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    Partial Business Law Notes Icpau Scanned Business Law notes for CPA students doing Business Law - institute of certified Public Accountants of Uganda

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    769 views145 pages

    Partial Business Law Notes Icpau

    Uploaded by

    Kisembo Rwangakuramya
    Partial Business Law Notes Icpau Scanned Business Law notes for CPA students doing Business Law - institute of certified Public Accountants of Uganda

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    INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (ie memes OF UGANDA Paper 4 Business Law Study Materials for Examinations Effective 2016 Scanned with CamScanner Table of Contents Syllabus Overview for Paper 4: Business Law: Overall aim of Business Law ... Expected learning outcomes from the study of Business Law... Level of assessment. Examination structure Detailed syllabus... Chapter A: General Principles of Ugandan Law... 1. Role, nature and classification of law. 2. Sources of Ugandan law... 3. Legal systems and administration of law.... Self-test questions... Chapter B: The Law of Contract. 1. General principles of the law of contract ivity of contract. Forms and terms of a contract... Standard form contracts Mistake Duress and undve influence .... legal, void and voidable contracts... 2 3 4 5. 6. Misrepresentation.. 7 8. 9. Assignment .. 10. Discharge of contract ... Self-test questions... Chapter C: Law of Agency 1. Definition, nature and purpose of agency. 2. Authority of the Agent. 3, Rights and duties between principal and agent. 4,” Relationship between third party and agent.. 5. _ Effect of contracts made by agents... 6. Termination of agency. Self-test questions... Scanned with CamScanner Chapter D: Partnerships L 2. Creation of partnership 3, _ Relations of partners to persons dealing with them. ‘4, Relations of partners to one another. 5, - Dissolution of partnership 6. Limited Liability Partnerships. self-test questions. Chapter E: Employment. a 2 3. 4, 5. 6. Self-test question: Chapter F: The Law of Trust... 1. 2. 3. self-test questions. Chapter G: Company Law ~ 1 2 3. a 6. Meeting and 7 8. 9. pes of partnerships... Definition and ty Contract of Employment ...... Duties and rights of employees. Obligations of employers. Discrimination Termination of a contract of employment Role of the labour officer. Definition and types of Trusts... Creation of a Trust... Appointment, discharge, duties and liabilities of Trustees . ion to Company Law and formation of the company Introducti Promotion Capital Debentures and borrowing. proceedings... 335, 356 pirectors and Secretary... its and audit of the company. Account pividends jo, Majority rule, minority protection and investigations self-test question: " +366 chapter Hi: Corporate Insolvency ™ 4. Winding up/Liquidation.. " . 392 2. Theliquidator 392. 399 self-test question: Scanned with CamScanner 1. Categories of ethical issues in business relationships... 2, Ethical aspects in procurement, extractive industries and financial institutions Scanned with CamScanner _— —— ICPAUO Syllabus Overview for Paper 4: Business Law Overall aim of Business Law To introduce knowledge and understanding of the Ugandan legal system with emphasis on laws relating to business environment in which an accountant operates. Expected learning outcomes from the study of Business Law On completion of this course, students will be able to: explain the general principles of Ugandan Law; explain the general principles of the Law of Contract; describe how companies are formed; define the roles and responsibilities of the officers of a company; identify the various legal forms of insolvency; demonstrate an understanding of the legal relationships between employers and employees; appreciate the principles of the Law of Agency; describe the formation, operation and termination of partnerships; explain the general principles of the law of trusts; and evaluate ethical issues in all business relationships. ReNS 9 LOND Level of assessment The examination will test knowledge, comprehension and the application of law to real life case Scenarios. It may also require analysing of the facts of the case, in.order to identify relevant issues and come up with recommendations. Examination structure ‘There will be a three-hour examination made up of sections A, B and C. Section A will comprise Of 20 compulsory, multiple-choice questions worth 20 marks. Section B will have three Questions worth 20 marks each, of which the student will be required to attempt any Mo questions, Section C will have three questions worth 20 marks each, of which the student wi be required to attempt any two questions. Scanned with CamScanner ICPAUG | Detailed syllabus Chapter A: General Principles of Ugandan Law 1, Role, nature and classification of law a) Explain the role and nature of law in Uganda 4 b) _ Deseribe the different classes of law in Uganda 2. Sources of Ugandan law a) Describe the sources of Ugandan Law b) Compare and contrast different sources of Ugandan Law. 3. Legal systems and administration of law a) Describe the different types of courts in Uganda b) Compare and Contrast criminal and civil law Chapter B: The Law of Contract 1. General principles of the Law of Contract Definition, classification and formation a) Define a contract b) Identify diferent classes of contracts ) _ Explain the essential elements of a valid contract 2. Privity of contract @) Explain the general principle of privity of contract b) "Identify the exceptions of the general rule of privity of contract 3. Forms and terms of a contract 2) Identify the different forms in which a cont b) Explain the major and minor terms of a col c) Identify the contents of a contract 4. Standard form contracts Explain the meaning of a standard form contract 5. Mistake a) Explain the meaning of a mistake b) Identify the different types of mistakes 6. Misrepresentation a) Explain the meaning of ‘misrepresentation” b) _ Identify the different types of misrepresentation 7. Duress and undue influence Compare and contrast duress and undue influence 8. Illegal, void and voidable contracts a) _ Differentiate between illegal and void contracts b) Explain the effect of voidable contracts 9. Assignment ee eaanee the term ®) Deseiks the different forms of assignment ract can be made ntract Scanned with CamScanner ICPAUS, ‘arge of contracts ° a evan the term “discharge of a cont b) Explain the different way 11, Remedies and limitations of actions . a) Identify the remedies for breach of a contract b) Mention the time linvt for co ¢) Discuss the exceptions on lim in which 9 cont ns ‘actual actions ation of contractual actions Chapter C: The Law of Agency 1. Definition, nature and purp a) Define agency b) Explain how agency is created ¢) Identity the purpose of Ag Formation and creation of princip. Describe