SOLUTION: BUSINESS AND CORPORATE LAW, MAY 2014

SOLUTION 1(a)

(b)

(i)

The general common law rule is that a contract may be in any form whatsoever.

(ii)

Therefore most contracts are valid whether they are made orally in writing or even by
conduct.

(iii)

However the law requires some contracts to be by deed or they must be special
contracts.

(iv)

Some contracts must be in writing

(v)

Examples of contracts in writing are contracts of guarantee, bills of exchange,

contracts for the deposition of land.
(i) Invitation to Treat
An invitation to treat is a preliminary communication. It is a mere declaration of
willingness to enter into negotiations. It does not constitute an offer and is not capable of
maturing into a contract upon acceptance. It is an invitation to the recipient to make an
offer. It is an offer to negotiate, an offer to receive an offer or an offer to chaffer.
Examples of invitations to treat are display of goods for sale, auctions and tenders.
(ii) Offer
An offer is an expression of willingness to contract on certain terms with the intention
that it shall become binding as soon as it is accepted by the person to whom it is
addressed. It is a definite undertaking or promise made one party with the intention that
it shall become binding on the party making it as soon as it is accepted by the party to
whom it is addressed.

SOLUTION 2
(a) (i) A contract of employment may be terminated by mutual agreement between the
parties.
(ii) A worker may terminate the contract of employment on grounds of ill treatment
and/or sexual harassment.
(iii) Where the worker is found unfit for employment upon medical examination.
(iv) Where the worker is unable to carry on work due to sickness, accident or
incompetence.
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SOLUTION: BUSINESS AND CORPORATE LAW, MAY 2014

(b) (i) The employer may not be held liable.

(ii) If the injury occurred whilst the employee was under the influence of drugs or was
intoxicated.
(iii) If the injury is self imposed.
(iv) If the workman made a false representation that he had not previously suffered injury
and he is subsequently injured during the course of his employment.

SOLUTION 3
(a) Section 8 (4) (a) to (c) of NRCD 292 describes protected goods as goods
-

Which have been let under a hire-purchase agreement or sold under conditional sale
agreement.

One- half of the price or total purchase price of which has been paid, whether in
pursuance of a judgment or otherwise, or tendered by or on behalf of the buyer or
guarantor.

In relation to which the hirer or buyer has not terminated the hire-purchase agreement or
conditional sale agreement, or in the case of a hire purchase agreement, the bailment, by
virtue of a night vested in the hirer.

(b) Under section 8 (2) to (3) where the owner or seller recovers possession of protected
goods without recourse to court action
-

The agreement, if not previously terminated is terminated.

The hirer or buyer is released from liability under the agreement and is entitled to recover
in an action for money had and received, the sums of money paid by the hirer or buyer
and the security given in respect of the agreement.

The guarantor is entitled to recover from the owner or seller, in an action for money had
and received, the sums of money paid and the security given in respect of the agreement.

On an application by the hirer or buyer the court may make an order for the return of the
goods to the hirer or buyer and for the rescheduling of payments due under the
agreement.

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SOLUTION: BUSINESS AND CORPORATE LAW, MAY 2014

SOLUTION 4
Under section 136 of the Companies Code, 1963 (Act 179),
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An auditor is not an officer or an agent of the company, however, an auditor stands in a

fiduciary relationship to the members of the company and shall act in manner that
faithful, diligent, careful and ordinary skillful/professional auditor will act in the
circumstances.

In any case, no regulations, contract or resolution of the company shall receive the
auditor of his duty to maintain appropriate professional standards or relieve him from
liability as a result of breach of those standards.

An auditor has a right of access at all times to the books, accounts and vouchers of the
company and to require from the officers such information and explanations deemed
necessary.

A right to attend any general meeting and receive notices and general communications
relating to any meeting.

A right to be heard at any general meeting on any business which concerns auditors.

An auditor also has a right to apply to the court for directions in relation to any matter
arising in connection with the performance of his functions.

SOLUTION 5
(a) Under the Companies Code, incorporation of a company results in the company
becoming a distinct, separate and artificial legal person.
-

Consequently once a company is duly incorporated, there is a figurative veil that

separates and distinguishes the corporation from the persons who may behind it or may
control it.

(b) The courts will lift the corporate veil to avoid trading with the enemy in times of war. For
example, where a company is owned or controlled by nationals of an enemy country,
despite its formal incorporation it would be considered an enemy company and face all
disabilities of enemies.
-

The courts will also lift the corporate veil in order to avoid fraud. For example, where a
company is a fly by night company.
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SOLUTION: BUSINESS AND CORPORATE LAW, MAY 2014

The corporate veil may be lifted also to prevent the deliberate evasion of a contractual
obligation. For example, a former MD of a company.

The courts may also lift the corporate veil to allow a group of associated companies to be
treated as one and not several companies. For example, where there are several
companies operating in the same premises with the same directors the veil will be lifted
for the companies to be treated as one.

SOLUTION 6
(a) The following can petition the court for the official winding up of the company
-

The registrar
A creditor of the company
A member or a contributory of the company
The Attorney General

(b) The court may order a company to wind up under the following circumstances.
-

Where a company does not within a year from its incorporation, commerce to carry on all
of its authorised businesses.

Where the company suspends any of its authorised businesses for a year

Where the company does not have any members

The objects of the business or company are unlawful

The company is operated for an illegal purpose

The company is carrying on business which is not authorised by its regulations

The company is unable to pay its debts

The court is of the opinion that it is just and equitable that the company should be wound
up

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SOLUTION: BUSINESS AND CORPORATE LAW, MAY 2014

SOLUTION 7
(a) Under the IPPA, a firm shall
-

Carry on business only under the registered firm name, and shall paint or affix and keep
painted or affixed, the registered firm name on the outside of the office or place in which
its business is carried on, in a conspicuous position in letters easily legible.

Accurately mention in legible characters at the head of the trade circulars and business
letters of the firm, the registered firm name and the present forenames or the initials of
the firm name and the former forenames or surnames of the partners in the firm.

Keep exhibited in a conspicuous position firm, the firms latest certificate of registration
issued under section 5 or 6.

(b) From the date of registration, the firm shall be a body corporate under the firm name,
district from the partners of when it is composed.
-

It is capable of exercising all the powers of a natural person of full capacity in so far as
such powers can be exercised by a body corporate.

Notwithstanding any changes in the constitution of the partnership, the firm shall
continue to exist as a corporate body until dissolved in accordance with the Act.

Every partner in the firm shall be jointly and generally liable with the firm and the other
partners for all debts and obligations of the firm incurred while he is a partner.

Each partner shall be entitled to an indemnity from the firm and to contribute from his copartners in accordance with his rights under the partnership agreement.

SOLUTION 8
Under section 15 of the IPPA,
-

A person admitted as a partner is not liable to creditors of the firm for anything done
before that person became a partner.

A partner who retires is liable for the debts or obligations of the firm before the
retirement.

A retiring partner may be discharged from an existing liability by an agreement to that

effect between the retiring partner and the firm and the creditor. Such an agreement may
be expressed or inferred as a fact from the course of dealing between the creditor and the
firm as newly constituted.
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SOLUTION: BUSINESS AND CORPORATE LAW, MAY 2014

Where a person deals with a firm after the retirement of a partner whom that person knew
to be a partner in the firm, that person is entitled to treat the retired partner as being a
partner until that person has notice of the retirement and the retired partner is liable
accordingly.

A person who had dealings with the firm prior to the retirement shall not be deemed to
have notice of the retirement, unless that person had actual knowledge of the retirement.

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