Lahore University of Management Sciences

Law 220 –Contract Law

Fall 2017-18


Instructor Khyzar Hussain
Room No. TBD
Office Hours TBD
Email khyzar.hussain@lums.edu.pk
Telephone Ext. 5606
TA TBD
TA Office Hours TBD
Course URL (if TBD
any)

Course Basics
Credit Hours 4
Lecture(s) Nbr of Lec(s) Per 2 Duration 110 mins per session
Week
Recitation/Lab (per Nbr of Lec(s) Per None Duration None
week) Week
Tutorial (per week) Nbr of Lec(s) Per TBD Duration TBD
Week

Course Distribution
Core BA/LL.B
Elective -
Open for Student BA/LL.B
Category
Close for Student Non-Law students
Category

COURSE DESCRIPTION
Course Description: Private parties form private agreements; but, a contract is a legal status which comes into
existence after a bargained for exchange of legal detriments, coupled with an absence of excuses towards its
enforcement.
This Course is designed to introduce students to the law of Contract in Pakistan. The purpose of this course is to
investigate the basic and complex rules governing contractual relations in Pakistan. The course is also designed to
equip students with a basic understanding of how other legal systems operate, and shall encourage students to
critically analyze the rules that are applicable to the Pakistani Legal System. The course shall begin with introducing
students to Contractual theory, and the rules regulating offers and acceptances. Consideration for a promise shall
follow, coupled with its understanding as a requirement to create an enforceable contract as well as its evidentiary
function. The course shall then highlight the issues relating to capacity to engage in contractual relationships as well as
formal requirements for certain transactions. Remedies, coupled with a measure of damages in case of breach of a
legally enforceable contract shall be the last part of the Course.

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Course Focus: The focus of this course is the Pakistani Legal system, with some emphasis on common law rules
regulating contractual relations (as applied in certain foreign jurisdictions). Students shall be able to understand the
issues that arise in contract law, and further understand the public policy arguments related to the rules that are in
place. Students shall also develop analytical and cognitive skills to work through a problem relating to the laws that
enforce promises and proposals. The major focus of the Course shall be the Contract Act of 1872, as well as other
materials prepared for class.

Although the following topics are touched upon in the recommended books, and in some of the cases (and covered in
some detail in the larger books), they are not covered in great detail in this course:
• Requirements as to the form of contracts (formalities governing certain contracts)
• Option contracts (that are necessarily congruent to certain formalities, and must be reduced to writing)
• Assignment/novation of contractual rights (including negotiability of instruments)
• Agency

COURSE PREREQUISITE(S)
• There are no prerequisites for this Course.
• Generally, a Student for this class must be familiar with the operation of the legal system.
Knowledge on how to spot issues, to determine what facts are material for the operation of law, and
logical analysis are presumed. Those topics are not reviewed in any detail in this class.

COURSE OBJECTIVES

• Traditionally, the law of contracts is used to introduce law students to the manner in which lawyers
think. However, there is no one body of law out there that can be memorized. Law is a way of thinking –
of applying rules to facts and predicting results. Even further, it is a method of asking if those results are
coherent and if they make sense within the larger goals of society.
But, it must be stated at the outset that the law of contracts is a rule laden discipline, filled with rules
and countless exceptions in a manner which causes many students to question whether anything was
ever learned, let alone allowing one to recall the corpus of law when it would b useful.

In order to facilitate the learning process, the following approach shall (in my opinion) be helpful in
organizing the thought process for students allowing them to spot the issues in a given problem.
The key to the law of contracts, regardless of the complexity of the question, is the recognition, at the
outset of whether liability is being debated with respect to a statement (or action) by one of the parties.
If so, then we are in the realm of the laws regulating contracts.
Students are advised to approach a contract law question by keeping the following issues in mind. These
6 inquires shall be used to organize all the materials in this course.

