KENYATTA UNIVERSITY

SCHOOL OF BUSINESS.

UNIT NAME: BUSINESS LAW 2

UNIT CODE: BBA 302

LECTURER: DR. SIMON KANOGA

TASK: GROUP WORK.

NAME REG NO SIGN

WESONGA JULIUS OWINO D33/1490/2018

KOSGEI VINCENT D33/1388/2018

LYDIA MUTHEU D33/1320/2018

GITONGA FRANCIS D33/1408/2018

DAVID DONNÉ D33/4831/2018

FELIX KIMANI D33/1226/2018

JAVAN ODHIAMBO D33/1543/2018

EMILY AKOTH D33/1512/2018

LEAKY ODHIAMBO OCHIENG D33/1350/2018

JACKSON PKIROR D33/1382/2018

Question 1: What different statutes an individual has in the eyes of the law of a person

The different statutes that an individual has in the eyes of the law of a person are;

1. Natural Person

2. Artificial Person/Legal Person

Natural Person

A Natural-person is defined as "A human being who has the capacity or rights to do something

Characteristics of Natural Person

1. Natural Person is a Human Being.

2. Natural Person has the characteristics of the power of thought, speech and choice.

3. Natural Person is a real and living person.

4. Natural Persons perform their functions and also perform the functions of legal persons.

5. A natural person lives for a limited period of time human being dies.

6. Capacity to sue and be sued

Types of Natural Persons

1. Domicile (Permanent Residency)

Domicile is the permanent residence of a person, a place to which, even if he or she were

temporarily absent, they intend to return. In law, it is said that a person may have many

residences but only one domicile. Domicile is not necessarily synonymous with residence, and

one can reside in one place but be domiciled in another. For adults, domicile is established by
physical presence in a place in connection with a certain state of mind concerning one's intent to

remain there. One acquires a domicile of origin at birth, and that domicile continues until a new

one (a domicile of choice) is acquired. The following are the ways in which one may acquire

domicile;

Domicile of origin. A domicile of origin is a domicile a person has from birth. It can be

the home of an individual's parents. The domicile of origin is the domicile that a child acquires

by law when s/he becomes an independent person by birth. A child born in lawful wedlock takes

the father's domicile, and a child born in unlawful wedlock takes the mother's domicile. The

domicile of origin remains with an individual until another has been acquired by domicile of

choice or domicile by operation of law.

How to acquire Domicile of origin

 The father's domicile, where a child born in a lawful wedlock

 The mother's domicile, where a child was born in an unlawful wedlock

 Where the parents were not known, the domicile was the place in which the child was

found

Domicile by choice. A domicile of choice is one chosen by the person himself. In order for a

person to acquire a domicile of choice, the party must be personally present in the place which

s/he chooses as a domicile, s/he must choose such place as his/her domicile, an independent

person can acquire a domicile of choice by changing his/her residence with an intention to make

that residence his/her permanent residence. A domicile of choice is a self-acquired domicile. It is

a domicile that a person chooses to replace his/her former domicile. A domicile of origin can
replace a former domicile by returning to the initial residence or domicile of choice by acquiring

a new domicile. Only a legally competent person can acquire a domicile of choice. Domicile of

Choice is presumed by law.

How to acquire Domicile by choice

 When a child reached the age of majority and had subsequently settled in another area

with the intention of making it his or her permanent home

 When a person moves away from the domicile of origin intending to settle in another

place but has not yet done so, his domicile remains of the origin until he or she settles in a

new permanent home.

Domicile by operation of law or dependency. Domicile by operation of law is domicile that the

law vests in a person without considering a person's residence or intention to change residence.

Here an individual cannot exercise his/her freedom of right. Domicile by operation of law is the

domicile that is imposed by law.

How to acquire Domicile by operation of law or dependency

 A child's domicile would change when the relevant parent had acquired a new domicile

of choice.

 A wife would acquire her husband's domicile upon marriage.

 A person born mentally incapacitated or becomes mentally incapacitated while still, a

minor continues to be treated in the same way as a dependent child until the incapacity no

longer exists.
2. Drunkard Person

A person under the influence of alcohol cannot take any decision in the normal process.

Drunkenness or intoxication produces temporary incapacity to contract. A person when is drunk,

his mental faculties are clouded for the time being, and he becomes incapable of participating in

a contract temporarily. The position of an intoxicated person is that of a lunatic.

