BUSINESS LAW
November 2017
THE KENYA NATIONAL EXAMINATIONS COUNCIL
DIPLOMA IN SUPPLY CHAIN MANAGEMENT
DIPLOMA IN BUSINESS MANAGEMENT
DIPLOMA IN CO-OPERATIVE MANAGEMENT
DIPLOMA IN INVESTMENT MANAGEMENT
MODULE I
1. (a) Benasa Limited entered into two valid contracts with Kipawa Limited to supply electrical materials and to construct a new building. Unfortunately, fire razed down the factory in which they planned to manufacture the electrical materials. Heavy rains also brought down the new building they had started constructing for the company. Advise Benasa Limited on the legal position regarding the two contracts. (10 marks)
(b) Explain the application of the concept of vicarious liability with regard to independent contractors. (10 marks)
2. (a) In relation to the employment law, highlight five obligations of an employee. (10 marks)
(b) Mutu came across an ox as he was walking home late one night, which he took home.
A week later, he counted himself lucky to have acquired the ox. He has decided that even if claimed, the owner would have to pay him a reasonable fee. Explain Mutu’s position regarding the acquisition of good title. (10 marks)
3. (a) Outline four circumstances under which the Kenya Court of Appeal would be free to depart from an earlier decision of its own, regarding a case. (8 marks)
(b) (i) In relation to the law of agency, highlight four requirements of a valid ratification. (8 marks)
(ii) Basil, an agent, regularly receives special instructions limiting his authority from his principal. Otondo transacted with the agent in good faith, unaware of the new limitations. Determine the liability of the parties. (4 marks)
4. (a) Outline four challenges faced by county governments in delivering services to the public. (8 marks)
(b) Explain six ways in which a banker’s authority to pay a cheque drawn on him may be terminated. (12 marks)
5. (a) Describe the procedure of devolving the estate of a person who died intestate and left behind a spouse and children. (10 marks)
(b) Explain live sources of law in Kenya. (10 marks)
6. (a) Explain four vitiating factors that may affect the validity of a contract. (10 marks)
(b) (i) Explain three ways in which agency may be terminated by the act of the parties. (6 marks)
(ii) Outline two exceptions to the termination methods identified in (i) above. (4 marks)
7. (a) Highlight four differences between a tort and a contract. (8 marks)
(b) In relation to the law of property, explain:
(i) Two classes of personal property;
(ii) The process of creating legal mortgages. (12 marks)