Business Law — 2024

KNEC Diploma in Supply Chain Management, Module I. Original examination questions with explained model answers for revision.

November 2024

Paper codes: 2903/106 (shared paper)
Time: 3 hours
Instructions: Answer any FIVE questions. All questions carry equal marks. Answer the questions in English.

Question 1(a) — 10 marks

Explain five branches of civil law.

Model answer

  1. Contract law governs legally enforceable agreements and remedies for their breach.
  2. Tort law provides civil remedies for wrongful interference with protected interests, such as negligence or trespass.
  3. Property law regulates ownership, possession and rights over land and other property.
  4. Family law governs matters such as marriage, maintenance and parental relationships.
  5. Succession law governs administration and distribution of a deceased person’s estate.

Question 1(b) — 10 marks

In relation to the law of tort, explain five instances when battery is justified.

Model answer

  1. Consent: valid consent may authorise contact within its scope, for example ordinary sporting contact.
  2. Self-defence: reasonably necessary and proportionate force may be used against an unlawful attack.
  3. Defence of another: proportionate force may protect another person from an unlawful attack.
  4. Lawful arrest: a person with legal authority may use only the force reasonably necessary to make the arrest.
  5. Necessity: reasonable contact may be justified in an emergency to prevent serious harm, for example necessary treatment of an unconscious person unable to consent.

Question 2(a) — 10 marks

Parliament has put in place certain mechanisms to contain delegated legislation. Highlight five such mechanisms.

Model answer

  1. Define the scope and limits of delegated power in the enabling Act.
  2. Require statutory instruments to be laid before Parliament.
  3. Use the relevant parliamentary scrutiny committee to examine legality, rights implications and compliance with the parent Act.
  4. Annul or disallow an instrument through the prescribed parliamentary procedure.
  5. Amend or repeal the enabling Act, or require approval/renewal before specified delegated rules can operate.

Question 2(b) — 10 marks

Explain five advantages tribunals enjoy over ordinary courts of law.

Model answer

  1. Specialist expertise: members can apply practical knowledge of the particular industry or subject.
  2. Lower cost: simpler procedures can reduce legal and administrative expense.
  3. Speed: a focused jurisdiction and less elaborate procedure can produce quicker decisions.
  4. Accessibility: less formal proceedings can make it easier for parties to present their cases.
  5. Flexibility: procedures can be adapted to the dispute, subject to the governing statute and a fair hearing.

Question 3(a) — 10 marks

Explain five grounds that justify summary dismissal of an employee.

Model answer

Gross misconduct must be established on the facts. Summary dismissal concerns dismissal without the normal notice; the applicable fair-hearing requirements still apply.

  1. Absence from work without leave or other lawful cause can amount to gross misconduct.
  2. Intoxication during working hours that makes an employee unwilling or incapable of doing the work can justify dismissal.
  3. Wilful neglect of work or careless/improper performance of a duty that must be performed carefully can justify dismissal.
  4. Abusive or insulting language or behaviour towards the employer or a person in authority can constitute gross misconduct.
  5. Knowing refusal to obey a lawful and proper command within the employee’s duties can justify dismissal.

Question 3(b) — 10 marks

Explain five ways in which a tenancy agreement may be terminated.

Model answer

  1. Expiry: a fixed-term tenancy ends when its agreed term expires, subject to statutory protection and any renewal.
  2. Notice: a periodic tenancy may be ended by valid notice of the required length and form.
  3. Surrender: landlord and tenant agree to give up the tenancy and the landlord accepts possession.
  4. Forfeiture: a sufficiently serious breach can permit termination, following the contractual and statutory notice/court procedures.
  5. Merger: the tenancy and the superior ownership become vested in the same person in the same capacity, so the lesser estate merges.

Question 4(a) — 10 marks

In relation to the law of succession, outline five factors the court considers before making any provision for dependants out of the deceased’s property.

Model answer

  1. The nature and amount of the deceased’s property available for distribution.
  2. The dependant’s past, present and future means and needs.
  3. Gifts or other provision the deceased already made for the dependant during life.
  4. The dependant’s conduct in relation to the deceased, where relevant to the statutory assessment.
  5. The situation and needs of the deceased’s other dependants and beneficiaries.

Question 4(b) — 10 marks

Hilda was given authority by her husband to buy goods in credit from Janero. However, Hilda continued to acquire goods on credit from Janero even after the husband became insane. Janero was unaware of the insanity of Hilda’s husband. When the debt became so huge and was not paid, Janero decided to file a suit in a court of law to compel payment of the debt. Explain the legal principles applicable in this case.

Model answer

  1. An agency relationship was created by the husband’s authorisation; Janero’s claim depends on the scope of that authority and its legal termination.
  2. A principal’s loss of mental capacity ordinarily terminates the agent’s actual authority by operation of law, subject to recognised exceptions.
  3. The separate issue is apparent authority: a principal who previously held an agent out to a supplier may remain bound to an innocent supplier dealing on that appearance before notice of termination.
  4. Janero was unaware of the incapacity and had previously been authorised to supply on the husband’s credit. If the purchases remained within the apparent scope of that authorisation, Janero has a strong claim for payment despite the loss of actual authority.
  5. Janero cannot use the earlier authorisation to recover for transactions he knew were unauthorised, or for purchases outside its apparent scope. The large total debt alone does not establish that every purchase was authorised.