1. Did the parties form an agreement?
2. If the parties formed an agreement, is their agreement a contract?
3. Do the terms of the contract, or the subsequent actions of the parties, confer any rights, or impose
any duties upon non-parties?
4. Once persons are determined, have the performance obligations created by the contract matured?
5. If the contract obligations have matured, has performance been excused?
6. If performance has not been excused, and not been tendered, then what are the remedies
available to the parties.
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Learning Outcomes

• At the Conclusion of the Course the Student will be able to:


1. demonstrate a working knowledge of the elements of a claim under the laws of contracts, or
alternative theories of liability;
2. understand the laws regulating contractual relationships and the theory underlying the applicable
rules governing the framework;
3. understand the case law, common law rules, and statutory law, that regulate contractual
relationships, and the importance of issues presented in the cases, and how courts have applied
those rules keeping public policy in mind;
4. understand that different rules regulating transactions may apply depending on the subject matter
of the agreement;
5. apply case law to a specific set of facts/issues;
6. apply statutory law to resolve issues presented; and,
7. interpret statutory language, and trace the relationship between statutory law and applicable case
law.

Grading Breakup and Policy
Quiz(s): 10% (5 in number, unannounced)
Class Participation: 5%
Attendance: None (See Attendance Policy below)
Midterm Examination: 35%
Project: None
Final Examination: 60%

• Attendance: Students are expected to attend all classes. The following Attendance Policy shall be enforced as per
the Undergraduate Student Handbook:
o any student who is more than 10 minutes late to class will be marked absent and may, at the
instructor’s discretion, be barred from sitting in that class; and,
o more than 3 unexcused absences will lead to a grade reduction. All requests to be absent from class
must have been approved by the instructor prior to the class in question.

• Class Participation: You are expected to read the assigned material prior to class to contribute meaningfully in
class. Only a meaningful contribution in class shall be cause for you to get credit.

• Examination: All examinations for this course are open book. All exam materials must be prepared in congruence
with Article 22 of the LUMS Undergraduate Handbook.
o Formative assessment shall be conducted through class discussions and quizzes that shall be conducted
in class. Points awarded shall count towards the final grade for this course.
o Summative assessment shall be through the Mid Term and Final Examinations (dates to be announced
later).

• Pledge to accompany all written submissions for this class: All submissions for this class must be submitted with a
signed pledge from the student stating that all the work being submitted is the student’s own. Sample language of
the pledge is stated below:
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“I respectfully submit this written submission in good faith. I further pledge upon my sacred Honor, as a student
engaged in the most noblest of pursuit of gaining a legal education, that I have not given, nor received, improper
help to aid in the completion of ALL my written submissions for this Course.”

• Electronic Devices: No electronic devices whatsoever are permitted to be used during the lectures. This includes
laptops for note taking purposes.

• Material: All Materials for this Course have been prepared by the Author. No part of the Course Pack, or other
provided material may be reproduced, stored in any retrieval system, or transmitted in any means or in any form,
without the prior express written consent of the author, or as expressly permitted by law.
You must not circulate the work provided in this Course in any other form and you must impose the same condition
on any other acquirer.
Enquiries concerning reproduction outside the scope of the above should be sent directly to the Author, at the
address outlined above.

It must be stressed at the outset, that all the cases provided as reading material for this Course have been severely
edited to present only specific issues for consideration. The cases provided to you as material for this Course should
under no circumstance be thought of as an alternative to reading the source material.

• Quiz: Any Quiz for this class shall be unannounced. A quiz will generally be conducted in the first 15 minutes of
class.

• Case Briefing: The class shall be conducted using the Socratic Method of learning. Students are expected to be
familiar with the material prior to coming to class.
In preparation for class, it is advised that all students read the assigned cases by isolating pertinent facts relevant to
the discussion. This process is known as “briefing” a case.
After briefing an assigned case, students are expected to know the answers to the following set of questions during
class discussions.

1. What is the procedural posture of the case? (Before which bench in the hierarchy of the court structure
does the case reside. E.g. The matter may be on appeal before the High Court, or the Supreme Court, after
a decision of the Subordinate Courts etc.)
2. The material facts of the case? (Material facts are facts that are necessarily narrated by the court as being
operative upon the said ruling.)
3. The relevant issues decided by the court? (Issues are the outstanding questions of law to be decided by a
sitting tribunal.)
4. The rule we get from the case? (The operative rule is a simple statement which can be described in a
logical function. E.g. therefore if X set of facts, then Y result)
5. The holding of the case? (E.g. in cases of a matter disposed of in the court of appeals, whether the case
was remanded for further proceedings, overturned/overruled or held.)
6. Why did the Court rule the way in which it did? (The student shall be expected to give a well reasoned
opinion as to why she believes that the Court decided the way in which it did.)

