CPA Introduction to Law and Governance – August 2026 Past Paper & Answers

Nature, Purpose and Classification of Law The Court System Administrative Law Alternative Dispute Resolutions (ADR)

(a) Highlight FOUR legal implications of treating a rule as law rather than as a moral expectation in Kenya.

(b) Outline FOUR matters that should be considered when deciding whether a dispute should be filed in the High Court, the Employment and Labour Relations Court, the Environment and Land Court or the Magistrates Court.

(c) A county executive committee member issues an internal circular requiring all small traders to pay a market access levy before opening their stalls. The levy has not been enacted by the county assembly and county officers threaten to seize goods from non-paying traders.

With reference to the Constitution of Kenya, 2010 and principles of equity, assess THREE legal controls that could be used to challenge the circular.

(d) Musa Otieno and Rehema Achieng own family businesses in Mombasa. Their dispute concerns delayed delivery of supplies, but they wish to preserve their commercial relationship and avoid publicity.

Advise them on THREE alternative dispute resolution mechanisms, other than arbitration, that could be suitable in resolving the dispute.

Law of Contract Law of Persons Law of Tort Sale of Goods

(a) Outline FOUR legal capacity issues that should be considered before a trader contracts with a person aged sixteen years, a registered co-operative society and an unregistered welfare group.

(b) At a supermarket in Nakuru, a customer, Daniel Omondi, slips on cooking oil that had been on the floor for over thirty minutes. Staff members had seen the spill but did not clean it or warn customers.

Analyse THREE elements that Daniel Omondi should establish in a negligence claim against the supermarket.

(c) Explain FOUR ways in which information technology might affect the formation and proof of a commercial contract under Kenya law.

(d) Amani Tech Stores sells second-hand laptops through an online platform. The advertisement states that the laptops are "tested and suitable for office use". After delivery, Wanjiru Mwangi discovers that the laptop supplied overheats and cannot run basic accounting software.

Advise Wanjiru Mwangi on THREE implied remedies available under the Sale of Goods Act.

Agency Partnership Indemnity and Guarantees Insurance

(a) Outline FOUR circumstances under which an agent may incur personal liability to a third party in an agency transaction.

(b) Three accountants, Hassan Ali, Mercy Wambui and Brian Kibet, operate an unregistered consultancy under the name HMB Advisory. They admit a new person to share profits but do not amend the partnership agreement or notify existing clients of the change.

Advise the partners on THREE legal issues that could arise under partnership law.

(c) Explain FOUR ways in which a letter of credit may support a commercial sales transaction while preserving the independence of the bank undertaking.

(d) Alicent Insurance Ltd. intends to migrate its motor insurance policies to a digital platform and terminate paper-based renewals. Some policyholders live in areas with limited internet access.

Evaluate THREE legal safeguards that the insurer should adopt to ensure policyholders are not unfairly disadvantaged under Kenyan law.

Negotiable Instruments The Law of Property Introduction to corporate governance Professional Ethics

(a) Enumerate FOUR legal effects of crossing a cheque on the rights and obligations of the banker and customer.

(b) Lax Developers Ltd. is selling units in a high-rise building before registration of the sectional plan and before the management company has been properly constituted.

Advise prospective purchasers on THREE legal safeguards that should be observed under Kenyan property law.

Explain FOUR corporate governance measures that should be applied to manage the conflict of interest before the supply contract is approved.

(d) A firm of accountants intends to use social media advertisements promising "guaranteed tax refunds" and comparing its services with named competitors.

Assess THREE ethical safeguards that the firm should apply to ensure that its publicity complies with professional ethics.

Administrative Law Introduction to corporate governance

(a) Outline FOUR remedies that may be sought in administrative law where a public regulator acts without hearing an affected licence applicant.

(b) Highlight FOUR components that a Kenyan start-up should include in its compliance register to manage legal obligations relating to contracts, licences, employee records and customer data.

(c) A public procurement review committee ignores documents submitted by Amaxi Supplies Ltd. and relies on an unpublished internal policy to reject its tender. The committee refuses to give reasons.

Analyse THREE grounds upon which Amaxi Supplies Ltd. could challenge the decision.

(d) A fast-growing private company has a board committee made up of founders, investor nominees and senior employees. The committee approves related-party contracts, employee disciplinary matters and investor reports, but it has no conflict register or whistleblowing mechanism.

Evaluate THREE governance risks arising from this arrangement.