Business LAW - Lecture notes 1-12 PDF

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DBA 301: BUSINESS LAW IUNIVERSITY OF NAIROBICOLLEGE OF HUMANITIES AND SOCIAL SCIENCESSCHOOL OF BUSINESSIn collaboration withCENTRE FOR OPEN AND DISTANCE LEARNINGBUSINESS ADMINISTRATIONDBA 301: BUSINESS LAW IAUTHORYASH VYASREVIEWERM. C. WAFULALecture series: DBA 301 - Business Law IPublished by Unive...

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DBA 301: BUSINESS LAW I

UNIVERSITY OF NAIROBI COLLEGE OF HUMANITIES AND SOCIAL SCIENCES SCHOOL OF BUSINESS In collaboration with CENTRE FOR OPEN AND DISTANCE LEARNING BUSINESS ADMINISTRATION DBA 301: BUSINESS LAW I AUTHOR YASH VYAS REVIEWER M. C. WAFULA Lecture series: DBA 301 - Business Law I Published by University of Nairobi, P. O. Box 30197, Nairobi, Kenya Printed by College of Education and External Studies, University of Nairobi, P. O. Box 30197, Nairobi, 2009 © Y.R. Vyas, 2009, all rights reserved. No part of this Module may be reproduced in any form or by any means without permission in writing from the author.

TABLE OF CONTENT Lecture Sources of Law and the Structure of Courts in Kenya ............. General Three: Introduction to the Unit......................................................... 3.1 Introduction................................................................................. General Objectives.......................................................................... 3.2 Objectives.................................................................................... Lecture One: Meaning and Nature of Law ............................................. 1.1Introduction.............................................................................. 3.3 Meaning of Sources of Law......................................................... 1.2Objectives............................................................................... 3.4 Sources of Law in Kenya................................................................. 1.3Meaning 3.4.1 The andConstitution Nature or Law.......................................................... of Kenya..................................................... 1.3.1 3.4.2The Legislation.......................................................................... Nature of Law.............................................................. 1.3.2 3.4.2.1 Definition PrimaryoforLaw............................................................... Parliamentary Legislation ..................................... 1.4Law 3.4.2.1.1 and Morality......................................................................... Purposes of Statutory Law 1.5Functions 3.4.2.1.2ofThe Law.......................................................................... Legislative Process or Procedure for Passing an 1.6Summary....................................................................................... Act of Parliament.................................................................. 1.7References..................................................................................... Lecture Two: Advantages Classifications of Law..................................................... 3.4.2.1.3 of Statute Law.................................................... 2.1Introduction.................................................................................... 3.4.2.2 Delegated or Subsidiary Legislation............................................ 2.2Objectives...................................................................................... 3.4.2.2.1 Reasons for Delegated Legislation......................................... 2.3Classification of Law...................................................................... 3.4.2.2.2 Criticism of Delegated Legislation................................ 2.3.1 3.4.2.2.3 PublicControl Law and of Private Delegated Law....................................................... Legislation.................................. 2.3.2 3.4.3Criminal Received Law English and Civil Law...................................................... 2.3.3 Written Law and Unwritten Law................................................ Law......................................................................... 2.3.4 3.4.3.1 Substantive English Statutes Law andofProcedural General Application................................. Law........................................... 2.3.5 3.4.3.2 International The Development Law andofNational English or Common Municipal LawLaw............................ .......................... 2.4Distinction 3.4.3.3 The between Development Common of Equity...................................................... Law System and Civil Law System................ 2.5Summary........................................................................................ 3.4.4 Judicial Precedent or Stare Decisis........................................................ 2.6References..................................................................................... 3.4.4.1Doctrine of Judicial Precedent..................................................... 3.4.4.2 The Hierarchy of Courts............................................................. 3.4.4.3 Avoiding Precedent.................................................................... 3.4.4.4 Advantages of Precedent or Case Law...................................... 3.4.4.5 Disadvantages of Precedent....................................................... 3.4.5 African Customary Law......................................................................... 3.4.6 Islamic and Hindu Law.......................................................................... 3.4.7 Foreign Statutes................................................................................... 3.5 The Structure and Jurisdiction of the Courts.................................................. 3.5.1 The Court of Appeal............................................................................. 3.5.2 The High Court..................................................................................... 3.5.3 The Resident Magistrate's Courts............................................ 3.5.4 District Magistrates Courts....................................................................