Question 5(a) — 10 marks

An agent must himself do the work which he has undertaken and cannot further delegate it to his sub-agent. Highlight five exceptions to this role.

Model answer

  1. The principal expressly authorises delegation.
  2. Authority to delegate is implied from the circumstances or the nature of the agency.
  3. An established and reasonable trade custom permits delegation.
  4. Necessity or an unforeseen emergency makes proper delegation necessary to protect the principal’s interests.
  5. The task delegated is a purely mechanical/ministerial act that does not transfer the agent’s entrusted personal discretion.

Question 5(b) — 10 marks

Matema bought a new car which he sold to Mariam after using it for eight months. During negotiations, Marlam maintained that the engine of the car had never been tampered with. Mariam relied on Matema’s statement and bought the car without examining the engine. Three days later, the car developed mechanical problems and the mechanic discovered that the engine had been repaired a number of times. Mariam stayed with the car for three months before she rejected it and took it back to Matema. However, Matema declined to take back the car. Explain the legal principles applicable in this case.

Model answer

The question prints “Marlam” as the speaker, but immediately says Mariam relied on Matema’s statement. The analysis treats Matema, the seller, as making the statement.

  1. A false statement of existing fact that induces a contract is a misrepresentation. The engine’s prior repair history is a fact, and the stated reliance supports inducement.
  2. Whether it was fraudulent, negligent or innocent depends on Matema’s knowledge, belief and responsibility for checking the statement. If he knew of the repairs or was reckless, fraudulent misrepresentation may be established.
  3. Mariam’s opportunity to inspect does not by itself defeat reliance on a positive false statement. The statement might also be a contractual term, depending on its importance and the circumstances.
  4. Rescission requires prompt action after discovering the truth and may be lost through affirmation, unreasonable delay, inability to restore the parties or intervening third-party rights. Keeping and using the car for three months after discovery may support affirmation/delay, but the facts must be assessed.
  5. If rescission is barred, an available damages claim for deceit, negligent misrepresentation or breach of an incorporated contractual term may remain. Matema cannot automatically defeat every remedy merely because Mariam delayed rejection.

Question 6(a)(i) — 4 marks

Specific performance is a remedy awarded for breach of contract where a monetary award is not adequate. Outline two cases where such remedy is granted.

Model answer

  1. A contract for transfer of a particular parcel of land, whose unique character makes an equivalent monetary award inadequate.
  2. A contract to deliver unique goods, such as a rare artwork or irreplaceable article, where a substitute cannot readily be bought.

Question 6(a)(ii) — 6 marks

Outline three cases where the remedy is not granted.

Model answer

  1. Where damages provide an adequate remedy, such as a purchase of readily replaceable ordinary goods.
  2. Where enforcement would require continuing supervision of personal services or would compel an unwilling personal relationship.
  3. Where the contract is invalid/uncertain or equitable relief would be unjust because of the claimant’s misconduct, undue delay or undue hardship.

Question 6(b) — 10 marks

Explain five defences that may be pleaded by a person accused of nuisance.

Model answer

The precise defence depends on whether the claim concerns private or public nuisance. Coming to the nuisance or claiming public benefit is not, by itself, a complete defence.

  1. Prescription: an actionable private nuisance openly continued as of right for the necessary prescriptive period may establish a right to continue it; the period runs from when it becomes actionable.
  2. Statutory authority: legislation may authorise the activity and its unavoidable consequences, provided the nuisance is inevitable despite due care and the operator stays within the authority.
  3. Consent: a claimant who validly agreed to the particular interference may be unable to complain of that agreed interference.
  4. Unforeseeable act of a stranger: the defendant may rely on an independent third-party cause where the defendant did not create, adopt or unreasonably fail to abate the nuisance.
  5. Act of God: an extraordinary natural event may excuse liability where it could not reasonably have been foreseen or guarded against; this does not excuse failure to address a known danger.

Question 7(a) — 10 marks

Outline five functions of the executive arm of the Government of Kenya.

Model answer

  1. Implement and enforce Acts of Parliament and other lawful decisions.
  2. Formulate and carry out national policies and development programmes.
  3. Administer public services and coordinate ministries/departments.
  4. Conduct foreign relations and represent Kenya internationally within constitutional limits.
  5. Maintain national security and public order through constitutionally accountable institutions.

Question 7(b) — 10 marks

In relation to the law of property, highlight five characteristics of an easement.

Model answer

  1. There must be an identifiable dominant tenement benefited by the right and a servient tenement burdened by it.
  2. The dominant and servient tenements must be in separate ownership/occupation when the easement exists.
  3. The right must accommodate or benefit the dominant land itself, rather than confer only a personal advantage.
  4. It must be sufficiently definite and capable of forming the subject of a grant, such as a defined right of way.
  5. It is a limited right over another’s land and does not transfer possession or ownership of the servient land to the dominant owner.
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