Description

Commercial Transactions

1. Dianah is a businesswoman carrying on the business of selling motor vehicles both in cash and in hire purchase. She is your long-time client. On 6/6/2013 she came to you and told you that a customer by the name of Karina wanted to buy a motor vehicle from her. The details of the motor vehicle she wanted to buy are as follows:
2. i) Registration number: KBVA 652G ii) Make: Kescolla, Mark X iii)          Colour: Blue iv)          Engine number: EA297DX
3. v) Chassis number: PXD 24559

Your client tells you that the agreed price is Kshs.1,200,000/=

1. The client has instructed you to prepare the requisite commercial instrument to capture the arrangement between her and her customer. The instrument is to be drawn and executed by the parties on the day of instructions. Proceed to do so. (5 marks)
2. Dianah delivered the motor vehicle on 7/6/2013. In return, Karina handed to your client her personal cheque for the agreed price drawn in favor of your client. On 8/6/2013 Karina effected the transfer of the motor vehicle to herself at the registrar of motor vehicles. On receiving the cheque Dianah wrote on the back of the cheque the words “Pay Nduku” and signed. Nduku banked the cheque on 7/6/2013. On 16/6/2013, Dianah was informed by Nduku that the cheque had been dishonored on account of lack of funds.

Advise your client on the remedies available to her and the extent of her liability, if any, to Nduku in the circumstances of the case. (5 marks)

1. Supposing the motor vehicle in question had been sold under the hire purchase agreement and Karina only paid 3 out of the 10 agreed monthly installments of Kshs.120,000, what remedies, if any would be available to your client? (5 marks)