3.5.5 Miscellaneous Adjudicating Bodies......................................... 3.6 Summary........................................................................................ ............... 3.7 References...................................................................................... ............... Lecture Four: Concept of a Contract and Formation of Contract Offer......... 4.1. Introduction.................................................................................... ............... 4.2. Objectives...................................................................................... ................ 4.3. The Concept of Contract................................................................................. 4.4. Essentials of a Valid Contract......................................................................... 4.5. Forms of Contract......................................................................................... .. 4.6. Classification of Contract................................................................................ 4.7. Offer............................................................................................. ................. 4.8. Rules on Offer............................................................................................. ... 4.8.1. Form............................................................................................. ........ 4.8.2. Distinction Between Offer and Invitation to Treat................................ 4.8.2.1. Advertisements. ....................................................................... 4.8.2.2. Shop Displays........................................................................... 4.8.2.3. Vending Machines, Car Parks and Plying of Buses................. 4.8.2.4. Auction Sale............................................................................. 4.8.2.5. Company Prospectus................................................................ 4.8.2.6. Tenders..................................................................................... 4.8.3. Making an Offer.................................................................................... 4.8.4. Communication of Offer....................................................................... 4.8.5. Termination of Offer............................................................................. 4.8.5.1. Revocation..............................................................................

4.8.5.2. Rejection................................................................................. 4.8.5.3. Lapse of Offer......................................................................... 4.8.5.4 Conditional Offer................................................................... 4.9. Summary........................................................................................ ................. 4.10 References . Lecture Five: Formation of Contract: Acceptance and Intention to Create Legal Relations........................................................................... 5.1 Introduction.................................................................................... ............... 5.2 Objectives...................................................................................... ................ 5.3 Acceptance..................................................................................... ............... 5.3.1 Rules on Acceptance............................................................................. 5.3.1.1Form.................................................................................... .......... 5.3.1.2 Acceptance Only Possible if the Offer is Still in Force................. 5.3.1.3 Acceptance must be Absolute and Unqualified............................. 5.3.1.4 Conditional Assent is No Assent................................................... 5.3.1.5 Communication of Acceptance..................................................... 5.3.1.5.1 Communication of Acceptance - General Rules................. 5.3.1.5.2 Communication of Acceptance - Exceptions to the General Rules ............................................................. 5.3.2 Some Special Cases................................................................................ 5.4 Intention to Create Legal Relation................................................................. 5.4.1 Social and Domestic Arrangements....................................................... 5.4.2 Commercial Agreements........................................................................ 5.5 Summary........................................................................................ ................. 5.6 References...................................................................................... ................ Lecture Six: Formation of Contract: Consideration.................................. 6.1 Introduction.................................................................................... ................ 6.2 Objectives......................................................................................

................ 6.3 Definition of Consideration............................................................................ 6.4 Classification of Consideration....................................................................... 6.4.1 Executory Consideration........................................................................ 6.4.2 Executed Consideration.......................................................................... 6.4.3 Past Consideration.................................................................................. 6.5 Rules Relating to Consideration...................................................................... 6.5.1 Consideration Required for Simple Contract......................................... 6.5.2 Consideration Must Move from Promise............................................... 6.5.3 Consideration Need Not be Adequate but Must be of Some Value.... 6.5.4 Consideration Must be Sufficient........................................................... 6.5.4.1 Performance of a Public Duty......................................................... 6.5.4.2 Performance of an Existing Contractual Duty to the Promisor........................................................................................ .... 6.5.4.2.2 Performance of an Existing Duty already owed to a Third Party..................................................................................... 6.5.4.3 Part Payment of a Debt................................................................... 6.5.4.2.3The Doctrine of Promissory Estoppel.......................................... 6.5. Past Consideration is no Consideration........................................................... 6.6 Doctrine of Privity of Contract........................................................................ 6.6.1 Exceptions to the Doctrine of Privity of Contract.................................. 6.7 Summary........................................................................................ ................. 6.8 References...................................................................................... ................ Lecture Seven: Terms of Contract........................................................ 7.1 Introduction.................................................................................... ................ 7.2 Objectives...................................................................................... ................

