINATION PAPER,2006.
TIME ALLOWED: THREE HOURS.
ANSWER FIVE QUESTIONS

1.(a)Draw a diagram showing the various Kenya courts.(10mrks)
(b)Explain the civil jurisdiction of the Kenya courts.(10mrks)

2.What are the advantages, from a legal point of view, of converting a business carried on as a partnership into a registered company limited by shares?(20mrks)

3.Write explanatory notes on the contractual capacity of infants.(20mrks)

4.(a)Distinguish between executed, executory and past consideration.(4mrks)

(b)Kamau lent Onyango Shs. 5,000 which was due for payment on 1st December, 1993. On 1st October Kamau asked Onyango for immediate repayment because he wanted to pay a deposit for a piece of land he was buying in Kariobangi. Onyango told Kamau that he had no money whereupon Kamau told him that if he paid Shs. 4000 immediately he would accept it in full settlement of the debt. Onyango relied on Kamau's promise and paid Kamau Shs. 4,000 on 2nd October.Onyango has informed you that Kamau is demanding the balance of Shs.1,000 and has threatened to take him to court if he does not pay the money within a week.Advise him.
(16mrks)

5.(a)What is meant by liquidated damages and penalties?(3mrks)

(b)State the rules by which the courts distinguish liquidated damages from penalties. Why is this distinction important?(7mrks)

(c) C company contracted with W company to deliver and erect certain machinery in twenty weeks for W company at a cost of Shs.2,000,000. C co mpany agreed in one of the clauses of the contract that if they exceeded the stipulated period of twenty weeks they were "to pay by way of penalty the sum of Shs.15,000 per extra week". C company were ten weeks late in completing their contractual undertaking. In view of the penalty clause in the contract, W company claimed Shs.200,000 from C company, the actual loss they had suffered as a result of ten weeks' delay. C company insisted that they were liable to pay Shs.15.000 per week as agreed in the contract.Consider the legal position.(10mrks)

6.(a)What conditions must be satisfied for agency by ratification to arise?(6mrks)

(b)A made an offer to B, the managing director of a company, for the supply of certain building materials. B accepted the offer, without authority, on behalf of the company. Then A withdrew his offer and gave the company a notice to that effect. The company's directors subsequently met and passed a resolution by which they approved what B had done on behalf of the company. Explain the legal position. (14mrks)

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