Question 2

Mwangu and Muzibu are partners in Ngumu firm. They are involved in retail- based trading business. They are also actively involved in all aspects of managing the firm's business. Over the years, the firm has registered high profit levels. However, since the beginning of 2021, the firm has faced a number of challenges attributed to actions of the partners. In one instance, Mwangu purchased the firm's goods on credit from Kuubo Traders on an understanding that he would pay for them in a week's time however, two weeks elapsed without any payment. Kuubo Traders sent a demand note to Ngumu firm which was received by Muzibu. Muzibu's reply was that Kuubo Traders were demanding payment from a wrong party. Upon learning of what had transpired, Mwangu approached Muzibu to clear the air but in vain. The two partners instead had a heated exchange and never resolved the matter. To date, Mwangu and Muzibu hardly communicate. Each one concentrates on his work without informing the other about the firm's business. One of Mwangu's friends, Opio, has advised him to let go of the partnership. In another scenario, Pinsi who deals in the construction and sale of houses often calls upon Muzibu to source for prospective clients for his houses. On one occasion, Pinsi agreed with Muzibu to source for a prospective buyer of his house in Nyonyo town. Muzibu identified a buyer who was willing to purchase a house at Shs 300 million and consequently informed Pinsi. Pinsi accepted the offer, subject to conditions that would be in the contract of sale. Three days later, before the sale agreement was concluded, Muzibu secured another interested buyer, who was willing to purchase the same house at Shs 320 million. He, however, did not inform Pinsi. Pinsi sold the house at Shs 300 million. Two days after the sale, Pinsi learnt that there was a prospective buyer who had informed Muzibu about his willingness to buy the house at Shs 320 million. It also transpired that Pinsi had agreed with Muzibu to source for prospective buyers for his three bed roomed bungalow. Negotiations would then be handled by Pinsi himself. Muzibu secured two prospective buyers and introduced them to Pinsi. Whereas on inspection one of them did not show any interest in the house, the second one showed willingness to purchase it and subsequently entered into negotiations. However, he was not able to buy it. When Muzibu demanded for his commission, Pinsi informed him that he could not claim for any payment since the house had not been sold.

Required:

Raise the relevant issues and resolve them.

Question 3 (20 marks) Bakola Enterprises (BE) is a thriving business based in Kampala district that deals in supply of stationary. At each of its offices, BE employs a minimum of ten people. All BE employee sign a contract of service upon recruitment. Jena, one of the employees at Bakola Enterprises signed a contract upon recruitment which provided among other things, that she would be offered accommodation with '.... a monthly deduction of Shs 30,000 towards water bills, Shs 30,000 towards electricity and Shs 200,000 towards general maintenance...'. Jena is perturbed by the deductions and is seeking for guidance. In a related development, another employee at Bakola Enterprises, Shida's contract contained a provision for 'monthly deductions amounting to Shs 35,000, towards a pension scheme ...'. Shida had been informed about the scheme at the time of recruitment and she signed a document of consent to join the scheme. However, she wonders why her salary continues to be subjected to deductions yet she has never accessed that money. Bisobye, one of the employees at Bakola Enterprises, was absent from office for two months as a result of a knee injury he sustained while working on his farm. He called his supervisor and informed him about his inability to move. When he reported to his supervisor with all his supporting medical documents as evidence of his treatment, the supervisor instead handed him a termination letter, on grounds of absence from work for 2 months. In another development, the marketing officer at Bakola Enterprises (BE) entered into a transaction on behalf of BE to supply three packages of art paper to Smart Art Ltd, worth Shs 150,000 per package. Part of the sale agreement was concluded on phone, while some aspects like the time of delivery, and full payment for the packages were written and signed by representatives of both parties. It is however, apparent that Smart Art Ltd has now declined to settle the payment arguing that, all their transactions have to be concluded with detailed written agreements. This implies that that BE has no basis to demand for payment.

Required:

Identify all the relevant issues and resolve them.