the different ways in whic Types of agents Identity and des ferent types o} 4 Duties and rights of an agent Explain the duties and rights of an agent 5. Duties and rights of a principal Explain the duties and rights of a principal nt relationship c be created 6. Relationships between the principal and third parties Explai the relationship between the principal and third partes 7. _ Relationship between third parties and the agent Explain the general rules and exceptions governing the relationship between the ag and third parties 6. Termination of the agency relationship Explain the circumstances under which the agency relationship can be minated Chapter D: The Law of Trust 1. Definition and types of trusts a) Definea “wust" 2, DD Identity and explain the different types of trusts Parties of a trust \dentty and describe the different parties to a trust 3. Creation of a trust Explain the circumstances under which a trust can be created 4. Appointment, discharge, duties and liabilities of trustees Identify the necessary requirements for being appointed as a trustee >) Explain the circumstances under which a trustee can be discharged ©) _ Explain the duties and liabilities of trustees Termination of 2 trust Explain the circumstances under which a trust can be terminated | | Peper 4: Business Law Scanned with CamScanner Chapter E: Employment Law 4, Contract of employment a) _ Explain the contents of a contract of employment b) Distinguish between a contract of service and a con 2. Duties and rights of employees Explain the duties and rights of employees 3, Obligations of employers Explain the obligations of an employer to the employees i 4, _ Discrimination a) Explain the different types of discrimination b) Identify statutory provisions that prohibit discrimination 5, Termination of a contract of employment a) Explain the circumstances under which a contract of employment can be terminated b) Explain the circumstances under which termination may be unlawful i tract for services Chapter F: The Law of Partnerships 4. Definition and types of partnerships | a) _ Define partnership b) Identify and explain the different types of partnerships 2. _ Formation of partnerships Explain the ways in which partnerships are formed 3. The relationship of partners Explain the duties and rights of partners 4, Partnerships and third parties Identify the obligations of partners to third parties 5, _ Termination of partnerships Explain the ways in which partnerships can be terminated Chapter G: Company Law 1 1. _ Definition of a company Define the term “company” 2. _ Incorporation and classification of companies a) Explain the different classes of companies b) _ Identify the different types of companies c) Distinguish between public and private companies j d) _ Explain the procedure of registering a company | ) _ Explain the importance of the certificate of incorporation Commencement of business Explain the requirements needed befor ip - ante reuurements nen re a company commences business Describe the characteristics of a company The veil of incorporation lai i i in « Bl pa fe eros under which the veil of incorporation may be lifted ° a Paper 4: Business Law Scanned with CamScanner IcPAU Define the term ultra vires | Describe the ultra vires doctrine Chapter H: Promotion and Formation of Companies 4. Promoters a) Define a promoter ») Explain the duties of a promoter ©) Identify the remedies for pre-incorporation acts of promoters 4) Explain the circumstances under which promoters are remunerated ©) Identify the rules governing pre-incorporation contracts 2. Memorandum of association 3) _ Explain the importance and contents of a memorandum of association ) Identify the requirements for altering a memorandum of association ¢) _E2mlain the effect of alteration of a memorandum of association 3. Articles of association a) Explain the importance and cor b) Identify the requirements for al ©) Explain the effect of alteration tents of articles of association tering articles of association Of articles of association Chapter I: Share Capital 1. Meaning and types of share capital a) Define “share capital” b)__ Mention and explain the types of share capital 2. Raising share capital: offers, Underwriting, brokerage, liability for risrepresentation and non-disclosure 2) "Identify ways of raising share capital 5) Explain different ways in which shares can be transferred ©) Identify parties liable for misrepresentation and non-disclosure in transaction of transfer of shares 5. Prospectus: nature, issue, contents, liabilities and remedies a) Define a prospectus 5). Explain the nature and contents of a Prospectus ©) Explain the ways liabilities may arise as a result of issuance of a prospectus a) Identify the remedies for parties whe may be aggrieved as a result issuance of a Prospectus ‘ 4. Allotment of shares: application, notice, power, pre-emption rights, considerations, issues Of shares at a discount and at 2 premium, restrictions on allotment 2) Explain how shares are allotted ®) Identify parties who are eligible for application for allotment ©) Explain pre-emption rights Sis 9) Explain the circumstances under which shares can be issued at a discount and at a premium ®) Describe the tules governing the allotment of shares 3 Peper a Bushes Law Mi Scanned with CamScanner _a—" 2 ~~ ICPAUO Chapter J: Debentures 1 Chapter K: Membership 1, 2 restrictions on transfer, lieu, mo, bers, annual returns, share warra, haser of own shares ty, Shares: certificates, calls, transfer, priorities, forfeiture, surrender, conversion, register of mem! variation of class rights, alteration and reduction of capital, pure! a) Explain the different types of shares b) Explain the contents of share certificate c) Describe the rules governing the calls and transfer of shares | d) Explain circumstances under which transfer of shares can be restricted e) Define the following terms; mortgage, forfeiture, surrender and conversion f) Explain the contents of the register of members g) Identify the features of annual returns h) Define the term share warrant i) Define class rights i) Explain instances that can le k) Explain why reduction of share ad to reduction of capital apital is generally prohibited Definition and classification of debentures a) Define a debenture ] b) Identify and explain the different classes of debentures | Issue and transfer of debentures i Explain the manner in which debentures can Trust deed Define a trust deed and explain its advantages Priority Explain the priority of payment of debenture holders Charges Explain the different types of charges Remedies of debenture holders | Identify and explain remedies available for debenture holders | be issued and transferred Eligibility for membership Identify the qualifications for company membership ag of becoming a member :xplain the different ways in which Teena ol nese rie @ person can become a member of a company Explain the ways in whi Rae woven ich company membership can be terminated Explain the import . Annual rete erence of Keeping a company register Identify the i 'e importance and contents of the company’s annual return Scanned with CamScanner ICPAUO, Chapter L: Meetings 1. 