INTRODUCTION TO LAW & GOVERNANCE NOVEMBER 2019 - CPA SOLUTION|REVISION KITS|KASNEB

QUESTION 1a(i)

Q (a) Outline four ways through which the Supremacy of the Constitution is manifested

A

Solution

Supremacy declaration - Section 3 of the Constitution emphasizes that it is the supreme law and any other law inconsistent with it is void to the extent of the inconsistency

Organs of the Government - The Constitution provides for the main offices and organs of government, namely the Legislative, Executive and Judiciary, Office of the Attorney General, Comptroller General of Police, Electoral Commission and Civil Service Commission .

Norm validating- All laws derive their validity from the constitution.

Fundamental rights and freedoms: Chapter V of the Constitution guarantees the fundamental rights and freedoms of individuals.
In accordance with Article 84 (1) of the Constitution, persons whose rights or freedoms have been, are or may be violated have the right to seek judicial remedy.

According to the special amendment procedure provided for by the Constitution, a bill to amend the Constitution must receive the support of at least 65% of all members, except ex officio members, during the second and third readings

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QUESTION 1a(ii)

Q (ii) Identify eight sources of law in your country.

A

Solution

The constitution.
Legislation or statute law.

Delegated legislation.

Common law.

Statutes of general application.

Islamic or Sharia law

Equity.

Case law.

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QUESTION 1b(i)

Q Distinguish between "substantive ultra vires" and "procedural ultra vires".

A

Solution

The courts have tried to curb enabling legislation through the doctrine of ultra vires, which literally means beyond the powers. Courts are empowered to declare delegated legislation ultra vires, the rules subsequently becoming invalid and therefore in force. Courts may declare delegated legislation ultra vires as to substance or procedure.

Substantive ultra vires.
Courts may declare delegated legislation substantially ultra vires if the claim:

The delegate exercised his powers for a purpose other than that for which the power was conferred.
The delegate has exceeded the power prescribed by the enabling of Parent Act.
The delegate acted unreasonably.

Procedural ultra vires.
The legislative procedure prescribed by the enabling law or parent law is mandatory and must be followed by the representative. Delegated legislation not in accordance with prescribed procedure, the procedure is flawed and the procedure may be declared ultra vires if challenged in court.

In Maina And Mwangi V. R (1950) the appellants were convicted. Resident Magistrates Court in Nairobi for overcharging a haircut contrary. Defence Control Regulations 1948. These regulations empowered the price controller to fix charges for various services including a haircut. He had fixed the price of a haircut at 50 cent. The appellants had charged Sh.1. On appeal, the appellants argued that their conviction and sentence was null and void as the rules under which they had been convicted were procedurally defective in that they had not been published in Government Gazette as required by law. Since the rules were procedurally defective they were declared procedurally ultravires and the appellant's conviction and sentence was set aside.

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QUESTION 1b(ii)

Q (ii) Discuss four ways in which the independence of the Judiciary is promoted.

A

Solution

Judicial officers should enjoy immunity in the exercise of their functions.

Judicial independence can be achieved, for example, by establishing a judicial authority within the judicial system. First, the court must be free from interference or control by either party.

udicial staff should enjoy the protection of tenure.

The judiciary should be the employer of all judicial personnel.

Judges should be appointed strictly on the basis of merit, professionalism, character and commitment to the rule of law.

The terms and conditions of the service must be consistent with its responsibilities

Judicial staff should have their own employment code and terms and conditions.

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QUESTION 2a

Q Mpole, the owner of the petrol station, is angry and seeks your advice on whom he can sue.
Advise Mpole.

A

Solution

vicarious liability
Advice

➪ This problem is based on the principle of vicarious liability.

➪ In this case, it is apparent that Mwanzia is Maku's servant as a truckdriver.

➪ It therefore follows that Mutuku is vicarily liable for torts committed by mwanzia in the course of his employant.

➪ It is clear that he is responsible for any significant time during his employment and Mutuku is responsible for any offense committed by Mwanzia.

➪ Although Mwanzia was negligent by litting the cigarette, Mutuku is liable as the master.

➪ As the servants conduct is irrelevant.

➪ My advice to Mpole is to sue Mutuku for the loss of the petrol station.

➪ This is because Mutuku is vicariously liable for torts committed by Mwanzia.

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QUESTION 2b(i)

Q Outline four circumstances when a buyer might reject the goods and repudiate the contract.

A

Solution

➪ If the seller delivers more goods than the quantity contracted for.

➪ If the seller delivers less goods than the quantity contracted for.

- If the seller delivers goods mixed with those of a different description.

➪ If the seller delivers by instalments contrary to the terms of the contract.