Question 4 Disog Ltd is company based in Gulu City. Disog Ltd has been registering considerable profits over the years. However, there are some questionable issues that cropped up recently. At one time, the directors decided to raise some capital by issuing shares at a discount. The company members were informed at a general meeting and a resolution was accordingly passed. A few minutes after the meeting, the shareholders were informed that the shares had been issued at a discount awaiting court sanction. Majority of the shareholders were shocked at the news and suspect that the directors could have had ill motives. In another incident, a 21 days' notice was given for a general meeting. During the meeting, members were informed about the need to replace Mugumu as the company auditor. Whereas some members preferred to handle such an appointment at another meeting, the directors insisted and persuaded members to replace Mugumu. Consequently, a resolution was passed to appoint another auditor. During the days that followed, it transpired that directors had been using the company name and money to conduct other businesses. Mugumu had kept asking about those proceeds without getting an explanation. It was suspected that all proceeds from the extra businesses were for the directors' personal benefit. Some members were very furious. They blamed the directors and demanded that they account for the proceeds. In despair, some members of Disog Ltd have opened a business under an agreed name 'Exodus Ltd'. They hired office space and sourced for business opportunities from various companies. However, they are disturbed by the fact that some companies have denied them business opportunities. The reason advanced to them is that it is very risky doing business with them. One company advised them to legalise their operations before approaching them for business.

Required: Identify the relevant issues and resolve them.

Question 5

(a) Differentiate between shares/ shareholding and debentures/ debenture holding. b)Explain the duties of company directors. (10 marks)

Question 6 (a) Distinguish between criminal law and civil law. (b) Explain circumstances under which an agency can be terminated by operation of the law. (10 marks)

Question 2 It is observed that in Uganda's economy. there is a predominance of small scale firms and these have continued to operate alongside the large scale firms. These small scale firms are located in rural. semi- urban and urban areas yet the large scale firms are mainly found in semi-urban and urban areas. Many of the small scale firms use locally available raw materials hence making it cheaper for them to operate. The labor force employed is mainly unskilled and learns on the job. These firms tend to be highly flexible and take services nearer to the consumers. Programs like Pakasa and Youth Livelihood Fund are in operation purposely to develop entrepreneurial skills for the proper working of the small scale firms Other programs are also aired over radio and television trying to sensitize the public so that they embrace modern technology to increase output, sales and profits for the small scale firms. Required: (a) (i) Account for the survival of small scale firms in Uganda. (8 marks) (ii) Discuss the measures that have been put in place to promote small scale firms in Uganda? (7 marks) (b) Explain the negative effects of economic dependence to the economy of Uganda. (5 marks) (Total 20 marks) Question 3 (a) Explain the: (i) Causes of structural inflation in Uganda. (5 marks) (ii) Possible solutions to structural inflation in Uganda. (5 marks) (b) (i) Discuss the reasons for liberalisation of trade in Uganda. (5marks) (ii) Describe the measures that can be taken to improve the terms of trade in Uganda. (5 marks) (Total 20 marks) Question 4 (a) (i) Explain the demerits of a free enterprise economy. (6 marks) (ii) Explain the various ways in which the supply of entrepreneurs can be increased in Uganda. (6 marks) (b) Describe the circumstances under which labor in Uganda maybe paid low wages? (8 marks) (Total 20 marks) Question 5 (a) An economy has a marginal propensity to save of 30% and an initial income of Shs 200 million. Required: Calculate: (i) The income multiplier (2 marks) (ii) New level of income (2 marks) (b) Explain the dangers of income inequality in developing countries (8 marks) (c) Discuss measures that can be taken to widen the taxable capacity in Uganda. (8 marks) (Total 20 marks) Question 6 (a) Discuss the ways in which unemployment has affected the economy of Uganda? (8 marks) (b) Explain the limitations of the Quantity theory of money in developing economies. (6 marks) (c) Describe the features of the informal sector in Uganda. (6 marks) (Total 20 marks)