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CPA
Foundation Leval
Introduction to Law and Governance November 2018
Suggested Solutions

Introduction to Law and Governance
Revision Kit

QUESTION 1a

Q (a) Outline six properties of law.
A

Solution


Law is a set of rules that are created and are enforceable by social or governmental institutions to regulate behavior. It is a discipline that is concerned with the customs, practices, and rules of conduct of a community that are recognized as binding by the community.

properties of law

(1). It is a set of rules that;

(2). Regulates the human conduct

(3). It is created and controlled by the state.

(4). It possesses a certain amount of stability, fixity, and uniformity.

(5). It is supported by coercive authority.

(6). Its violation leads to punishment.

(7). It's an idealogy of "sovereignty," which is the most crucial aspect of a state.

(8). It is a manifestation of the will of the people, and in order to give it definiteness, it is typically put in writing.

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QUESTION 1b(i)

Q In relation to the sources of law:

(i) Distinguish between an "amendment" and a "repeal" of a law.
A

Solution


Amendments are frequently employed When it would be preferable to update the document rather than create a new one.

A law is repealed when it is no longer useful or is having unfavorable effects. It is removed from the books or reversed.

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QUESTION 1b(ii)

Q (ii) Identify four examples of persuasive precedents.
A

Solution


Persuasive precedent is a former ruling, by a judge, which is not binding but can be applied by another judge, at discretion, in the interpretation of a case of a similar circumstance or nature (Putman, 2009, 183).

Examples of persuasive precedents.

“Central London property trust LTD v high trees house LTD” of 1947

The high court established case law, the doctrine of equity, that has since been used by more superior courts like the court of appeal.

“Great Peace Shipping Ltd v Tsavliris salvage international Ltd” of 2003

The court of appeal declined to apply a precedent that it had earlier set in the case of Solle v Butcher in the year 1950 on the basis that the Solle v Butcher case had been inconsistent with provisions of the house of Lords.

“Attorney General for Jersey v Holley”.

The judge considers a lot of information before making a judgement. Decisions typically include information regarding the case's facts, legal arguments, and reasoning since it is important to know these things in order to identify a point of law.

“Candler v Crane Christmas”

The judgment delivered argued that there should be a duty of care for negligent misstatements. This judgement was followed in the case of Hedley Byrne Heller.

“Re S (Adult: Refusal of Medical Treatment)”

A woman had been in labour for hours and refused to have a caesarean. The doctors believed that the baby and the mother were at risk. The judge had to deliver a quick judgement and having no binding precedent he was persuaded by a similar case in the USA.

“Obiter Dicta: R v Howe”

The court decided that duress is not a defence for murder but in the judgement the judge said obiter dicta that duress would not be a defence to attempted murder either. This persuaded R v Gotts.

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QUESTION 1c

Q List six Instances when a court might review an administrative action.
A

Solution


Circumstances when a court might review an administrative action.

1. When the body acts ultra viresly (beyond the legal power or authority of the person performing an action).

2. When there is error of law.

3. When there is jurisdictional errors.

4. When a public body or official acts in bad faith.

5. When there is breach of principles of natural justice.

6. When there is biasness.

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QUESTION 2a

Q Explain the meaning of the term "written law"
A

Solution


Meaning of "written law".

A set of rules in a country, region, or society that is recognized as binding and enforceable by a law, written and prepared using some system (usually a subject), and written in a book of such rules, e.g., a code,a statute, tradition

It include:

1. The constitution - Is a public legal document which governs the relations between the state and the citizens.

2. Acts of parliament (Statute) - This is law made in parliament through introduction of a bill.

3. Case law (judicial precedent)

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QUESTION 2b

Q (b) The legislative power of parliament is exercisable through bills passed by the National Assembly,

With reference to the above statement, explain three types of bills that might be presented to parliament in your country. (6 marks)
A

Solution


Types of bills

A bill is a draft of proposed Act of parliament.

Types of bills include:

1. Public bills - This is a bill whose provisions have broad public impact and which deals with public policy issues.

2. Private bills - This is a bill intended to entice or benefit a specific individual, group, or business entity.

3. Government bills - These are bills presented or introduced to parliament by either the attorney general or a cabinet minister.

4. Private member bills - These are bills which address issues affecting only a small section of particular legislator's given area (constituency)

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QUESTION 2c

Q Outline six common servitudes under the law of property.
A

Solution


Easement - is a right attached to a parcel of land which allows the proprietor of the land either use the land of another in a particular manner or restrict its use to a particular extent.