2. Statutory meeting Explain the importance of holding a statutory meeting Annual general meeting Explain the importance of an annual general meeting and describe the company matters that must be considered in it Other meetings Identify and explain other meetings of a company Notices of meetings Explain statutory requirements for notices of different meetings Proceedings at general meetings Narrate the legal requirements of conducting a general meeting Chapter M: Directors and Secretary 1. 10. Appointment a) Describe how directors are appointed b) Identify qualifications for appointment Publicity requirements Explain circumstances under which company directors are supposed to be publicized Powers, duties and responsibilities a) Explain the powers and duties of the director b) Identify circumstances in which a director can be held liable personally Remuneration Explain the circumstances under which directors are remunerated Directors’ meetings Describe the roles of directors in their meeting Directors’ interest in shares or debentures Identify circumstances under directors can interest in shares or debentures Disqualification and removal of directors Explain the circumstances under which directors can be legally removed The Company Secretary Explain the duties and powers of the company secretary The register of directors and secretaries Explain the contents of the register of directors and secretaries Insider dealing a) Define “insider dealing” b) Identify parties liable for offences/irregularities in insider dealing Chapter N: Accounts (Financial Statements) and Company Auditor 1. Accounts (financial statements): Auditor's responsibilities, types of accounts (financial statements), Auditor's report a) Define an auditor b) Explain under what circumstances an auditor can be personally liable for damages arising out of his report Scanned with CamScanner (cPAUS : : oe i ies, resignation, remunerag. ero, tc sii) Maloy 2, Auditors appointment, © tromnon [2 civil and crimin . figence under : fiabity (negligence UF are appoint ved Re how anger ich directors can be remo) Explain : “audit 3 Enumerate qualifications of aut I yetor 4 Heserbe rights, dues ad Pte e) Explain how auditors are rem Chapter 0: Dividends 4. Declaration and payment a) Den 2 iver tjends are decared and Paid b) Explain how dividen 2. Unlawful distributions : os anla Explain ways in which distribution of dividends can be unl 3. Capitalization of profits . | Explain circumstances under which profits can form part of the capital wiul Chapter P: Corporate Insolvency 4. Winding up: types, grounds, petitioners, procedure, commencement and consequences, distribution of property, completion a) Define the term winding up b) Explain diferent ways of winding up ©) Enumerate grounds for winding up 4) _ Identify parties who can qualify to petition for winding up e) Describe the procedure for winding up ) Explain how winding up is commenced and completed a Explain te legal consequences of wnng up ist in order of privity the apportionment of proc indi 2. The Liquidator: appointment and removal, enact ara af and duties, liability and release control of a liquidator, powers a) Define a liquidator b) Explain how a liquidator is appointed and 6) Deseribe the rights, powers and dutles of eta d) Explain the ways in which a liquidat. es ‘uidator may be liable for transactions made during Chapter Q: Majority Rule, Minority Protection and Investigati ions 1. The rule in Foss v. Harbottle a) Explain the rule in Foss v. Harbottle b) Explain how common law and case |: law prot i erasing Protects the minority shareholde, ©) Explain circumstances under which shareholders “action by the company can bring action for OF against Paper 4: Business Law Sat 8 Scanned with CamScanner ICPAUO 2. — Statutory protection of the minority Identify statutory provisions for protection of minority 3. Company investigations and inspections Explain the circumstances under which company investigations and inspections can be carried out Chapter R: Ethical Issues 1, _ Identify and explain ethical issues in business relationships 2. Recommend appropriate solutions to ethical issues Scanned with CamScanner ‘ICPAU® : Chapter A: General Principles of Ugandan Law 4. Role, nature and classification of law a) Role and nature of law in Uganda Theories of law There are various definitions of law.’ First is the positivist or Austinian concept of law as the command of the sovereign or government.? This covers the law or legislation passed by the legislature or parliament, or made under its authority, such ‘as subsidiary legislation or siatutory instruments normally issued by government. Second is the related pure theory of law by Hans Kelsen® that law is an abstraction divorced from other aspects or factors, is logical, uniform in its universal application at all times and in all places, free from ethics, politics, sociology, history, etc. In other words, laws “pure”. Finally, law in Kelsen's view, law consists of norms, the highest of which is the Grundnorm or basic law, which in modern practice is equated to the constitution of a country. Third is the historical or anthropological approach to law’, to the effect that law is a product of history and human development which should be understood in order to explain the present situation. The leading proponent of this approach, Savigny, conceived law or any particular system of law as a reflection of the spirit of the people or Volksgeist.> He explained that all law is a manifestation of the common consciousness and added that:® Law grows with the growth, and strengthens with the strength of the people and finally dies away as the nation loses its nationelity. The basic notions of the historical conception of law are that.” (a) law making should follow the course of historical development; (b) custom precedes legislation and is superior to it; and legislation should always conform to the popular consciousness; (c) law is not universally applicable but varies with peoples and ages; (d) the Volksgeist cannot be criticized for being what itis but is the standard by which laws are judged; and (e) contrary to the moral authority underpinning the natural law concept, social pressure underlined the historical conception of law. Fourth is the economic or Marxist conception of law as a reflection of the economic conditions and substratum and capable of withering way depending on economic changes or revolution.® Underlying this approach was the view that law is an ‘See generally, Dias, Jurisprudence (London: Butterworth, 3° Esition, 1970) Part Il 2d, Chapter 14. 