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Lahore University of Management Sciences

Examination Detail

Yes/No: YES
Combine Separate: Combined; Grading Separate
Midterm
Duration: 90 Minutes (1hr 30 Min)
Exam
Preferred Date: -
Exam Specifications: Open Book & Open Notes (Short Questions and/or Multiple Choice Questions)


Yes/No: YES
Combine Separate: Combined; Grading Separate
Final Exam
Duration: 180 Minutes (3hrs)
Exam Specifications: Open Book & Open Notes (Four (4) Essay Questions)



Recommended
Lecture Topics
Readings Objectives/Application
Students shall be
introduced to the general
framework regulating the
law of Contracts.

An explanation of the
differences between and
importance of reading the
primary materials of the
law – cases and legislation.

Although most of the
syllabus deals significantly
with principles developed
by the courts, there are
1. Introduction to the Elements of also pertinent statutory

the law of Contract provisions which need to
be considered because
they contain rules
affecting contracts
generally.

Students must understand
that a significant portion
of each class shall be used
to read, and interpret the
text f the Contract Act of
1872, before applying
relevant case law to
specific fact patterns.

Students shall be
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introduced to the objective
standard of contractual
relations: where the secret
subject reservations and
meanings of the parties
are irrelevant to analyzing
contracts. We must
consider objective
manifestation of a present
intent to form a present
contract.

Students will be able to
state that Promises are
statements of future intent
that indicate a
commitment by the
promisor to the promisee
that the promisor intends
to be bound by his or her
promise such that a
reasonable person
standing in the shoes of
the Promisee would
understand it as a
commitment.

• CONTRACT ACT §§ 2, 9 Students will be able to
• Owen v. Tunison, 158 A. 926 explain what an offer is,
(Me. 1932) and differentiate it from
other statements not
• Harvey v. Facey, [1893] A.C. 552.
amounting to offers.
(Privy Council of Jamaica)
• Lucy v. Zehmer, 196 Va. 493 Understand an offer to be
(1954) a definite
• Leonard v. PepsiCo., 88 F. Supp. promise/proposal.
2d 116, (S.D.N.Y. 1999)
Promises/Proposals, and • Patridge v. Crittiden, [1968] 1 Understand acceptances to
2. Invitations to Treat, Offers and WLR 1204 be an objective
Types of Contracts statement/act showing a
• Neb. 89, 152 N.W. 310 (1915)
definite intention to be
• Ch. Muhammad Younis v. The bound by the terms of the
Islamic Republic of Pakistan, offer.
1972 PLD 847
• Further Readings State that there exist
o Carlill v. Carbolic Smoke exceptions to the
Ball Company, [1892] communications of
EWCA Civ 1 acceptances in certain
o Nebraska Seed Co. v. Harsh, types of contemplated
152 N.W. 310 (1915) contracts.

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Present Intent, content
(essential terms), and
communication of offers
shall be emphasized as
• CONTRACT ACT §8 essential parts of a
• Arnold Palmer Golf v. Fuqua contract.
Industries, 541 F.2d 584 (6th
Cir. 1976) State what happens to an
• Lahore development Authority v. offer when it is not
Muhammad Qasim Khan, 2002 accepted. Students will
also be able to state when
YLR 1345
an offer may close
3. Acceptance of Offers • Karachi Gas Co. Ltd. v. Daewoo
Cotton Mills Ltd, 1975 PLD 193 Explain what a valid
• Syed Paper Mills v. Trust acceptance is and what is
Investment Bank Ltd., 200 CLD not.
1830
• Abdul Hamid v. Abbas Bhai- Explain what happens
Abdul Hussain, PLD 1959 (W.P.) when the offeree
Karachi 629 expresses a condition to a
certain mode of
acceptance and the
general rules applicable to
the unilateral contracts.