7.3 Terms and Representation. ............................................................................. 7.4 Incorporation of Representation as a Term of Contract.................................. 7.4.1 Importance of the Statement................................................................... 7.4.2 Interval between the Negotiations and the Contract.............................. 7.4.3 Whether the Contract has been Reduced to Writing.............................. 7.4.4 Reliance by the Plaintiff......................................................................... 7.4.5 Special Knowledge Possessed by the Person who made the Statement....................................................................................... 7.5 The Parole Evidence Rule.............................................................................. 7.6 Express Terms............................................................................................ ... 7.7 Implied Terms............................................................................................ .... 7.7.1 Terms Implied by the Customs................................................ 7.7.2 Terms Implied by the Statute................................................. 7.7.3 Terms Impied by Courts....................................................... 7.8 The classification of Terms............................................................................ 7.9 Exemption Clauses......................................................................................... 7.10Incorporation into the Contract....................................................................... 7.10.1 Incorporation by Signature................................................................... 7.10.2 Incorporate by Notice........................................................................... 7.10.3 Incorporation by Consistence Dealing................................................. 7.11Construction of Exemption Clause................................................................. 7.11.1 Strict Construction................................................................................ 7.11.2 Contra Proferentum Rule...................................................................... 7.11.3 Negligent Acts...................................................................................... 7.11.4 Repugnancy to the Main Object...........................................................

7.11.5 Fundamental Breach............................................................................. 7.12Standard Form of Contract. ........................................................................... 7.13Summary........................................................................................ ................ 7.14References...................................................................................... ................ Lecture Eight: Capacity to Contract.................................................... 8.1 Introduction.................................................................................... ................ 8.2 Objectives...................................................................................... ................ 8.3 Minors........................................................................................... ................. 8.3.1. Valid Contracts with Minors................................................................. 8.3.1.1. Contract for Necessaries............................................................... 8.3.1.2 Beneficial Contracts of Service..................................................... 8.3.2 Voidable Contracts with Minors............................................................ 8.3.2.1 Contract for Lease......................................................................... 8.3.2.2 Contracts to Acquire Shares in a Company.................................. 8.3.2.3 Contracts of Partnership............................................................... 8.3.3 Absolutely Void Contracts with Minors................................................ 8.3.3.1 Contract of Loan .................................................................... 8.3.3.2 Contracts for Non-Necessaries...................................................... 8.3.3.3 Accounts Stated............................................................................ 8.3.3.4 Actions By and Against the Minor................................................ 8.3.3.5 Ratification of Void Contracts.......................................... 8.3.4 Misrepresentation of Age....................................................................... 8.3.5 Minors Liability in Tort.......................................................................... 8.3.6 Minor Liability in Quasi-Contract ........................................... 8.4 Mentally Disordered Persons.......................................................................... 8.5 Drunkard Persons.......................................................................................... . 8.6 Corporations....................................................................................

............... 8.6.1 Chartered Corporations.......................................................................... 8.6.2 Statutory Corporations........................................................................... 8.6.3 Registered Companies............................................................................ 8.7 Summary........................................................................................ ................. 8.8 References...................................................................................... ................ Lecture Nine: Vitiating Factors........................................................... 9.1 Introduction.................................................................................... ................ 9.2 Objectives...................................................................................... ................ 9.3 Mistake.......................................................................................... ................ 9.3.1 Common Mistake................................................................................... 9.3.1.1 Mistakes as to the Existence of Subject Matter..................... 9.3.1.2 Mistake as to Quality................................................... 9.3.2 Mutual Mistake....................................................................................... 9.3.3 Unilateral Mistake.................................................................................. 9.3.4 Mistakes in Documents.......................................................................... 9.3.4.1 Rectification of Common Mistakes................................... 9.3.4.2 Non est Factum.......................................................... 9.4 Misrepresentation........................