Profit a prendre - is a right to go to the land of another to take particular substance from that land, whether the soil or products of the soil.

Restrictive covenants - an agreement by which a proprietor or land owner undertakes to restrict the use of his land in a particular manner for the benefits of some other land

Praedial servitude - This is when a person has a right of use due to the fact that he is the rightful owner of a certain property. Should he sell the property, the servitude can be exercised by or will have to be honored by the new owner.

Personal servitude - A right in favor of a specific individual. This means that when that individual moves on, the servitude goes away. It does not pass on to the new owner if the property is sold

Equitable servitudes - A non-possessory interest in land that permits the owner of the benefitted property to utilize or restrict the use of the burdened property.

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QUESTION 2d

Q State four advantages of unincorporated associations.
A

Solution


Advantages of unincorporated associations.

Unincorporated associations are organizations founded by an agreement between a group of individuals who get together for purposes other than profit

Advantages

1. They are simple to start because they don't need a precise legal foundation.

2. In the event of a partnership, risks are shared among many parties.

3. Access to additional funding is available.

4. Partners bring knowledge from their respective fields.



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QUESTION 3a

Q (i) Explain the meaning of a "conditional sale agreement".

(ii) Describe six features of a conditional sale agreement.
A

Solution


Conditional sales agreement

Conditional sales agreement is where a buyer takes possession of an asset, but its title and right of repossession remain with the seller until the purchase price is fully paid. If the buyer defaults, the seller can repossess the property.

Features of a conditional sale agreement.

➪ It is a contract.

➪ Terms and conditions embeded in the contract

➪ Involves a buyer and seller .

➪ Involves the sale of goods.

➪ The seller allows the purchaser to take delivery of the items outlined in the contract and pay for them later.

➪ Rightful ownership of the property belongs to the seller until the full price is paid by the buyer.

➪ Repossession by the owner when the purchaser defaults

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QUESTION 3b

Q Outline six liabilities of a minor who has been admitted in the benefits of a partnership.
A

Solution


Liabilities of a minor who has been admitted in the benefits of partnership.

➪ Contracts for the supply of necessaries - Items appropriate for the circumstances in which such a baby or minor lives and his actual involvement.

➪ Educational benefits.

➪ Contracts for beneficial services.

➪ Contracts for the supply of 'other necessaries'

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QUESTION 3c

Q Identify four grounds upon which a valid treaty might be invalidated under international law.
A

Solution


Grounds upon which a valid treaty might be invalidated under international law.

1. Change of law.

2. Lack of essential requirement of the contract

3. In case of frustration of the subject matter.

4. Security threats.

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QUESTION 4a

Q In relation to negotiable instruments, discuss three acts that might be held to amount to negligence on the part of the collecting banker.
A

Solution


Acts that might be held to amount to negligible on the part of the collecting banker.

➪ Honoring checks without express or streamlined authority.

➪ Unauthorized disclosure of client information or balance.

➪ Failure to collect customer-paid checks.

➪ Failure to exercise reasonable care in handling client transactions.

➪ Not paying checks in accordance with crossings

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QUESTION 4b

Q Explain five circumstances under which an agent's action which was initially unauthorised might be subsequently ratified by his principal so as to become binding.
A

Solution


circumstances under which an agent's action which was initially unauthorised might be subsequently ratified by his principal so as to become binding.

➪ The principal must have had capacity to enter into the transaction not only when the agent did so but when he ratifies the same as well

➪ The agent must have purported to act for a principal .

➪ The agents' principal must be competent.

➪ The transaction entered into by the agent must be capable of ratification and not be illegal or void.

➪ The principal must have been aware of the material facts affecting the contract.

➪ The transaction must be ratified by the principal in a timely manner.

➪ The principal must ratify the contract in its entirety.

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QUESTION 4c

Q Outline four ways in which a surety might be discharged from a contract of guarantee.
A

Solution


1. Notice of revocation:

2. Death of surety

3. Variance in terms of contract

4. Release or discharge of principal debtor

5. Arrangement by creditor with principal debtor without surety’s con­sent

6. Creditor’s act or omission impairing sureties eventual remedy

7. Loss of security

8. Invalidation of the contract of guarantee (in between the creditor and the surety):

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QUESTION 5a

Q Advise Mjengo Limited on the legal position.
A

Solution


➦ In the given scenario, Mjengo Limited contracted with Ukulima Limited based on the purported authority of Brian Bundi, who claimed to act as the Managing Director of Ukulima Limited. However, Ukulima Limited now denies Brian Bundi's authority to act on behalf of the company.