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QUESTION 2b(ii)

Q Explain three circumstances under which the unpaid seller might exercise his right of lien.

A

Solution

Under Section 41 of the Act, the unpaid seller's lien is exercisable in the following circumstances:

➪ Where goods have not been sold without any stipulation as to credit.

➪ Where goods have been sold on credit but the term of credit has expired.

➪ If the buyer becomes insolvent.

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QUESTION 3a(i)

Q Explain three rules that govern the measure of damages for breach of contract.

A

Solution

➪ Compensation: The purpose of the indemnity is to compensate the plaintiff for the losses suffered.

➪ proof: the plaintiff must prove the loss or damage suffered. He must adduce evidence of the actual loss suffered.

➪ Causation: There must be a nexus or link between the plaintiff loss

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QUESTION 3a(ii)

Q Angela has refused to pay Alex the contract price claiming that he has not completed the work. Advise Alex on the legal position

A

Solution

➪ This problem is based on the exceptions of the common law doctrine of precise and exact i.e. substantial performance.

➪ In this case, it is clear that Alex has substantially performed his part of the contract and is therefore entitled to payment for workdone.
➪ Angela is bound to pay Alex the contract price less the amount she is likely to spend to have the door painted as agreed. However, if the amount is too low, he may have a cause of action for breach of contract.
➪ My advice to Alex is to seek redress for payment of a reasonable amount. This advice is basedon the decision in Marshides Mehta and Co. Ltd. V Barron Verhegen whose facts weresubstantially similar.

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QUESTION 3b

Q Explain three characteristics of the contract of guarantee

A

Solution

The contract can be oral or written
There must be a principal debt-The security agreement relates to the principal debt or the payment obligation of the principal debtor. The guarantor undertakes to be liable only in the event of default by the principal debtor. If this principal obligation does not exist, but a party promises to be indemnified by the other
party in given circumstances, and the performance of this promise does not depend on the default of the other party, it it is an indemnity contract.

The interest of the principal debtor is a sufficient consideration - Consideration is required for a warranty contract like any other contract. The pledge of guarantee must have a direct counterpart between the creditor and the pledge, and it is enough that the creditor does something in the interest of the main debtor. The principal debtor's interest is sufficient consideration for the security to grant the security.

Consent to warranty shall not be obtained by misrepresentation or concealment

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QUESTION 4a(i)

Q Four modes of sentencing that a court might impose on an offender.

A

Solution

Death penalty.
Restitution.

Suspended sentences.

Absolute and conditional discharge.

Finding security to keep the peace and be of good behaviour.

Forfeiture.

Fines.

Payment of compensation.

Probation orders.

Community service orders.

Imprisonment.

Suspension of certificate of competency in traffic offences.

Police supervision.

Revocation/forfeiture of licences.

Committal to rehabilitation centres

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QUESTION 4a(ii)

Q Four modes of udgement that a plaintiff might be awarded.

A

Solution

Specific performance:
Injuction.

Tracing.

Rescission.

Winding up

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QUESTION 4b(i)

Q Summarise four circumstances under which the duty of disclosure is justified.

A

Solution

➦ It's important to note that the duty of disclosure in insurance law is generally based on the principle of utmost good faith, where both the insured and the insurer are expected to act honestly and transparently.

In the context of the law of insurance, there are several circumstances under which the duty of disclosure is justified including;

When Applying for Insurance: When an individual applies for an insurance policy, they have a duty to disclose all relevant information to the insurer. This includes providing accurate and complete information about their personal details, medical history, previous insurance claims, and any other information that may affect the insurer's decision to provide coverage. The duty of disclosure at the application stage ensures that insurers can assess the risk accurately and set appropriate premiums.
Material Changes in Risk: During the term of an insurance policy, if there are material changes in the risk being insured, the insured has a duty to disclose these changes to the insurer. For example, if a homeowner installs a swimming pool or makes significant renovations that increase the value of the property, they are obligated to inform the insurer. Failure to disclose such changes may result in coverage issues or claims being denied.
Renewal of Insurance Policies: When an insurance policy is up for renewal, the insured has a duty to disclose any new information that may affect the insurer's decision to renew the policy or adjust the terms and conditions. This includes providing updates on any changes in circumstances, claims history, or other relevant factors that could impact the insurer's risk assessment.
Claims Submission: When submitting an insurance claim, the insured has a duty to provide accurate and complete information regarding the claim. This includes disclosing all relevant facts, supporting documents, and any other information that may impact the validity or amount of the claim. Failing to disclose material information during the claims process could lead to denial of the claim or even accusations of fraud.

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QUESTION 4b(ii)

Q Outline four conditions that must be met for the principle of "contribution" to apply.