3Ypi., Chapter 15, pp. 406-2. ‘b., Chapter 16. Sib, pp. 428. id. “ibid. pp. 429. ibid, Chapter 17 and particuarly, pp. 452, 457-64. Paper 4: Business Law 11 Scanned with CamScanner rAuw ar | Of fe toe tes eh gear ene discarded. The major shortcoming causation, (b)itpun o im lar to t e historical approach, it dependeg (it 5 purported to be “scientific” but focused only on the economic faci, i was based on the class struggle between capitalists and workers but wa ‘ Specifically located or positioned; (d) it emphasized materialism; (e) it empha the law as an instrument of domination and exploitation, wielded by capita! against workers, thereby, ignoring the other functions of law as regulating _ ordering societal activities; (e) the envisioned development to a “classless a under Marxism contradicts the idea of a state in a state of class conflict betnee capitalists and workers; and (f) the prophesy of the law “withering away” leaving i “administration of things” ignores the role of law as regulator of the behavior a activities in society Fifth is the sociological approach, mainly associated with Ihering to the effect thy law is a part of human conduct and serves to further and protect the interests y society."° A variation of this is Ehlich's thesis that laws found in formal legal source; uld be distinguished from norms of conduct which govern the (e.g., legislation) shot d it could be found from:* life of society."! The living law as Ehlich conceive (a) judicial decisions as evidence thereof; (b) modern business documents; ani (c) observation of people, by living among them and noting their behavior Consequently, the state and its organs are only one factor of social control and should be examined relative to others such as customs, morality and the practices of groups and associations. | concept of law is the utilitarian view propounded by Jeremy Bentham to the effect that the law should promote the happiness of the greatest member.*? The main criticisms of this approach are:™ (a) it is difficult to in into an objective oné translate a subjective criterion of pleasure and pai (b) pleasure and pain may be indefinite in time and unforeseeable in their effect and (c) happiness of the majority may not necessarily increase the happiness of the society as a whole. Nevertheless, Bentham argued that in promoting the happiness of the greatest number there has to be a balancing of individual interests with ie communal welfare (“felicific calculus”) and law making should achieve social ends.” nd Bentham, the Tubingen School developed the ich rules should be related to the social interes coe Pound vuctute Another variation of the sociological Building on the ideas by Ihering a “jurisprudence of interests” by whi giving rise to it.'° The failure to elaborate on this was filled in by Rost conceived law as a tool of social engineering in order to “puild as efficient a st" Scanned with CamScanner ICPAUO. of society as possible which requires the satisfaction of the maximum wants with the minimum friction and waste and involved the balancing of competing interests."” Sixth is the conception of law by the Modern Realists as the pronouncement of judges or legal interpretation of the law and facts.'® The main objections to this approach are:"® (a) rules determine judicial discretion and cannot be ignored; (b) there are objective yardsticks for judicial evaluation which are independent of the “hunch” of a judge; (c) clients are inevitably advised by counsel prior to going to court and decisions are made at that point which cannot be ignored because they have not occurred in court; (d) laws, including legislation exist outside court proceedings; (e) the idea that a court decision is what is law implies that it ceases to be law since it may be subject to subsequent interpretation and decision by the courts; (f) by concentrating on judicial action the approach ignores the purpose of the law in regulating human behavior outside adjudication and which itself is the basis of judicial decision; (g) the approach emphasizes certainty or fixity of law based on judicial decision and ignores flexibility and discretion in legal application; and (h) the realist approach concentrates too much on judges and is “helpful in a system which leaves considerable discretion to the judiciary.” Finally, the natural law school which conceives law as emanating from a higher or moral order dictated by God or the nature of man.?* The main criticisms of this approach are:%(a) the moral test is vague in determining "basic" rationality and its limits; (b) ‘the reasoning processes of applying a formal test and a moral test differ and the judicial machinery is not geared to the latter”; (c) to make the moral sense of judges decisive is to impose on the community the morality of an unrepresentative group of people; and (d) there are very few people who are ready to sacrifice their position and livelihood and even life for moral principles Law in Ugandan context Constitutional Framework Uganda was first explored by Europeans and Arab traders in 1844. An Anglo- German Agreement of 1890 declared it to be in the British sphere of influence in Africa and the Imperial British East African Company was chartered to develop the area, The company did not prosper financially and in 1894, a British Protectorate was proclaimed. Uganda became independent on 9 October 1962. In 1963, Sir Edward Mutesa, the King of Buganda was elected the first President and Milton Obote, the first Prime Minister of the Country. With the help of an Army officer, Col. Idi Amin, Obote seized control of the Government in 1966 and declared a Republic. Parliament passed the 1967 Republic Constitution which remained in force, despite a Military Coup by Idi Amin in 1971, until 1995 when a new "ib, pp. 496. ‘ibid,, Chapter 19, pp. 522-6. For a variation by the Scandinavian Realists, see pp.336-83, "8820 also Cardozo, The Nature ofthe Judicial Process, pp. 128. ® Dias, Supra n. 1, pp. 526. 