December 2025 CPA CS Introduction to Law and Governance Past Paper answers

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CERTIFIED PUBLIC ACCOUNTANTS (CPA) CERTIFIED SECRETARIES (CS)
CERTIFIED CREDIT PROFESSIONALS (CCP) FOUNDATION LEVEL
INTRODUCTION TO LAW AND GOVERNANCE
TUESDAY: 2 December 2025. Morning Paper. Time Allowed: 3 hours.

This paper consists of seven (7) questions. Answer any FIVE questions. ALL questions carry equal marks. Do NOT write anything on this paper.
QUESTION ONE
(a) Distinguish between “agency” and “bailment”. (4 marks)

(b) Outline FOUR disadvantages of judicial precedent. (4 marks)
(c) Jane Vilakazi went to KiloRide Bus Company to travel from Nairobi to Kisumu. At the ticket counter, she was given a ticket that stated on the back: “The company is not liable for any loss, injury or damage to passengers, however caused.” Jane Vilakazi did not read the clause. During the journey, the bus driver, who was drunk lost control of the bus causing an accident in which Jane Vilakazi was seriously injured and her luggage was destroyed. Jane Vilakazi sued KiloRide Bus Company for damages.

The company relied on the exemption clause to decline compensation. Advise Jane Vilakazi on the following:

(i) The law on exemption clauses. (6 marks)
(ii) Vitiating factors in contract law. (6 marks)
(Total: 20 marks)
QUESTION TWO
(a) Explain the following principles as used in insurance law:
(i) Subrogation. (2 marks)
(ii) Reinsurance. (2 marks)
(iii) Uberrimae fidei. (2 marks)

(b) In relation to corporate governance, describe FOUR roles of board of directors in an organisation. (4 marks)

(c) The Constitution provides that an alien may apply to be a citizen and he/she may be granted a certificate of naturalisation if they fulfill certain conditions.
Highlight FOUR conditions that the alien should fulfill. (4 marks)

(d) In the context of Sale of Goods Act in your country, identify SIX circumstances when the buyer may lose the right to reject the goods. (6 marks)
(Total: 20 marks)

QUESTION THREE
(a) In relation to the law of partnerships, explain the following liabilities:
(i) The liability of retiring partners. (2 marks)
(ii) The liability of incoming partners. (2 marks)
(iii) The liability of minors as partners. (2 marks)

(b) Examine FOUR elements of a contract of sale of goods. (4 marks)
(c) Evaluate FIVE differences between a “contract of indemnity” and a “contract of guarantee”. (10 marks)
(Total: 20 marks)

QUESTION FOUR
(a) Highlight FOUR objectives of legal audit to an organisation. (4 marks)
(b) Outline SIX characteristics of a partnership. (6 marks)
(c) Assess FIVE effects of unethical behaviour to a business. (10 marks)
(Total: 20 marks)

QUESTION FIVE
(a) With reference to negotiable instruments, enumerate FOUR features of a bill of exchange under the Kenyan law.
(4 marks)

(b) In relation to administrative law, explain SIX ways in which the concept of irrationality (Wednesbury unreasonableness) is a ground of judicial review. (6 marks)
(c) With reference to the law of partnership, evaluate FIVE circumstances under which a partnership may be dissolved.
(10 marks)
(Total: 20 marks)

QUESTION SIX
(a) Statutes of General Application are recognised as a source of Law of Kenya by Section 3 (1) (c) of the Judicature Act. However, their application is restricted.

List FOUR ways in which they can only be relied upon. (4 marks)

(b) With reference to the law of property, describe FOUR types of interests in land. (8 marks)
(c) Examine FOUR acts that constitute professional misconduct for an accountant. (8 marks)
(Total: 20 marks)

QUESTION SEVEN
(a) Explain TWO differences between “mercantile agent” and “a del credere agent” in agency law. (4 marks)
(b) Highlight SIX advantages of using tribunals rather than the ordinary courts in resolving disputes. (6 marks)

(c) Evaluate FIVE forms of intellectual property recognised under property law in your country. (10 marks)
(Total: 20 marks)
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