A

Solution

➦ In the law of insurance, the principle of "contribution" comes into play when there is more than one insurance policy covering the same risk. It allows for a proportionate sharing of the loss among multiple insurers. The principle of contribution generally applies when the following conditions are met:

Existence of Multiple Policies: Contribution applies when there are two or more insurance policies that cover the same risk or the same insured interest. For example, if a property is insured under two separate property insurance policies from different insurers, the principle of contribution may be invoked.
Common Insured Interest: The policies involved must have a common insured interest. This means that the policies should protect the same person, property, or liability. For instance, if two different liability insurance policies cover the same individual's legal liability for a specific event, contribution may be applicable.
Indemnity Principle: The principle of contribution operates on the basis of indemnity, meaning that the insured cannot profit from the loss or receive more than the actual amount of the loss. The total amount of compensation an insured can receive should not exceed the value of the loss suffered.
Insured's Rights: The insured must have the right to claim under both policies and recover the loss from each insurer. This means that the insured must be entitled to make a claim under each policy separately and receive compensation from each insurer up to the applicable policy limits.
No Double Recovery: Contribution ensures that the insured does not receive double recovery or more than the actual amount of the loss. The principle aims to achieve a fair sharing of the loss among the insurers involved.

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QUESTION 5a

Q Describe four circumstances that should exist in order for a mediation to be termed as "International Mediation".

A

Solution

International mediation is an attempt to resolve disputes between nations: It operates under the same dispute resolution principles that apply to disputes between individuals.

It is a way to put the parties in control of dispute resolution through objective advice in a neutral environment. International mediation can relate to business and commercial matters, or attempt to prevent or end an armed conflict.

Many countries use international mediation to settle disputes on a variety of issues.
Features.
- Involves two or more parties from different countries in dispute over one or more contract issue(s).

- Mediator is always from the different country from the conflicting parties so as to be seen neutral.

- Application of international law mechanisms to settle dispute.

- Touches on weighty issues e.g treatment of refugees, border disputes and border issues.

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QUESTION 5b(i)

Q Identify three superior courts.

A

Solution

Superior courts:

Supreme Court,
Court of Appeal,

High Court,

An Employment and Labor Relations Court and,

A court to hear matters concerning the Environment, and the use of occupation of and title to land

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QUESTION 5b(ii)

Q Summarise five grounds upon which a judge of a superior court might be removed from office.

A

Solution

Inability to perform office functions arising from mental or physical incapacity;

A breach of a code of conduct prescribed for judges of the superior courts by an Act of Parliament;

Bankruptcy;

Incompetence; or

Gross misconduct or misbehaviour.

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QUESTION 5c

Q Highlight four forms that a qualified acceptance might take.

A

Solution

Qualified as to place;
Qualified as to amount;

Qualified as to time;

Acceptance made by some of the drawees only, and;

Acceptance made for payment in installments.

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QUESTION 6a

Q (a) Explain four differences between an "incorporated association" and an "unincorporated association"

A

Solution

Incorporated Association	Unincorporated Associations
This is an association of persons recognized as a legal entity	These are associations of persons who come together to promote a common and lawful purpose.
It has an independent legal personality with rights and subject to obligations.	They have no legal existence of their own
Such a corporation may be brought into existence by registration, charter or by statute	Property if any is jointly owned or held in trust for all members
Examples include corporations solecorporations aggregate,	Examples include: Partnerships, Trade unions, Political parties, Welfare associations, Clubs, Staff unions.
Legal personality	The association can sue or be sued through its principal officers.
Limited liability	In the event of dissolution members are entitled to share in whatever remains
Perpetual succession.	The law which regulates the association is the law which regulates the activities it engages in
Owning property	Members' rights are enshrined in the constitution of the association.

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QUESTION 6b

Q (b) Highlight four circumstances in which the principle of "delegate non potest delegare" does not apply in the law of agency.

A

Solution

Delegate non potest delegare
➦ The principle of "delegate non potest delegare" is a Latin term meaning "a delegate cannot delegate." It generally refers to the principle that an agent who has been appointed to act on behalf of a principal cannot further delegate their duties or responsibilities to a third party without the principal's consent. However, there are certain circumstances in the law of agency where this principle may not apply. Here are a few examples:

Authority to Delegate: If the agency agreement explicitly grants the agent the authority to delegate their duties or responsibilities, then the principle of delegate non potest delegare may not apply. The principal can include a provision in the agreement that allows the agent to delegate certain tasks or responsibilities to others.
Custom or Trade Practice: In certain industries or trades, it may be customary or accepted practice for agents to delegate certain tasks or responsibilities to others. If such delegation is a common practice in a particular industry and the principal is aware of and agrees to this custom, then the principle of delegate non potest delegare may not apply.
Necessity or Emergency: In cases where it becomes necessary or an emergency arises, an agent may be allowed to delegate their duties or responsibilities to a third party in order to fulfill their obligations to the principal. This can occur when the agent is unable to perform their duties due to illness, unavailability, or other legitimate reasons.
Agent's Expertise or Specialization: If an agent lacks the necessary expertise or skills to perform a specific task or responsibility, they may be permitted to delegate that particular function to someone with the required knowledge or qualifications. This can occur when an agent needs to engage a specialist or subcontractor to carry out certain aspects of the agency work.

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QUESTION 6c

Q (c) Describe two conditions and two warranties that are implied in a hire purchase contract.

A

Solution

Implied Condition

An implied condition on the part of the owner that he has the right to sell the goods when ownership should pass.

There is an implied condition that the goods must be of merchantable quality, but no such condition shall be implied under this clause -

(i) in respect of manufacturing defects of which the owner could not reasonably have been aware at the time the agreement was made, or

(ii) in respect of the agreement (whether referred to as a default in the agreement or other similar description), or

(iii) the lessee has inspected the goods or samples thereof in respect of a defect which the inspection should have discovered, or

(iv) if the goods are second-hand and the contract contains a statement to that effect.

Implied warranty.

(i) That the hirer shall have and enjoy possession of the goods.

(ii) That the goods shall not have been charged or encumbrance in favor of any third party at the time when the property is to pass.

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QUESTION 7a(i)

Q Outline three conditions for the remedy of statutory power of sale.

A

Solution

The statutory power of sale only becomes available to a mortgagee when the default complained of has not been remedied by the mortgagor even thereafter given the opportunity to do so.

Therefore, before invoking statutory power as a remedy, the mortgagee must be able to prove that the mortgagor has not only defaulted in their obligations but also failed to remedy the default within a specified period of time.

Where the mortgagor defaults and the default continues for a month or other period specified in the mortgage instrument, the mortgagor must send written notice to the mortgagor requesting that the default be corrected. The clause clarifies that, for a notice of default to be effective, it must be served on the mortgagor either personally; either by registered mail to an address registered in the land register or known to the mortgagee; either by leaving the notice on the property which is the subject of the mortgage, in a conspicuous place or by fax.

Once notice has been given, the mortgagee has no right to sell the secured property at auction or otherwise before a period of one month or such other period as may be specified in the mortgage deed. If this period expires and the mortgagor has not taken steps to remedy the default, the mortgagor is entitled to sell the secured property without further reference and without liability for the sale of the property.

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QUESTION 7a(ii)

Q List three ways in which co-ownership might be terminated.

A

Solution

Division of the property in hand by mutual concent
Sale of the property

Unification of the property/ Property vested to one person

Conversion of a joint property into a public ownership

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QUESTION 7a(iii)

Q Explain the two types of chattels personal.

A

Solution

chattels personal are called "personal property" and can be classified in to two, tangible or intangible.

Tangible personal property refers to personal property that has a physical form and can be physically owned by someone. Examples of tangible personal property include equipment, motor vehicles and household goods.

Intangible personal property is something that has no physical embodiment, but represents something of value. An example of intangible personal property includes actual shares and options.

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QUESTION 7b(i)

Q Identify five ways in which a person shall cease to be a partner.

A

Solution

Upon the dissolution of the partnership
On his/her death.

if the person has been declared to be of unsound mind by a court of law.

If the person has applied to be deemed insolvent or declared insolvent

If it is provided in the Partnership agreement.

If the partner has given written notice of at least 30 days to other partners about his/her willingness to resign.

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QUESTION 7b(ii)

Q Highlight five clauses which might be found in a partnership agreement.

A

Solution

The name of the partnership
The partners' names and addresses
The partnership's goals

Partners participation in decision-making, such as how to decide whether to hire employees or to contract e.t.c

Partnership operatpons, such as an LLC or a corporation

The partners' responsibilities

What each partner contributed to the business

How to determine partners' liabilities for debts

Whether if the partnership is for a certain period of time

Procedures for adding new partners

Hours of operation and vacation policies

How to amend the agreement

Where the partnership will operate, including the specific addresses

Whether should partners sue in arbitration or mediation?

Profit-sharing, including when and how to pay the partners, and in what percentage

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CPA
Foundation Leval
Introduction to Law and Governance November 2019
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Comments on CPA past papers with answers:

Financial Accounting

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CPA
Foundation Leval
Introduction to Law and Governance November 2019
Suggested Solutions