544-6, 2 Bid, pp. bid, pp. 551, Scanned with CamScanner pyraye 5 iod, the Constitut; Ww 1 the intervening period, Stitution Weg b) dM Constitution was Press supplemented by ™! lid laws not only enacted by the Parliamen, val bs ity of England and any custom which ig i of Eq 1d conscience as well as tna i \d goo ity or ve now discussed below. ; as The Constitution recognizes bee the Common Law and Dootti di repugnant to natural justice, eee particularly of trade and commerce. Parliament and legislative process cus Fi i nsists of the Acts ten law in Uganda co 0 e ry body of writ ordinances or other written law which iments, Currently the primai | laws at the time of independence, unless Parliament and the enactments, instru were part of the formal body of colonial repealed or modified by the Parliament. Most regulatory Acts and other written laws vest the relevant Minister, in charge, with the power to make rules/regulations relating to the objects of the Act or other written law in question, without the rules having to be directly approved by Parliament, except in specified cases. Despite the rules (also known as subsidiary legislation) being formulated and laid down by the Executive branch of the Government, they, nonetheless have the status of written law under the Constitution, since they are issued under the general authority of the Parliament in the governing Act or other written law. The rules may also be changed or revoked without the consent of Parliament. A large number of the current Acts of Parliament are i (enactments, decrees, statutes and so on) which were Hace nstruments Government before independence and have Continued in for: arene Parliament. This is the import of the Judicature Act (Cap, Faves epee’ by «|S, Laws of Uganda, 2000). However, these have been supplemer ; te ‘alas several post.independence governments sings 1962 ®Y lesisltion passed under Since the Judicature Acts, 1962, 1967 and 1996 as me , Now: i of Ugends, 2000 Eston, itis now clear which kee one onstitution, written law (legislation), the common ©. By hie established and current custom or usage, pom 2nd doctrines of Bae i observed by the High Court before those Acts, and, in these’ iM and thaw: 2Y rules, in conformity, with the principles of justios t"® 2sen cou ; Ce oF applicable by the courts. SAuity and go, ae express ‘Onscience Act, Cap, 13, Laws Classification of law in Uganda Law is normally classified or categorized first int 0 publi into civil and criminal law. Puble and privatg law 9d then Scanned with CamScanner ICPAUO, 2 Ogata, ot al, 2011, Business Law (Nao: Focus 2011) r2. Ibid, Public and private law Public law Public law generally regulates matters that affect the general public or state or society as a whole. Alternatively, it is a division of lew which regulates: (a) the relations between the citizen and (b) the operations of various state organs. In this context, public law generally covers Administrative Law dealing with the laws governing government agencies. Constitutional Law, comprising laws which protect the rights of citizens set out in the Constitution; Criminal Law relating to crime; Municipal Laws, consisting of ordinances, regulations and bye-laws that govern a city or town; and International Law, dealing with relations between nations. Private law Private law is distinguished from public | and deals with the rights and obligations of individuals, families, businesses and small groups and aims to assist citizens in disputes that involve private matters: specifically, private law covers the Law of Contract, Law of Torts, the Law of Succession, Family Law and Law of Property. The law of contract governs the ri contracts while the Law of Torts obligations of persons entering into the rights, obligations and remedies to a person who has been wronged by another. The Lew of Succession regulates the transfer of estate between parties in the event of death. The Law of Property deals with the forms of property ownership, transfer and tenancy matters. Family Law regulates family related and domestic aspects. Civil and criminal law The second and fundamental distinction is between criminal and civil law. Civil lave Civil law largely regulates** disputes between individuals, groups and organizations who seek an award of compensation for their grievances. Examples include, contract which determines the enforcement of promises made by persons; tort, which is a breach of a general duty imposed by law such as the duty not to be negligent and not to trespass on another's property; property law as explained above; company law, regulating the relationship between @ company and its directors, shareholders, creditors and employees; commercial law, covering contractual matters relating to business transactions, such 2s consumer credit, sale of goods, cheques and insurance; employment or labour law governing contractual on 17/082015. 2 also Study com, 2: Scanned with CamScanner ICPAUO, loyee, redundancy or retrenchmén, ips between an employer and emp e er , unfar dsmissel and health and safety at work; and family law dealing Matriagg divorce, nullity, guardianship and legitimacy. Criminal Law A crime is a wrong done to the state.”° Most of the criminal law is contained in the Penal Code Act.” However, several legislations* contain ae Protons for il wi ti isic The director of Public Prosecutions failure to comply with statutory provisions. ; normally handles prosecutions by the state and, shen convicted, the accuseg person is punished either by imprisonment or payment of a fine. Comparison between civil and criminal actions - | Criminal and civil hearings are normally conducted in different courts with different | tules of procedure. The Criminal Procedure Code (Cap. 116) and Trial on Indictment Act#* govern criminal trials while the Civil Procedure Act® and Rules govern civi Proceedings. There is also a different standard of proof. In a criminal trial the prosecution must prove the accused’s guilt beyond reasonable doubt, while in a civil action the plaintiff must prove his/her case on the balance of probabilities. Itis also notable that the difference between a crime and civil wrong does not lie in the nature of the act itself, but in the legal consequences that follow it.21 For instance a taxi driver who crashes may commit: (a) a breach of contract, in failing to deliver hislher passenger to the destination; (b) a tort, where damage is caused to any Person or property; andlor (c) a crime arising from dangerous driving. In such 4 case, separate actions will be started in diferent courts, respectively handling civil and criminal matters. Prosecutions involving serious criminal offences, such as indictments are brought in the name of the state, for instance Uganda v. Musoke. For civil cases the parties’ names are used, for example, Rukundo v. Wakula 2. Sources of Ugandan law Although generally it is thought®? that there are broadly four to five Sources of i Uganda the hierarchy of laws includes:* (a) the constitution; () written ‘ewer of law, in (©) common faw and equity; (2) any established and current custom 2 Usage tom Powers vested in, and the procedure and practice observed by the High Court any na | 7 in 27 Abbot ofa Bid BP 15 eon) 2” Cap. 120 (Laws of Uganda ition). 2 rs Companies ‘Act, 2012; Income Tax Act, Cap. 340; Trademarks Act, 2010; Traffe & Road Safety act ae : 1 29 Cap. 23. 2 Cap. 71. 3" Abbott, ef al, supra n. 25. po. 16. 2 1 Part |; Abbott, supra n. 26, pp.18-35 , 2 Jute ct (Cap 13 Laws of Uganda 200) Eton 5.14 (2 Soe ao Negistes Couts het (Cag — Uganda 2000 Edition) s.9. Scanned with CamScanner ICPAUO the absence of any express rule applicable to the matter in dispute before the court it shall apply the principles of justice, equity and good conscience. The sources stipulated by the Judicature Act and Magistrates Act™ broadly correspond with those identified by some leading academic jurists as precedent, legislation statutory interpretation, custom and values. The sources outlined above are briefly examined below. a) The Constitution The Constitution of the Republic of Uganda, 1995 (as amended) is the supreme law of Uganda and binds all authorities and persons.