Branch Banking: Law and Practice November 2019 Past Examination Question Paper – KNEC
This Past Paper examination was examined by the Kenya National Examination Council (KNEC) and it applies to the following courses:
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1. (a) Explain four procedural steps that should be carried out by a bank when opening an account for an unincorporated club. (8 marks)
(b) Highlight six disadvantages of taking land titles deed as a security against a bank loan. (12 marks)
2.(a) (i) The Branch manager of trade firm bank has instructed the account opening clerk at the bank to establish joint and several liability on partnership accounts.
Explain three reasons for undertaking such a step. (6 marks)
(ii) Wamae, Fusa an Dejo operate a partnership business, They opened a bank account for the business at your branch five months ago.
Today, Wamae has written to the bank giving authority to Monel, a third party to sign cheques on the account.
Explain the legal position of the bank conce the authority given to Monel. (6 marks)
(b) Highlight four banking accounts which may be set-off in realizing a bank debt. (8 marks)
3. (a) Kavuta opened an account with your bank nine months ago. He applied and obtained a loan of Ksh 21 million guaranteed by his friend, Jackson.
Kavuta has made repayment instalments satisfactorily in the past. His two other accounts with the bank always carry substantial credit balance. Jackson has called off this morning asking to be briefed on Kavuta’s loan repayment status and his financial standing. He states that this would help him plan for any eventuality.
Explain the legal principles applicable in this case. (12 marks)
b) Outline four advantages of direct debit facilities to a bank customer. (8 marks)
4. (a) In relations to appropriation of payments, explain six instances in which the rule in Clayton’s case does not operate. (12 marks)
(b) Highlight four ways in which an agricultural floating charge may be crystalised.
(8 marks)
5. (a) Aron deposited a locked deed box for safe custody with your bank. Today you have received notice of his death.
Explain how the bank should proceed upon receipt of the notice. (12 marks)
(b) In relation to collection of cheques, one of the protections, available to a bank is holder for value.
Explain four instances when value is deemed to have been given by the bank. (8 marks)
6. (a) Your bank has been advised of the mental incapacity of Bashen, aged 62, an account holder. This morning Bashen Junior, a son aged 29, calls in and informs you that he has applied to the court of protection to be appointed the receiver. He asks the bank to allow the dependants to operate the account pending the processing of his applications as a receiver.
Explain how the bank may proceed upon such request. (12 marks)
(b) Highlight four remedies of a legal mortgagee in event of default by the mortgagor. (8 marks)
7. (a) Manoti drew a cheque of Ksh 26,000 in fvour of Mwangi in full settlement of a debt.
However, a week later, Mwangi requested Manoti to issue a duplicate cheque stating that he lost the original cheque.
Advise Manoti in this circumstance (8 marks)
(b) (i) Outline the bank’s procedure when opening a personal representatives bank account ( 10 marks)
(ii) State the parties who may stop a cheque drawn on a personal representatives’ account. (2 marks)