• Contract Act §§ 3-8

• Pakistan Steel v. Indus Steel Students shall be
• Punjab Privatization Board, familiarized with the
Government of Punjab v. concept of an offer ending.
Counter Offers; Revocation, Muhammad Younas Malik, 2008
An offer can be terminated
termination of the Power of CLD 356
4 in 4 ways: rejection,
Acceptance; and, Communication • Port Karachi v. Messrs revocation, lapse of Time,
of Acceptances • Pakistan v. Muslim Comm. Bank & Death or Incapacity.
• Hyde v. Wrench; These topics shall be
• Butler v. Ex-cell.O studied in more depth
• Toy v. Burlington further into the course.

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Students shall be able to

illustrate the postal rule as
it relates to sending
• Contract Act § 4, 5 through acceptances; and,
• Household v. Carriage; will be able to understand
• Howell Sec. v. Hughes; the rationale behind the
• Businet v Aramex; rule.
5. The Postal Rule
• Lahore Development Authority
v. Sunbeam, 1984 PLD 430 The reasonableness of the
type of communication
• White v. Corlies
that ought to be used in
• Int’l filter Co. v. Conroe Gin, Co. the transmission of the
offer shall be debated in
class.

Students shall be
introduced to the issues
associated when
• Contract Act §§7,8 considering whether an
• International Filter v. Conroe offer has been duly
• Allied Steel v. Ford accepted.
• Day v. Caton
Manners in which an offer
Modes of Acceptance and • Hobbs v. Massasosit Whip Co.
6. may be accepted shall be
Ignorance of an Offer • Manchester v. Commercial introduced.
• Felthouse v. Bindley
• Errington v. Errington The offeree’s power to
• R. V. Clarke revoke an offer prior to its
acceptance shall be
discussed.

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• Contract Act §§5,8

• Ishaq v. Madan
• State of Behar v. Bengal Students shall be able to
• Behari v. Radhie understand that every
condition modifies a
Acceptance by performing • Contract Act §§ 5, 6, 9
promise/offer.
7. conditions • Brogden v. Metro
• White v. Corelies The happening of certain
• Lucy v. Wood conditions may trigger
• Byrne v. Van acceptance of a said offer.
• See also Pakistan Steel v. Indus
Steel

Students shall be able to

state consideration as an
essential element of in the
• Hafizullah Khan v. Al Haj
making of a binding
• Feinburge v. Pfeiffer agreement
• Chappel v. Nestle
• White v. Bluett Explain the issue of past
Consideration
8. • Mills v. Wyman cf. Webb v. consideration, and how it
is not adequate to create
McGowin
• Dougherty v. Salt an enforceable legal
obligation.
• Hayes v. Plantation Steel

Students shall be able to
state that a donative
promise is not enforceable

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if not supported by
consideration.

State situations in which
past consideration can be
good consideration for a
new promise (if any)
• Hamer v. Sidway
• Feige v. Boehm Students shall be
introduced to the concept
• Ward v. Byham
of promissory estopple as
9. Consideration (Continued) • Arzani v. People a separate theory of
• Kirksey v. Kirksey cf. Ricketts v. liability when anticipating
Scothorn binding legal obligations

Students shall understand
why certain promises can
be enforced under the
theory of promissory
estopple when a promise
is not supported by
consideration.
Promissory estopple as
a separate theory of
liability shall be
explained.

Elements for a claim
under this theory shall
be stated, and
understood using case
law.

• Central London v. High Trees The limitation of the
• Hughes v. Metrorail theory under “as justice
Promissory Estopple and Unjust • Rickets v. Scothorn requires” shall be
10. Enrichment as theories of • Feinberg v. Pfeiffer considered by the class
Contractual Liability • Mubarik v. ADBP and debated.
• Habib Bank v. M. Hussain
• Rickets v. Scothorn Unjust enrichment and
its associated remedies
shall be discussed. This
discussion shall be
limited to explaining its
application with respect
to certain transactions.