® Where any custom or law is inconsistent with any of the provisions of the constitution, the constitution prevails and that other law or custom is, to the extent of the inconsistency, void.3” The constitution broadly provides for: (a) the citizenship; protection and promotion of fundamental human rights and other freedoms; (b) representation of the people, including the Electoral Commission; (c) the legislature its composition and functions; (d) the executive including the President, Vice President and Cabinet;-(e) the judiciary including the exercise of judicial power and the courts; (f) finance including taxation, consolidated fund, appropriation, the central bank and auditor general: (g) the public service, including the public, education and health service commissions and permanent secretaries; (h) local government; (i) defence and national security; () inspectorate of government; (k) leadership code of conduct; and (\) traditional or cultural leaders and other matters. b). ‘Legislation The written law or legislation is passed by the legislature or parliament, following due process.*. In. this respect, parliament is the supreme law making body. Practically, statutes passed by parliament normally amend, and sometimes abolish, established rules of common law or equity, overrule the effects of decisions of courts or make entirely new law on matters which previously have not been the subject of legislation.2° There are two types of legislation, that is, parliamentary and delegated or subsidiary legislation. The latter is normally made by designated persons, normally Ministers under specified statutes made by parliament.“ Mid, Dias, supra n. 1, Chapters 3 to 7. ‘asticle 3 (1) Constitution of the Republic of Uganda. Ibid, Article 3(2), Ibid, Article 78, “Abbott, supra n. 25, pp. 25. “Constitution of the Republic of Uganda, Article 79 (2). Scanned with CamScanner ICPAU@ c) Ibid. Article 77 (1), Abbott supra n. 25, pp. 25-6, e.g. Public Order Management Act, 2013. Abbot, supra n. 25, pp. 20. ‘followed no declaratory theory as the 4 “ laws on any matter for the a Although parliament is empowered to “make a,""" five specific functig, id: nance of Ugani 8 9 Order, development and Soot oe These are: (a) law reform baseq oa ‘| Parliament have been ide! 8 Commission or reversing a Aecig, i Uganda Law Reform ussic in ofthe, Saint (E)conaodcion where existing beara eae nee aa i / ic (both case law ant inclug ificati n all the law on a topic (both a (eoeries Een being the directors’ duties under the rompanies Act, 2019, (@) revenue Collection reflected in the annual Finance Acts wile vablement the budget proposals; and (e) special legislation, which is ileal ith the day. day running of the society, for instance the Appropriation Acts. An Act normally comes into force on the day itis assented to by the President o such day as is notified by a statutory instrument normally issued by the Televant | Minister. The Act ceases to be effective when it is repealed by another Act, Passeq by Parliament. The Act has effect within the territorial boundaries of Uganda, unless | otherwise specified, | Common law and equity/judicial precedent Common law“* Initially, common law courts applied the declaratory theory of the common law, that is, the law was contained in the customs of the land, which the judges merely declared. At the time judges tegarded precedents Or past decisions of court as Persuasive and not binding.** Later, the Judges paid More attention to previous decisions, hence, the development of the common law through Precedent.#6 Equity While equity generally refers to the “power @ particular case by a Judicial body” application: of strict tules,"” the techy developed by the English Court of Char to meet the moral Standards of justice in using its discretion to “mitigate the rigid Woon, Understanding is that of a system | aan 'n this context, the Court of Chancery justice in each individual case. This leq to uncertain oa ay did but aspired ‘ot increasing respect for and reliance on Previous decisio pa which pecessitale developed, henceforth, through precedent 4 ns. Equity, therefore, also anner Fisher v. Prince (1763 Abbe hit Scanned with CamSe; ICPAUS, Doctrine of binding precedent The doctrine of precedent is about 135 years old and originally arose from two developments.” First, in 1865, a council was set up by the Inns of Court and The Law Society to publish, under professional control, the decisions of the superior courts. Second, the Judicature Acts, 1873-1875 (similar to our Judicature Act, Cap. 13) established a clear court hierarchy. The doctrine of precedent “depends for its operation on the fact that all courts stand in a definite relationship to one another.”® In simple terms, the Supreme Court, Court of Appeal/Constitutional Court and High Court are courts of record whose decisions are binding on the respective lower courts in the hierarchy.5* There are two criteria for a precedent to be binding. First, it must be a ratio decidendi statement and, second, the court must have a superior or in some cases equal, status to the court considering the statement at a later date. Where these requirements are satisfied, and the material facts are identical, the court is bound to apply the rule of law stated in the earlier judgment. ** The ratio decidendi comprises three basic elements: (i) findings of fact which may be direct or inferential/circumstantial or deductive; (ii) statement of law applicable to the facts of the case (ratio decidendi statement as distinguished from an opinion or obiter dicta); and (iii) the decision which determines the rights and liabilities of the parties in relation to the action or dispute. d) Custom or usage Legal basis Section 14 (2) (b) (li) of the Judicature Act provides that the High Court shall exercise its jurisdiction in conformity with “any established and current custom or usage” Relatedly, Section 15 of the Act empower the High Court to observe and enforce *.... any existing custom which is not repugnant to natural justice equity and good conscience and not incompatible either directly or by necessary implication with any written law.” Nature of custom What then is a custom? There are three possible meanings of “custom."