3. Person of Unsound Mind

Unsound mind is a term that denotes lunacy and insanity. Under the law, a person with an

unsound mind is considered incompetent to go to trial. The term is used in statutes. The spouse

of a person with an unsound mind can claim divorce under the ground of insanity. Wills can be

contested if there is ample proof that the testator was of unsound mind. Conveyances by persons

having unsound minds who are tinder

4. Major Person

A major is a person who has attained the age of majority and can and enjoy all rights of

an adult person. The age of majority is the legally defined age at which a person is considered an

adult, with all the attendant rights and responsibilities of adulthood. The age of majority is

defined by state laws, which vary by state, but is 18 in most states. Rights acquired upon

reaching the age of majority include the rights to vote and consent to marriage, among others.

5. A minor Person

A minor is usually defined as someone who has not yet reached the age of majority. In

most states, a person reaches the majority and acquires all of the rights and responsibilities of an
adult when he or she turns 18. A minor does not have the legal rights of an adult. Until a minor

reaches the legal age of adulthood, he or she may not be responsible for his/her own actions

(including the capacity to enter into a contract which is enforceable by the other party), for

damages for negligence or intentional wrongs without a parent being liable, nor for punishment

as an adult for a crime. The national legal age for drinking or buying alcoholic beverages is 21.

6. An Idiot Person

An idiot is a person who has low general intelligence. That person cannot show any

understanding even in normal matters. Idiocy is incurable, and any contract with an idiot is void.

An idiot refers to a person incapable of managing his/her person or affairs from birth. An idiot is

different from a lunatic. 'An idiot is a person who has been from birth or infancy deficient in

mental capacity and destitute of the ordinary intellectual powers. A lunatic has clear intervals,

and the idiot has no power of the mind. The term lunatic has broadened to include all insane

persons except idiots.

Artificial Person/Legal Person

An artificial person/legal person is defined as "A legal entity which is not a human being

but recognized as a person in law. Legal persons can sue and be sued, own property, and enter

into contracts. However, legal persons cannot vote, marry, or hold public office. (Example of a

legal person is Corporations/Companies). Legal or Artificial Person has Legal Personality (Legal

right or capacity to act like a human being). To have a legal personality means to be capable of

holding legal rights and obligations within a certain legal system, such as entering into contracts,

suing, and being sued.

Types of artificial persons

1. A Sovereign State

In international law, a sovereign state or country is a nonphysical juridical entity

represented by one centralized government with sovereignty over a geographic area.

International law defines sovereign states as having a permanent population, defined territory,

one government, and the capacity to enter into relations with other sovereign states.

2. Municipality/Counties

A municipality is usually a single administrative division having corporate status and

powers of self-government or jurisdiction as granted by national and regional laws to which it is

subordinate. It is to be distinguished (usually) from the county, which may encompass rural

territory or numerous small communities such as towns, villages and hamlets.

3. A Trade Union

A trade union, also called a labour union or labour union, is an association of workers in

a particular trade, industry, or company created to secure improvement in pay and benefits. A

trade union is a legal person it can be sued and can sue

4. Cooperative Societies

A cooperative (also known as co-operative, co-op, or coop) is "an autonomous

association of persons united voluntarily to meet their common economic, social, and cultural

needs and aspirations through a jointly-owned and democratically-controlled enterprise".

5. Corporations/Companies

A Corporation or company is an artificial or legal person with a separate legal existence

from its owners.

Question 2: A bill of exchange is an unconditional order in writing, signed by the maker,

directing to pay a certain sum of money to or to the order of a specified person or to the

bearer. Discuss the statement.

A bill of exchange is a written order made by the drawer to the drawee. A bill of

exchange is not a request or a promise. It is an order that the drawer gives to the drawee to sign

the document for a specific amount of money to the drawer as an unconditional order. There are

no conditions attached to the bill's payment as it should only be an order to pay money. An order

today is unconditional because of the time for payment of the amount or instalment thereof being

expressed to be on the lapse of a certain period after the occurrence of a specified event which,

according to the ordinary expectation of humankind, is sure to happen, although the time of its

happening may be uncertain.

The sum payable may be specific, within the meaning section 4, although it includes

future interest or is payable at an indicated rate of exchange, or is according to the course of

exchange, and although the instrument provides that, on default of payment of an instalment, the

balance unpaid shall become due. The person to whom it is clear that the direction is given or

that payment is to be made may be a certain person, within the meaning of section 4, although he

is misnamed or designated by description only.