Students shall be able to
state that under the
theory of unjust
enrichment arises in 3
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situations namely: 1.
Gratuitous transaction:
2. Emergency Services:
(remedy exists if
renderers are in the
business if not in the
business, no restitution)
3. Self-interested
transaction

Students shall consider

pre-acceptance reliance
on promises in the
• Patterson v. Pattberg
context of commercial
• James Baird Co. v. Gimbel Bros.,
transactions, and in
Inc
particular, subcontracts
• Drennan v. Star Paving Co.
Pre-Acceptance Reliance : for construction work.
11. • Pop’s Cones, Inc. v. Resorts Int’l
Unilateral & Bilateral Contracts
Hotel, Inc.:
Different collateral
• Empro Mfg. Co., Inc. v. Ball-co theories of liability shall
Mfg., Inc.: be demonstrated and
• Hill v. Gateway explained.

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• Contract Act §§
• Exide Pakistan Ltd. v. malik
Abdul Wadood, PLD 2008
Students shall be able to
Karachi 583
understand that certain
• Sana Ullah v. Muhammad
objects/exchanges have
Manzoor, 1993 CLC 2348
been prohibited by law.
• Hossain Ali Khan v. Firoza
These types of contracts
Unlawful Consideration and Begum, PLD 1971 Dacca 112
12. are prohibited.
Void/Voidable Contracts • Messers Pakistan State Ol

Company Ltd. v. Malik Hadi
Contracts may also be
Hussain, 2013 YLR 2769
unenforceable owing to
• Syed Asadul Haq v. Messers public policy arguments.
Balochistan Glass Ltd. 2011 CLC
294
• Anheuser-Bush Brewing v.
Mason

• Keifer v. fred
• Aamir Maood v. khurshid
Begum
• Ortelere v. Teachers Capacity to enter into a
• Cundick v. Broadbent contractual relationship
Capacity to enter into contractual
13. • Suleman v. Kala shall be discussed in
relationships
• Haji v. Raja this class.
• Sheikh M. v. M. rafiq
• Zafarullah v. Aziz
• Jhandha v. M. Younis

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Students shall be able to

define
misrepresentation as a
false statement of fact
• Abdur Rehman v. Altaf
or law, which
• Merchantile v. Imam
reasonably induces a
14. Fraud and Misrepresentation • Kannavos v. Anninio
party to a contract.
• CAA v. AER Liability in
misrepresentation has
roots in the law of tort.

Students shall be able to

explain what a
contractual mistake is
and is not.

Students shall be able to
compare the impacts
mistakes have as
contrasted with
misrepresentations.
• Sheikh Brothers v. Arnold
• Dover v. Brooking Students shall be shown
• Centrovincial Estates v how to outline the
Merchant Investors (1983) circumstances in which
courts have found a
• Ameer v. Azhar
Mistake (Mutual and Unilateral mutual mistake to be
15. • Smith v. hughes
Mistake) operative.
• Raffles v. Wichlehause

• Riaz v. Razi Students shall be able to
• Cooper v Phibbs (1867) state whether a
• Bligh v Martin (1966) fundamental mistake as
• Griffith v Brymer (1903) to the quality of the
subject can cause of a
contract to be vitiated.

Students shall further
be able to state the
circumstances in which
courts have historically
found mistakes in the
formation of an
agreement to be
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operative.

Students shall be made
sensitive to the debate
as to whether or not
courts have a doctrine
in which a mistake in
equity can cause a
contract to be set aside.

Every condition
modifies a promise. A
condition either inserts
a contingency that must
occur prior to the
performance of a
contract. These are
• Luttinger v Rose
conditions precedent.
• International Rotterham v.

River
Condition precedents and Or a contingency that
15 • Kanvanos v. Hancock
Satisfaction of Contracts must be satisfied
• Muhammad Ishaq v. Sufia
simultaneously with
• Gibson v. Carange maturing liability on the
• Laurel v. Regal modified promise.
These are conditions
concurrent.
Conditions subsequent,
the happening of which
will extinguish the
contract.

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• Lakshman v. Moselumddin The concept that parties

• Sheikh v. Shabbir in a joint contract all
• Shirin v. Ziaul parties become equally
Conditions: Joint promises and
16 • Ramzan v. Abdullah and wholly responsible
the essence of Time
• LCCHS v. Dr. Nusrat for the obligations of the
• Yaqoob v. Hakim contract shall be
discussed.