® First, in the English context, custom is the original source of the common law. However, currently custom cannot be equated with the common law since the common law rules are based on judicial decisions rather than ancient custom. Second, “custom” refers to a conventional trade usage. In this sense, it is not a source of law but a “Wi, ip, * Seo atzo Betibinga, 2013, Law of Contract in Uganda, 2° Edition (Alahabad: The Written Word Publications) pp. 4-6. For the composition and jurisdiction of these courts see Judicature Act (Cap 13, Laws of Uganda, 2000 Edition), Sectons 3-21 ebbbett ‘supra, n. 25, pp 21-2. Scanned with CamScanner PAUS. ot Means by which terms are implied into contracts. ae e noe the wee @ describes rules of law which apply only in ete area, ocay Custom. In this Sense, it is a distinct source of law.’ Proof of a Custom Custom Fora Custom to be accepted as part of the law if must be proved to exist in court and then “judicially noticed,” The factors necessary to prove the custom include Showing: (j) that it Possesses sufficient measure of antiquity at the time of revie Ww; (ii) that it has’ been enjoyed co Ntinuously without interruption; iii) “it-has been bligatory Sense; (iv) it must be certain and precise; (v) it ith other customs in the area: and (vi) it must be reasonable h the common law. In the Ugandan Context, a custom ig additionally Subjected to the test of whethe: is Fepugnant “to Natural justice, equity and good Conscience” and incompatibi ‘with-any written law."57, Fit lity Usage . F e Statuto, and common imited to a mi de oF locality but international: d ity law; (Cc) need have ino Particular scope and may: be i may .be .common_ to. the whole country or even 3 . A reasonable; ‘and (e) is unenforceable 0 particular Cases if it Ee) tonalgy be vary th express terms of the contract, Since its function ig to imply a term whee contract is'silent.© i ; i It has beeh observed that “the operation of such conventig) nal Sages j ‘| ‘ituti S is - illustration of Practice in influencing other law constitutive Processogr si also an 2 0 Edition), Sections 13-15 or impieg terms . 82 Laws of Uganda, 200 ns wit ,2.g., Sale bol br ateae peace and qualiy‘and ness of he goo i poe reais Lf garage ee 0; Wambwa v. Okuma N97O}Eq gy Siren 1. BP ie ‘Mawireiee Courts Act, (Cap..16), s.10; Wamt ens cature Act, supra, s. 15; tract in Uganda, supra, pp. 7. F Scanned with CamScanner ICPAUO Natural justice equity and good conscience Both the Judicature Act and Magistrates Courts Act (MCA) indicate®? that jurisdiction in civil cases where no express rule is applicable to any matter in issue before the ae court, in conformity with the principles of natural justice equity and good conscience”. It has been argued that a large part of adjudication depends on judicial discretion which is an ‘instinctive sense of justice born of vast knowledge and experience of the law."® This view is relevant to judicial application of natural justice, equity and good conscience which one jurist equates to the “values” of a judge which “cover all those considerations that shape the provisional decision of a court and guide its handling of rules by providing the yardsticks for measuring the conflicting interests that are involved," The concept of “value-judgment” depends on the following considerations:® (a) the Novelty of a case which cannot be handled under the existing law; (b) the texture of the law which determines the extent of judicial discretion; (c) “doing justice according to Law’ is a continuous process; (d) values should be studied relative to case law; (e) cases should be considered in series, in order to determine the consensus among judges; and (f) the principal yardsticks by which conflicting interests are evaluated broadly include national and social safety, sanctity of the person, sanctity of property, social welfare, equality, fidelity to doctrine and tradition, morality, convenience and international comity.®* 3. Legal systems and administration of law a) Legal system Similar to other member nations of the Commonwealth, Uganda has a common law legal system This means that the courts not only apply written laws in deciding a case but also the huge body of judicial precedents (previous decisions by the Courts in Uganda, England and other applicable jurisdictions), that constitute the body of the common law. In the common law tradition, legislation enacted by Parliament only provides for a general framework: the constitutional assumption is that it is for the courts to flesh out this general framework into a more detailed one with each precedent that they set and add to the body of the common law. ‘Some very important and large areas of Ugandan law lie almost entirely in the realm of the common law, in that there is little or almost no governing legislation. Instead, the common law is the only law in such areas, examples being the fields of contract (until recently when the Contracts Act, 2010 was passed) and tort laws. Traditionally, in the absence of a local precedent on a given point of common law, the Ugandan © Judicature Act, 5.14 (2) (6); MCA, 5.10 (3) © Dias, supra, a. 1, pp. 162. “Ibid. Chapter 7, pp. 165. Ibid, pp. 165-6. For detailed discussion of these see id, pp. 167-94. Paper 4: Business Law 2 Scanned with CamScanner ai ICPAUO b) Courts i i mbodieg i law. This approach is now en in the English common al em eee the J Hoare he Cap 13, pr, section 14 (2), which provides the chy of tu , Cap. 13, laws to be applied by the High Court. ture Act by the provision that i ified in section 14 (3) of the Judicature D te eared ie pica sega Ae doctrines of equity shall e a ee oniy insofar as the circumstances of Uganda and its peoples permit, and subject to such qualifications as circumstances may render necessary. Types of courts Courts of record Under Article 129 of the Constitution, 1995, all judicial power is exercised by the Courts of udicature which comprise the Supreme Court, Court of Appeal, High Court and such subordinate courts as Parliament may, by law, establish. There are basically two levels to the national court system. At the higher level are the Su preme Court, the Court of Appeal and High Court, which are courts of record. The High Court has original jurisdiction (it is a Court of First Instance) as well as appellate jurisdiction (it hears appeals from subordinate courts) in both civil and criminal matters. The Court of Appeal hears appeals in both civil and criminal matters from the High Court and also matters related to the interpretation of the Constitution, when constituted as the Constitutional Court, The Supreme Court hears appeals from the Court of Appeal in civil, criminal and constitutional matters and is the highest Court of Appeal in the country. The High Court has unlimited Original jurisdiction in all matters and such appellate and other iurisdiction conferred on it by the Constitution. Magistrates Courts The subordinate Courts comprise the Magistrates Courts. In iy . magistrate has fiscal jurisdiction of up to fifty milion Uganda shin . oat (USD 14,700); the Magistrate Grade One has jurisdiction where the Raa (UGX) subject matter does not exceed UGX twenty million (USD 5.280). The we oF the Grade Two has jurisdiction in respect of subject matter not exceeding Yay