Lahore University of Management Sciences

Law 220 Contract Law

Fall 2015

Instructor Khyzar Hussain

Room No. TBD
Office Hours TBD
Email khyzar.hussain@lums.edu.pk
Telephone Ext. 2277
Secretary/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 LAW
Elective -
Open for Student As Determined by the Department
Category
Close for Student As Determined by the Department
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, and 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 shall follow, coupled with a measure of damages in case of
breach of a legally enforceable contract.

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Course Focus: The focus of this course is the Pakistani Legal system, with come 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
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?
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6. If performance has not been excused, and not been tendered, then what are the remedies
available to the parties.

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

Assignment(s): None
Home Work: Reading the Assigned material prior to class
Quiz(s): 10% (5 in number, unannounced)
Class Participation: 5%
Attendance: None (See Attendance Policy below)
Midterm Examination: None
Project: None
Final Examination: 85%

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
instructors discretion, be barred from
o 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.
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o Summative assessment shall be through the Final Examination (date 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 students own. Sample language of
the pledge is stated below:
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 Instructor. The Author of the materaial asserts all
moral rights associated with the materials produced for class. 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, by license.
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 Instructor, at the
address outlined above.

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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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

Read the Outline. The outline syllabus deals significantly
1. Introduction to the Elements of
shall be discussed in detail with principles developed
the law of Contract by the courts, there are
during the first class.
also pertinent statutory
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
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1872, before applying
relevant case law to
specific fact patterns.

Students shall be
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.

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Promises/Proposals, and
2. Invitations to Treat, Offers and
Types of Contracts
3. Acceptance of Offers
CONTRACT ACT 2, 9
Owen v. Tunison, 158 A. 926
(Me. 1932)
Harvey v. Facey, [1893] A.C. 552.
(Privy Council of Jamaica)
Lucy v. Zehmer, 196 Va. 493
(1954)
Leonard v. PepsiCo., 88 F. Supp.
2d 116, (S.D.N.Y. 1999)
Patridge v. Crittiden, [1968] 1
WLR 1204
Neb. 89, 152 N.W. 310 (1915)
Ch. Muhammad Younis v. The
Islamic Republic of Pakistan,
1972 PLD 847
Further Readings
o Carlill v. Carbolic Smoke
Ball Company, [1892]
EWCA Civ 1
o Nebraska Seed Co. v. Harsh,
152 N.W. 310 (1915)
CONTRACT ACT 8
Arnold Palmer Golf v. Fuqua
Industries, 541 F.2d 584 (6th
Cir. 1976)
Lahore development Authority v.
Muhammad Qasim Khan, 2002
YLR 1345
Karachi Gas Co. Ltd. v. Daewoo
Cotton Mills Ltd, 1975 PLD 193
Syed Paper Mills v. Trust
Investment Bank Ltd., 200 CLD
1830
Abdul Hamid v. Abbas Bhai-
Abdul Hussain, PLD 1959 (W.P.)
Karachi 629
Students will be able to
explain what an offer is,
and differentiate it from
other statements not
amounting to offers.
Understand an offer to be
a definite
promise/proposal.
Understand acceptances to
be an objective
statement/act showing a
definite intention to be
bound by the terms of the
offer.
State that there exist
exceptions to the
communications of
acceptances in certain
types of contemplated
contracts.
Present Intent, content
(essential terms), and
communication of offers
shall be emphasized as
essential parts of a
contract.
State what happens to an
offer when it is not
accepted. Students will
also be able to state when
an offer may close
Explain what a valid
acceptance is and what is
not.
Explain what happens
when the offeree
expresses a condition to a
certain mode of
acceptance and the
general rules applicable to
the unilateral contracts.
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Counter Offers; Revocation,
termination of the Power of
4 in 4 ways: rejection,
Acceptance; and, Communication
of Acceptances
5. The Postal Rule
Contract Act 3-8
Pakistan Steel v. Indus Steel
Punjab Privatization Board,
Government of Punjab v.
Muhammad Younas Malik, 2008
CLD 356
Port Karachi v. Messrs
Pakistan v. Muslim Comm. Bank
Hyde v. Wrench;
Butler v. Ex-cell.O
Toy v. Burlington
Contract Act 4, 5
Household v. Carriage;
Howell Sec. v. Hughes;
Businet v Aramex;
Lahore Development Authority
v. Sunbeam, 1984 PLD 430
White v. Corlies
Intl filter Co. v. Conroe Gin, Co.
Students shall be
familiarized with the
concept of an offer ending.
An offer can be terminated
revocation, lapse of Time,
& Death or Incapacity.
These topics shall be
studied in more depth
further into the course.
Students shall be able to
illustrate the postal rule as
it relates to sending
through acceptances; and,
will be able to understand
the rationale behind the
rule.
The reasonableness of the
type of communication
that ought to be used in
the transmission of the
offer shall be debated in
class.
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Modes of Acceptance and
6.
Ignorance of an Offer
Acceptance by performing
7. conditions
Contract Act 7,8
International Filter v. Conroe
Allied Steel v. Ford
Day v. Caton
Hobbs v. Massasosit Whip Co.
Manchester v. Commercial
Felthouse v. Bindley
Errington v. Errington
R. V. Clarke
Contract Act 5,8
Ishaq v. Madan
State of Behar v. Bengal
Behari v. Radhie
Contract Act 5, 6, 9
Brogden v. Metro
White v. Corelies
Lucy v. Wood
Byrne v. Van
See also Pakistan Steel v. Indus
Steel
Students shall be
introduced to the issues
associated when
considering whether an
offer has been duly
accepted.
Manners in which an offer
may be accepted shall be
introduced.
The offerees power to
revoke an offer prior to its
acceptance shall be
discussed.
Students shall be able to
understand that every
condition modifies a
promise/offer.
The happening of certain
conditions may trigger
acceptance of a said offer.
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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 consideration, and how it
8. Mills v. Wyman cf. Webb v.
is not adequate to create
McGowin
an enforceable legal
Dougherty v. Salt obligation.
Hayes v. Plantation Steel
Students shall be able to
state that a donative
promise is not enforceable
if not supported by
consideration.