In this class, students

shall be made aware of
certain conditions that a
court may impose upon
• Plante v. Jacobs
the parties in the
Constructive conditions and • Kingston v. Preston
17 interest of justice and
Substantial Performance • Stewert v. Newbury
fairness.
• Gill v. Johnson
Certain conditions may
also be implied as a
matter of law.

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Students shall learn

• Muhammad Hussain v. about certain promises
Federation of Pakistan that are mutual, but
independent of one
• M. Abdul Ghani v. M. Jalil
Reciprocal Promises and another: where a party
18 • Azizul v. Shahida
concurrent performance must perform his part of
• M. Saleem v. Ashfaq Khan
the promise without
• Walker v. Harrison waiting for the other
• K&G Harris party of the contract to
perform it.

Excusable non
performance can arise 3

Where they have
become objectively
impossible

• Paradine v Jane (1647). Where the performance
• Taylor v Caldwell (1863) obligations have
• Davis Contractors become commercially
Excuses as to performance
• Ltd v Fareham Urban District impartibly
19 (Impossibility, Commercial
Council (1956)
Impracticability, and Frustration)
• TI Group Inc v Frustration of purpose
• Transclear SA (2008) that subsequent to the
• Krell v Henry (1903 formation of the
contract, that the
performance of the
other party has no value
to the primary party.
Here the party seeks
non-performance of his
side of the bargain.

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Students shall be able to
explain the doctrine of
duress.

Students shall consider
whether economic
hardship can act as a
vitiating factor when
• North Ocean Shipping v ascertaining if the
Hyundai Construction contract has been
• Halpern v Halpern (2007) procured under duress.
• Barton v Armstrong (1976).
• Universe Tankships of Monrovia Indicate when duress
20. Undue Influence
v will vitiate an apparent
• International Transport contract
Workers Federation
• Alec Lobb Ltd v Total Oil (1983) Explain what undue
• Lloyds Bank v Bundy (1975) influence is.

Indicate circumstances
when undue influence
will vitiate a contract.

Students shall be able to
outline an approach to
both doctrines.

• Fatima Ent v. State Bank of

Pakistan
21 Recession and repudiation • McCloskey v. Minweld
• Hochester v. de La Tour

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• Rockingham v. Luten
• Parker v. 20th Century
• Shahabiddin v. Khushi
• Iron Trade v. Wilkoff
• Mahattan Pak Co. v. government
of Pakistan
• Messrs American v. Messrs New
Mitigation
Jubilee
22. Damages: Expectation or
• Hawkins v. McGee, 84 N.H.
Exceptional Damages
114 (1929)
• Ruxley v. Construction Ltd
• Laredo v. H & H

• Fera v. Village
• Jacob & Young v. Kent

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• Anglia v. Reed
Damages: Reliance and
23 • CC Films v. Impact Quadrant
Restitution
• U.S. Algernon

• Hadley v. baxendale
• Spang v. Aetna
Foreseeability, certainty and • Chicago Coliseum Club v.
24
avoidability Dempsey
• Victoria v. Newman
• Parker v. 20th Century Fox

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25

• White v. Benkowski
• Aijaz v. Mssrs Amin
• Dada Steel v. M.V.I. Van
• Federation of Pakistan v. Messrs
These classes shall
Al Farooq
introduce students to
• State Life Insurance v. Messrs
Damages: Quantum how damages are
Bibojee
calculated for breaches
• Trading Corp v. International of contract.
Trade
• Wasserman’s Inc. v. Township
of Middletown

26

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Students shall be
introduced to certain
drafting language where
• International Civil Engineers v.
parties can limit the
Karachi Shippyard
quantum of damages at
• Mohomed Karimuddin v. Kanza
27 Liquidated Damages the outset in a
Food
transaction.
• NDFC v. Moona Liza Ltd

• Hopper v. All pet Animal Clinic The class shall involve a
drafting exercise to be
conducted in class.

• The Course shall be reviewed

and any questions not
previously addressed shall be
28 Review Session
discussed.
• Exam questions shall be
presented to the class.

Textbook(s)/Supplementary Readings
Shaukat Mahmud & Nadeem Shaukat, The Law of Contract
The Law of Contracts (Treital, G.H)
McKendrick, E. Contract law. (London: Palgrave Macmillan, 2011) ninth edition

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