Pella is the managing partner of Kazi & partners. The other partners are Sange, Kama, Kapere and Dofil.The partnership deals in building materials.In order to compete favourably in marketing their products, the firm decided to offer its clients free transport for delivery of materials. On behalf of the partnership, Pella hired his wife's Fuso for the purpose of implementation of the partnership decision.

In a meeting to discuss the partnership affairs, it was revealed that Pella had been receiving tokens secretly from clients for delivery of goods. Pella explained that there should be no cause for alarm, as he earned the tokens through his hard work and clients had not complained. It also transpired that Kapere's several requests to access firm's books of accountwerealso ignored by Pella. Other partners joined Kapere to demand accountability for money received. Theyinsisted that Kapere, an accountant by profession, had toaccess the firm's books of account.

Having realised that his stay in the partnership management was in balance, Pella sold his shares in Penguin Ltd, a private limited companyto Tadoba, a non- member to raise capital to start other businesses. The director of Penguin Ltd declined to effect the transfer, on the ground that he was not duty bound to do so.

In December last year, the company held its annual general meeting, Tadoba moved to attend the meeting with his share certificate and the transfer document he got from Pella. He was denied access to the meeting venue on the ground that his name did not appear on the company register. Tadoba is contemplating to sue Penguin Ltd.

Required:

(i)Raise and resolve all issues arising from the given facts.

(a) Explain five features of sole proprietorship form of business ( 10 mks)

(b) Explain five measures that the government may take to improve the volume of exports ( 10 mks)

2. (a) Explain five demerits that may be associated with water transport ( 10 mks)

(b) The trial balance of Zakayo Traders as at June 2008 is given below

Question 3

Tallo Ltdsells and buys nuts and maize within and outside the country. One of the suppliers is Primpo. He grows maize in the village and transacts business with Tallo Ltd through Kipoli.

Over the last two months, Kipoli has been delivering maize to Tallo Ltd at his own transport cost. Primpo had promised to pay every three months when the company pays for the maize.It has now come to Kipoli's knowledge that Primpo was in fact paid every month, directly to his bank account. When Kipoli demanded for his commission and extra transport costs, Primpo responded that although the commission would be promptly paid, he had never promised to pay any extra money relating to any transaction.

Kipoli thereafter informed Tallo Ltd that due to some cash challenges, Primpo had instructed him (Kipoli) to receive cash payment on Primpo's behalf for a full month. When Primpo did not receive payment from Tallo Ltd at the end of the month, he asked Kipoli about the month's supplies. Kipoli instead showed him evidence of all supplies to Tallo Ltd. Primpo is confused on the next course of action.

In another development, 17 year old, Jim, who is the first son of the late Bende, is demanding recognition from Tallo Ltd to enable him hold his late father's shares in Tallo Ltd, in trust for his younger siblings and himself. According to Jim and his siblings, the current trustee for their shares does not manage trust affairs well.

The directors of Tallo Ltd have also been threatened by some shareholders who hold 1/10 of company shares, to bring an action against them.The shareholders discovered that while the directors sold nuts outside the country at a profit, they at times sell elephant tusks in the company's name but the huge profits received are divided amongst themselves.

Required:

Raise all issues involved and resolve them.

Question 4

(20 marks)

Mbalo Ltd was incorporated in 2016. The company manufactures tiles. Mbalo Ltd employs a number of people ranging from expatriates to casual labourers. Kabi, one of the employees, has been working with the company since its incorporation. One day, as he was loading tiles on a truck, he fell and broke his left leg.He informed the general manager about his fate. He spent a month in hospital on treatment. When he checked his bank account, he found no credit for

the monthly salary. Upon inquiry, he was informed that he could not be paid because he never worked during that month.

In the same company, Turuho, a mechanical engineer took his wife to hospital for delivery. On reaching the hospital, it was realised that she had complications and was admitted. At around mid-night, Turuho's wife had a miscarriage.Turuho informed the company about his family misfortune and requested for two days to nurse his wife. His request was denied and he was asked to choose between the job and nursing his wife.

In another development, Balolo aged 16 years bought shares in Mbalo Ltd. The company made a lot of profits and the directors declared dividends. After the declaration of dividends, Balolo was shocked to find that he was not given any dividends, on grounds that he was a minor.

In another scenario, Donke, Monti and Twona are directors of BMT Ltd. Donke and Monti are part-time directors while Twona works on a full time basis. The part-time directors are based abroad and whenever they come, they sign blank cheques for Twona, to run the company. Twona used the signed blank cheques to advance unsecured loans to debtors, who never paid back the money. The shareholders are now contemplating an action against the directors.

Required:

Raise and resolve issues involved.

Question 5

(a) Describe the types of mistakes in the law of contract.

(b) Explain the different ways in which a contract may be discharged.

(i)Explain five in which banks contribute to the development of Kenya (10 mks)

2.outline five reasons why banks currently account is popular with traders (10 mks)

3. Explain service offered to commercial banks by the central bank of Kenya (10 mks)

4. in what ways of the functions of commercial bank differ with those of non- bank financial institutions (10 mks)

5. explain five ways in which central bank of Kenya may control the supply of money in the country

Question 6

1. (a)Explain the contents of a memorandum of association.
2. (b)Outline the effects of altering a memorandum of association.

(10 marks)