COUNCIL OF LEGAL EDUCATION
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PRE - BAR EXAMINATION
COMMERCIAL LAW
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WEDNESDAY, 21ST SEPTEMBER, 2011
DURATION: 3 HOURS
Instructions to Candidates
(a ) Answer Question ONE and any other three Questions
(b) ALL Questions carry 25 marks each
(c) Marks may be lost for illegibility
PLEASE TURN OVER
1. Duncan entered into an agreement with David to sell to David an iphone. Duncan
transacted the business through his company Rafiki Co. Ltd. The price was however
not fixed as between the parties. David made it clear that he needed the iphone in order
to record his brother's graduation ceremony on 16th February, 2011. David agreed to
pay as soon as the price was fixed. On 15th February, 2011 Duncan tried to reach David
to inform him of the price but David could not be reached on his cellphone. Duncan
decided not to deliver the iphone and as such David was unable to record his brother's
graduation.
(a ) Discuss the status of the agreement bringing out the legal issues involved.
(15 marks)
(b) What are the remedies of a seller for a breach of contract? (5 marks)
(c) What are the remedies of a buyer for breach of contract? (5 marks)
2. "The effect of passing the property in goods to the buyer is a transfer to him/her of the
title and full legal interest in the goods, subject to any rights in the goods retained by the
seller or by any third party." Anonymous .
(a ) State the rules governing the passing of property in a contract for the sale of specific
goods and indicate the circumstances under which a seller can reserve title.
(15 marks)
(b) Peter Juma writes out a cheque drawn on Newpesa Bank Limited for Kshs.750,000/-
in favour of 'John Maina or order'. Maina loses the cheque and Kabila, a rogue,
finds it and forges Maina's endorsement and passes it on to Rongai Motors, ( motor
car dealers) in exchange for a seven-year old car. Rongai Motors, in turn, endorse
the cheque to Ongata Limited, their landlords, in part payment of rent due to the
latter.
In the meantime, Maina has discovered the loss of the cheque and traced it to Rongai
Motors' landlords. He now claims the return of the cheque or the proceeds.
Briefly discuss the rights and remedies, if any, available to Maina and Ongata
Limited.
(10 marks)
3. ( a) Discuss the circumstances under which a creditor may be entitled to present a
bankruptcy petition against a debtor.
(15 marks)
( b) What are the duties of a debtor against whom a receiving order has been made?
(10 marks)
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4. Write brief notes on the following:
( a) Chattels Mortgage (15 marks)
(b) Elements of a valid Chattels transfer instrument (5 marks)
(c) Distinction between a promissory note and a bill of exchange. (5 marks)
5. An agent can have different types of authority from his principal.
( a) Write short notes on the following types of authority of the agent:
(i) Actual authority (5 marks)
(ii) Apparent authority (5 marks)
(iii) Customary authority (5 marks)
( iv) Presumed authority (5 marks)
(b) In what ways can the agent- principal relationship be terminated ? (5 marks)
6. In order to ensure that the debtor or hirer is aware of his rights and the remedies
available to him under a Hire-Purchase Agreement, certain minimum information must
be contained in the agreement.
(a ) State the minimum information which must be contained in a hire purchase
agreement.
(10 marks)
(b) Discuss the remedies available to the owner in a hire purchase agreement in case of
default by the hirer.
(10 marks)
( c ) A hirer who obtains possession of a refrigerator from its owner under a hire
purchase agreement sells the refrigerator to a buyer who buys in good faith without
notice of the right of the owner. Will this buyer get a good title to the refrigerator?
State reasons for your answer.
(5 marks)
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