wstrate (USD 147). Where a alspute is governed only by civ eusi eX 800,000, Chief Magistrate and Magistrate Grade One have unlimiteg jurisdiction,” ‘8% the Other Courts The Industrial Court i i der the Labour Disputes (arty The Industrial Court is established un t ‘bias Settlement) Act, 2006. The court currently consists of two judges, a Chief Ju, de and Deputy Chief Judge, each with a tenure of five years, assisted hand representatives respectively of employers, employees and Labour Unions, ba} The court is 2 court of equity and not bound by ordinary rules of evidence, Scanned with CamScanner ICPAUG The court's jurisdiction is referral in that labour disputes are referred to it by a party to a dispute where a labour officer has failed to dispose of a dispute within eight (8) weeks under the court's regulations as requested under the Act. The court also hears appeals against @ labour officer's decision under the Labour Disputes (Arbitration and Settlement) Act, 2006. The Tax Appeals Tribunal” The Tax Appeals Tribunal is constituted under the Tax Appeals Tribunal Act®® (TATA) ) Composition and constitution of the tribunal The Tribunal consists of a chairperson and four other members appointed by the Minister responsible for Finance for a term of three years which is renewable (TATA Sections 3-4, 6). In terms of qualifications, the chairperson should be a person qualified to be appointed as a judge of the High Court. Each of the other members should be a person of high moral character and integrity, not be a convict of an offence involving moral turpitude and should be qualified in taxation, finance, accounting or law (TATA s. 5). The Tribunal is constituted for a proceeding by three members. ii) Powers of the tribunal The tribunal is empowered to review any decision under a taxing Act by the Uganda Revenue Authority (TATA, s. 14 (2), (3)) following an application for review submitted to it in the prescribed form (TATA, s. 16 (1)) Small Claims Courts procedure A Small Claims Procedure (SCP) has been established by the Commercial Court Division and applies to claims not exceeding UShs 10 million, such as those arising out of the supply of goods, rent or debts. The SCP will be applied after a suit has been instituted in the court whose jurisdiction the cause of action wholly or in part arises. Scanned with CamScanner IUrAUG c) ee A natural person may institute the suit, although a body corporate can only be pa ry to the suit as a defendant. ) Excluded matters The SCP is not applicable to claims exceeding UShs 10 milion claims againg government, family disputes, professional or employment services, claims involving torts, succession matters and those in which specific performance ig claimed without option of payment of damages. However, aclaim for Tendering an account or transferring movable property and disputes based on tenancy agreements up to UShs 10 million in value are permissible. i) Legal representation No legal representation by an advocate is permitted under the SCP. However, a plaintiff may obtain advice from an advocate at their cost. A court clerk's assistance is free of charge. Electricity Disputes Tribunal Zhe Electricity Disputes Tribunal is constituted under section 93 of the Electricity Act in 2003. It consists of four (4) members, including three lawyers and one engineer and the quorum for its proceedings is three members, Its jurisdiction is to hear and determine all matters referred to it relating to the electricity sector. This includes electricity disputes between consumers and the Public bodies charged with generation, transmission and distribution of electricity in Uganda. In exercising its functions, it has the Powers of the High Court, A majority decision of the tribunal is binding and witnesses be ; wt fore it enjoy immunities, obligations and privileges as those before the High Court The Tribunal's proceedings are informal but should be Conducted within the rules of natural justice. The Tribunal is currently based at the Ministry of Energy, and Mineral Development, Amber House, Kampala. , Executive powers and administrative law In the Ugandan system, the Executive power ofthe state les with the P his/her cabinet. Cabinet Ministers are charged with the superintendence or ot ministries whose jurisdiction is delimited not by legislation but by the Been Vatious role ofthe Executive branch inthe day-to-day regulation and supenigie tive, The is significantly enhanced by the legislative practice of generally including poede Act of Parliament an empowering clause giving the relevant minister p09," each make rules and regulations forthe achievement ofthe objects ofthe relay P? Eee Parliament. Tesident and Paper 4; Business Law Scanned with CamScanner AUS These powers to frame rules and regulations are known as_subsidiary legislation and have the same force of law as the parent Act (known as the primary legislation). The enabling Acts generally provide for the subsidiary iegislation to take effect simply by being gazetted or published in the required statutory form by the Minister. Such subsidiary legislation generally flesh out the regulatory framework or machinery broadly spelt out in the parent Act. Scanned with CamScanner Fog a sang Ga! Self-test questions Typical exam questions Question 1 : . articular regard to: Explain the doctrine of binding precedent in Ugandan law paying P: (5 markg a) the hierarchy of the courts; and / {5 mark of the doctrine. ¢ hy ive advantages and disadvantages of b) the relative Ps = ACCA June 204 Solution: Precedent: The dostrine of binding precedent, or stare decisis, lies at the heart of the English legal system, The doctrine refers to the fact that within the hierarchical structure of the English courts, a decision of a higher court will be binding on a court lower than itn that hierarchy. When judges try cases, they will check to see if a similar situation has come before a court previously, If the Precedent was set by a court of equal or higher status to the court deciding the new case, then the judge in the present case should normally follow the rule of law established in the earlier case. a) _ The hierarchy of the courts: The Supreme Court stands at the summit of the Uganda court st are binding on all courts below it in the hierarchy. The ‘Supreme its previous decisions where it appeared right to do so, ructure and its decisions Court free to depart from ener: decisions of the Supreme Court and its own previous decisions To ra brits number of exceptions to this general rule. The exceptions sien where: Nowever, @ i) there is a conflict between two previous dex i) previous decision ofthe Court of Appeal has bean’ Court; andlor "erTled by the Supreme i) the previous decision was glen per incuriam, i. in ignora, that would have led to a different conclusion (Youny Bristoy of SM authority (1944). Aeropiane Co Lig

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