CAT 2 BUSINESS ASSOCIATIONS II

Instructions:
1. Students will take one and a half hours to write this answer on the designated date and
within the class allocated on the CAT 2 Timetable.
2. Students are expected to make reference to the law in their answer and must raise brief
facts, issues, law applicable and make well-reasoned arguments.
3. Students should carry their own answer booklets into the designated class room.
4. All answers must be written within the designated class room.
5. Students should not submit more than five pages (A4 size) of hand written answers.
THE CURIOUS CASE OF BAD BLACK LIMITED
BAD BLACK LIMITED (the Company) was incorporated in Uganda in 2016. Its shareholders and
directors are Obama, Trump and Desantis. Obama holds 50% of the shares of the company while
Trump owns 25% and Desantis owns 25%. The Company owns rental apartments in Naalya and
Entebbe. All the apartments are valued collectively at UGX. 200,000,000 (Two Hundred Million
Ugandan Shillings). These properties bring in a monthly income of UGX. 2,000,000 (Two Million)
BAD BLACK LIMITED is focused building the most successful car manufacturing plant in Uganda.
In order to achieve this goal, the Company entered into credit facility with Bank of Baroda for
UGX. 1,000,000,000 (One Billion Ugandan shillings) for expansion. The properties in Naalya and
Entebbe were used as security for the credit facility and a charge was entered upon them allowing
the lender to prospectively collect income from the properties in the event of default. The
Company took another loan from Stanbic Bank for UGX. 500,000,000 (Ugandan Shillings Five
Hundred Million).
Trump used the money for his own private benefit and the Company failed to invest the money
from the credit facilities as expected. The loans from Stanbic Bank and Bank of Baroda are long
overdue and have an interest rate of 18% as of today. The Company, does not have even a single
coin for paying up these loans.
The CEO of Stanbic Bank and Bank of Baroda are in your chambers. They learnt that you are an
expert in commercial law. Advise them on the different contractual and statutory ways that they
may recover their principal sums and interest from the credit facilities.