Here is the legal position and advice for Mjengo Limited:

  1. Actual Authority: Actual authority refers to the authority explicitly given to an individual by the company to act on its behalf. In this case, if Brian Bundi was not officially appointed as the Managing Director through the proper channels, he may not have actual authority to enter into contracts on behalf of Ukulima Limited. Mjengo Limited should inquire if any official appointment or resolution exists regarding Brian Bundi's authority as the Managing Director.
  2. Apparent Authority: Apparent authority arises when a reasonable third party would perceive an individual to have the authority to act on behalf of the company based on the company's actions or representations. If the other directors of Ukulima Limited were aware of Brian Bundi's actions and allowed him to hold himself out as the Managing Director without objection, it could create the appearance of authority or apparent authority. Mjengo Limited should investigate if there is evidence to support this.
  3. Ratification: Even if Brian Bundi lacked actual or apparent authority initially, Ukulima Limited may still be bound by the contract if it later ratifies the actions of Brian Bundi. Ratification occurs when the company, with full knowledge of the unauthorized act, accepts or confirms the contract. Mjengo Limited should determine if Ukulima Limited, after becoming aware of the contract with Mjengo Limited, has explicitly or implicitly ratified the contract.

Advice for Mjengo Limited:
  1. Review the Contract: Review the contract signed with Brian Bundi and Ukulima Limited to identify any provisions related to authority, indemnification, or dispute resolution. Evaluate the terms and conditions agreed upon by both parties.
  2. Gather Evidence: Collect all relevant documentation, including any communication, emails, or correspondence, which supports Brian Bundi's authority to act as the Managing Director and Ukulima Limited's knowledge of his actions. This evidence will be useful in establishing a legal position and negotiating with Ukulima Limited.

Ultimately, the legal position and possible outcomes for Mjengo Limited will depend on the specific evidence, contractual provisions, and applicable laws in the jurisdiction.

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QUESTION 5b

Q List six advantages of using mediation in reaching a settlement in commercial disputes.
A

Solution


Advantages of using mediation in reaching a settlement in commercial disputes.

➪ Quick and Inexpensive - Mediation is a choice to take into consideration when parties wish to go on with their lives and business. Because mediation typically takes less time to complete, an earlier resolution than is achievable through investigation is made possible.

➪ Confidential - The mediation process is confidential. Any information disclosed during the mediation shall not be disclosed by the mediators. The sessions are not transcribed or recorded on tape. Whatever notes the mediators made throughout the mediation are destroyed when it is over.

➪ Greater Degree of Party Control - The outcome of a disagreement is more in the power of the parties who negotiate their own solutions. In the process, all parties have an equal voice. Instead of assigning blame, the parties settle their dispute in a way that is acceptable to both of them.

➪ Informal - Legal counsel is not required because the approach is informal and flexible. There are no witnesses and no formal norms of evidence.

➪ Comprehensive and Customized Agreements. Mediated agreements often help resolve procedural and interpersonal issues that are not necessarily susceptible to legal determination. The parties can tailor their settlement to their particular situation and attend to the fine details of implementation.

➪ A Foundation for Future Problem Solving - If a conflict arises after a mediation resolution, the parties are more likely to choose a cooperative venue for problem-solving to settle it than to take an adversarial route.

➪ Preservation of Relationships - In the framework of continuous professional interactions, many arguments take place. Working relationships are frequently preserved in ways that would not be conceivable in a win-lose decision-making process via mediated agreements that take into account the interests of all parties. A work relationship's termination can also be made more friendly through mediation.

➪ Mutually Satisfactory Results - Parties are generally more satisfied with solutions that they have had a hand in creating, as opposed to solutions that are imposed by a third-party decisionmaker.

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QUESTION 5c

Q Outline six special powers of the High Court in addition to the jurisdictional ones identified in the Constitution of your country.
A

Solution


Special powers of the High Court in addition to the jurisdictional ones identified in the Constitution of your country.

➪ The authority to hear an appeal from a decision of a tribunal appointed under this Constitution to consider the removal of a person from office, other than a tribunal appointed under Article 144;

➪ Unlimited original jurisdiction in criminal and civil matters;

➪ The authority to determine whether a right or fundamental freedom in the Bill of Rights has been denied, violated, infringed or threatened;

➪ Authority to hear any argument regarding how the Constitution should be interpreted.