 The bill of exchange can be categorized into two; inland bills and foreign bills. An

inland bill is a bill that is both drawn and payable within East Africa. It can also be drawn within

East Africa upon the same residents. A foreign bill is any other bill that is not an inland bill. A

bill can either be drawn payable to, or to the order of the drawer or drawn payable to, or to the

order of the drawee. If a drawer and the drawee are the same people, or maybe if the drawee is a

fictitious person hence cannot contract, the holder may treat the instrument as a bill of exchange

or a promissory note. The drawee must be named, and if not, he must be indicated in the bill with

reasonable certainty. A bill can be addressed to two or more drawers. However, if a bill is

addressed to two or more drawers in alternative or succession, it is not a bill of exchange.

If a bill is not payable to the bearer, the payee has to be named or indicated with a

reasonable identity. A bill may be jointly payable to two or more payees. If the payee is fictitious

or non-existing, the bill is treated as payable to the bearer. If a bill contains words that inhibit

transfer or showing that the bill should not be transferable, then the bill is valid but not

negotiable. A negotiable bill is payable either to the order or to the bearer. A bill is payable to the

bearer, which is expressed to be payable and payable to the order which s expressed to be

payable. A bill that is expressed to be payable to the order of a specified person either originally

or by endorsement is payable to the person at his option. Within the meaning of section four, the

sum payable by a bill of exchange is certain, which is either paid with interest or by stated

instalments. However, the sum can also be paid according to the indicated exchange rate or as

per the exchange rates to be ascertained as directed by the bill.

If the sum payable is expressed in words or figures, and a discrepancy arises, the amount

stated in terms is payable. Where a bill is expressed with payable interest, the interest runs from
the date of the bill unless stated otherwise. A bill is payable on demand only if expressed as

payable on demand, sight, or presentation. Also, if a bill has no payment time expressed, it

becomes payable in demand. If a bill is accepted or endorse when overdue, it is deemed as

payable on demand according to the endorser. However, a bill; can also be payable in the future

time. A bill is expressed as payable at a fixed period after it is issued undated; any hinder can

inserts the actual date of acceptance or issue provided the holder is in good faith. Suppose a bill

is not payable on demand. In that case, its due date is determined by adding three grace days to

the time of payment as fixed by the bill becomes payable of the last day of grace, provided it is a

business day; otherwise, it becomes payable on the next succeeding day.

Question 3: Define the term property. Discuss the various ways in which the ownership of

property can be acquired.

Property of any kind is a movable or immovable, tangible or intangible, and includes any right or

interest in such a property. The various ways in which the ownership of property can be

acquired.

1.The Joint Tenancy

A joint tenancy is a legal arrangement in which two or more people own a property

together, each with equal rights and obligations. When one of the owners in a joint tenancy dies,

that owner's interest in the property passes to the survivors without the property having to go

through the court/legal process.

Characteristics of Joint Tenancy:

  On the death of one joint tenant, their interest in the land passes to the other joint tenants

by the right of survivorship, and the process continues until there is but one survivor, who

then holds the property as sole.

 Each tenant holds common (or undivided) interest. If one owner dies, the remaining joint

tenant(s) automatically inherits the property in equal proportions. This does not form part

of the estate on one’s death.

 All joint tenants always own an identical and equal portion – for two tenants, 50% each,

and for four tenants, 25% each.

 Joint tenancy can avoid legal fees and delays. Shares are automatically passed on without

court interference which can be a major advantage to Joint Tenancy.  

 All names of the group who are joint tenants will show up on the title of the property

evenly.

 It is the most common way for a couple to own real property.

 The mortgage of a joint tenancy property requires the unanimous agreement of all joint

tenants.

 In certain cases and geographical areas, a joint tenant can apply to the courts to have the

land severed and provide each owner with a separate and distinct piece.

 For joint tenancy, approval for the co-owner is not needed to break up a joint tenancy.

 All tenants can occupy and manage the property:

Pros of Joint Tenancy

I. Right of Survivorship: 
As a joint tenant, you have the right to a proportionate share of the property if one of the joint

tenants dies. This is probably the main advantage of joint tenancy as opposed to other forms of

joint possession of real property (such as tenancy in common)

II. Tax Benefits: 

Joint tenancy may allow the owners to obtain various tax benefits. For example, joint tenancy

can sometimes prevent certain types of taxes from being imposed, such as state gift tax

requirements.

III. Rights to get Rent from the third party: 

Joint tenants are entitled to their proportional share of rents paid by third parties. This is true

regardless of the joint owners' relation to the renters.