➪ Hear any other jurisdiction, original or appellate, conferred on it by legislation

➪ The High Court does not have supervisory jurisdiction over a superior court, but it does have jurisdiction over all subordinate courts and anybody else performing judicial or quasi-judicial functions.

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QUESTION 6a

Q In relation to the law of contract, explain four ways in which a contract might be discharged.
A

Solution


Ways in which a contract might be discharged.

1. By express agreement - If the parties to a contract expressly agree to do so, the contract may be dismissed by agreement. The shared commitments provide as support for the discharge.

2. Discharge by performance - If both parties carry out their mutually agreed-upon obligations, the contract is discharged by performance.

3. Discharge by impossibility or doctrine of frustration - A contract is said to be frustrated if there are unanticipated events that neither party is to blame for that make the fulfillment of the obligation impossible, unlawful, or commercially useless.

4. Discharge by breach of contract - this refers to failing to fulfill a commitment by the due date or providing subpar performance.

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QUESTION 6b

Q Advise Jerry Katana on the legal position
A

Solution


Advice to jerry katana

The letter from Tom Obonyo constitutes an offer.

An offer is a clear expression by one party of its desire to enter into a contract with another.

Since it was sent to Jerry Katana, it was not intended for the general public, and hence was not something that she would accept.

The desire by Jerry Katana to cut the price from Sh. 500,000 to Sh. 450,000 constitutes conditional acceptance, which is not an acceptance.

Tom Obonyo was entitled to rescind the offer because he didn't specify how long it had to be valid.

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QUESTION 6c

Q Explain the meaning of the following terms as used in international contracts of sale:

(i) Free Alongside Ship (FAS).

(ii) Free On Board (FOB).
A

Solution


(i). Free Alongside Ship (FAS)

Free alongside ship (FAS) is a contractual term used in the international export business that stipulates that the seller must arrange for goods to be delivered to a designated port and next to a specific vessel for easier transfer.

(ii). Free On Board (FOB).

Is one where the buyer makes arrangements shipping and the seller discharges his duty by putting the goods on board the ship .

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QUESTION 7a

Q With reference to the law of tort:

(i). State the meaning of the term "defamation"

(ii). Explain the two forms which defamation could take

(iii). Discuss three essential aspects of the defence of fair comment in an action for defamation.
A

Solution


(i). Defamation

Defamation is a statement that injures a third party's reputation .

(ii). forms which defamation could take

Slander

Slander involves something that is spoken, with the intention to damage someone’s reputation, and which can be heard. It is in verbal form. For example, Tito says bad things about Stela’s character, which results in Stela losing her job. Tito has committed the crime of defamation through slander.

Libel

Libel involves something that is represented visually, with the intention to harm someone’s reputation, and which can be seen. So, anything that can be written, printed or something on an effigy, movie or statue can be libel. If Tito writes something about Stela in a magazine in a derogatory manner, then Tito has committed the crime of defamation through libel.

(iii). Essential aspects of the defence of fair comment in an action for defamation.

1. The remarks made were ones of public interest.

2. The remark was not maliciously made

3. The statement is based on facts.

4. The statement was an opinion not a claim of fact.

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QUESTION 7b

Q Explain four ways in which an insurance contract could be classified.
A

Solution


1.By nature of event by which the sum becomes payable

The insurance contracts are divided according to this classification into groups such as;

• Marine
• Fire
• Life

2.Nature of the interest affected

Under this classification, insurance contracts are divided into three major groups, including;

• Personal insurance e.g. life, accident, fidelity etc.
• Property insurance e.g. fire, marine, motor, Crop etc.
• Liability insurance where policies are taken out in compliance with statutory provisions e.g. the compulsory third party motor insurance, NSSF, NHIF

3.Nature of contract of insurance

contract of insurance may be

• indemnity

is an insurance contract where the insured pays a premium with the idea that he will be reimbursed for the actual loss suffered in the case of a loss. He needs to be put back in the position he was in before the loss.

• non- indemnity.

is one where the insured ensures the payment of a set amount of money that has previously been calculated as the worth of the insurance subject matter. There is a guarantee that the money will be paid out if a risk occurs, like with a life insurance policy.

4.By nature of the program of insurance

insurance programs are either;

• private
• social.

Private insurance is generally optional and voluntary and is effected on the basis that the insured stands to lose should he take the risk attached.

Social insurance is mandatory and is imposed upon the assured by statute to protect the society from a hazard that no single individual can cushion.

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