IV. Rights to get Profits: 

Joint owners are also entitled to a proportional share of any profits that may be derived from the

land.  This includes the discovery of natural resources such as oil, minerals, or gas. They are also

entitled to any commercial profits or revenue. 

V. Avoiding Legal Process 

Since the property shares will pass to the other joint owners, this can help avoid the legal process

upon the death of one of the tenants.

Cons of Joint Tenancy

 I. Increased Level of Responsibility and taxes 

Joint tenants must pay their proportionate share of taxes, mortgage payments, and any other

assessments related to the property.

II. Duty to Compensate new owner: 

A joint tenant also has the duty to compensate other owners for any waste they commit against

the land or property.

III. Maintenance and Repairs: 

Joint owners are liable for their proportional share of necessary costs for repairs and maintenance

to the property. 

IV. No Inheritance Rights: 

If one joint tenant dies, the property title is transferred to the surviving joint tenants.  Thus, a

joint tenant may not be able to transfer property interests to their children or other family

members through inheritance.

2. Tenancy in Common

Tenancy in common is a situation in which two or more people have an ownership share

in a property. Each owner has the right to leave his share of the property to any beneficiary upon

the owner's death. Each tenant in common has a separate share of the property (for example, a

half or a quarter of the property) which they can dispose of during their lifetime or when they

die, but this is an undivided share. Basically, the separate share is not physically separated or
outlined. Just the percentage of the land is determined. Because the share is undivided, each

tenant has the right to occupy all of the lands. One tenant in common cannot exclude another

from a certain part of the land or restrict the use of any part of the land, even if one tenant in

common may have a larger share than the others.

Characteristics of Tenants in Common:

 Each tenant holds a percentage of interest in the property. If one of the owners dies, their

interest in the property passes to their heirs according to their will.

 Tenants in common is usually used when tenants own the property in unequal shares, i.e.

in different percentages.

 "Agreement between Tenants in Common" may be entered into, which could override the

rights which tenants would normally have under law.

 The tenants can hold equal or unequal shares: Every tenant owns an undivided share in

the property, therefore, is free to possession of the whole property.

 If the holder of tenancy in common desires, either to sell or mortgage their interest in the

property, that can be done by them without the consent of other tenants.

 Does not carry a right of survivorship: if one tenant dies, their interest does not go to the

other tenants but goes to the heirs of the deceased. If there is a will, it's distributed

accordingly. However, if there is no will, there are provincial legislation, and the person's

assets (including tenant's interest of property) would be distributed to relatives according

to that legislation.
  If an individual is purchasing properties for investment purposes with people that are not

relatives, tenants in common would be appropriate as then their shares will not

automatically go to the remaining tenants.

Benefits of a Tenancy in Common

I. Every owner owns the asset;

II. Each owner can own 50% of the asset, or any other percentage can be established;

III. Any party can part with his or her share legally without needing consent or approval from

the other party;

IV. The asset will be passed to the heirs;

V. The asset will not transfer automatically to the surviving account owner when the first

owner dies;

VI. The asset will be passed on according to the provisions that have been made in the

deceased owner's will. Most tenants leave their assets to their heirs, but it could be passed

on to the other account owner as long as the deceased has decided against it in his or her

will. There is access to the assets, so if one of the owners dies or becomes disabled, the

second owner should be able to gain access to his or her part of the assets and can sell the

asset or dispose of it in any way that suits them without the necessity of waiting for a

probate court judgement.

Methods of Terminating a Co-ownership

1. Sole Survivorship  
The most common way in which co-ownerships are brought to an end is when one of the two JTs

passes away and the entire estate vests in one sole owner. While there is no right to survivorship

in a TIC, it can still happen. For example, if A and B were TICs for a certain property and B is

the owner in fee simple, if A transferred his life interest to B, the interest would merge, and B

would be the sole owner.  

2. Disposition of co-owned estate to the third party

For example, if A and B were TICs and they sell their interests to C, then C would be the sole

owner of the entire interest. Note: this can happen either when A and B voluntarily agree to sell

to C

3. Partition  

Partition serves to destroy the unity of possession that is common to both TIC and JT. There are

two ways this can happen:

I. Parties agreement to partition the property, Parties mutually agree to partition property

according to the respective share

II. Court partition, one party, applies to the court for a partition

4. Destruction or loss of the property right

5. Prescription in favour of a third party where Co-ownership can be terminated through the

Prescription (Giving the right to use the property to the third party) in favour of a third person or

a co-owner.