State situations in which

past consideration can be
good consideration for a
new promise (if any)
Hamer v. Sidway
Students shall be
Feige v. Boehm 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.

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Promissory Estopple and Unjust
10. Enrichment as theories of
Contractual Liability
Central London v. High Trees
Hughes v. Metrorail
Rickets v. Scothorn
Feinberg v. Pfeiffer
Mubarik v. ADBP
Habib Bank v. M. Hussain
Rickets v. Scothorn
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.
The limitation of the
theory under as justice
requires shall be
considered by the class
and debated.
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
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
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Students shall consider

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

Unlawful Consideration and
12.
Void/Voidable Contracts
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
Begum, PLD 1971 Dacca 112
are prohibited.
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

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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

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.

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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.

Students shall be shown

how to outline the
circumstances in which
courts have found a
Sheikh Brothers v. Arnold mutual mistake to be
Dover v. Brooking operative.
Centrovincial Estates v
Merchant Investors (1983) Students shall be able to
state whether a
Ameer v. Azhar
Mistake (Mutual and Unilateral fundamental mistake as
15. Smith v. hughes
Mistake) to the quality of the
Raffles v. Wichlehause
subject can cause of a
Riaz v. Razi contract to be vitiated.
Cooper v Phibbs (1867)
Bligh v Martin (1966) Students shall further
Griffith v Brymer (1903) be able to state the
circumstances in which
courts have historically
found mistakes in the
formation of an
agreement to be
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.

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Condition precedents and
15
Satisfaction of Contracts
Conditions: Joint promises and
16
the essence of Time
Every condition
modifies a promise. A
condition either inserts
a contingency that must
occur prior to the
performance of a
Luttinger v Rose contract. These are
conditions precedent.
International Rotterham v.
River
Or a contingency that
Kanvanos v. Hancock
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.
Lakshman v. Moselumddin The concept that parties
Sheikh v. Shabbir in a joint contract all
Shirin v. Ziaul parties become equally
Ramzan v. Abdullah and wholly responsible
LCCHS v. Dr. Nusrat for the obligations of the
Yaqoob v. Hakim contract shall be
discussed.
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Constructive conditions and
17
Substantial Performance
Reciprocal Promises and
18
concurrent performance
In this class, students
shall be made aware of
certain conditions that a
court may impose upon
Plante v. Jacobs
the parties in the
Kingston v. Preston
interest of justice and
Stewert v. Newbury
fairness.
Gill v. Johnson
Certain conditions may
also be implied as a
matter of law.
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
another: where a party
Azizul v. Shahida
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.
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Paradine v Jane (1647).
Taylor v Caldwell (1863)
Davis Contractors
Excuses as to performance
Ltd v Fareham Urban District
19 (Impossibility, Commercial
Council (1956)
Impracticability, and Frustration)
TI Group Inc v
Transclear SA (2008)
Krell v Henry (1903
North Ocean Shipping v
Hyundai Construction
Halpern v Halpern (2007)
Barton v Armstrong (1976).
Universe Tankships of Monrovia
20. Undue Influence
v will vitiate an apparent
International Transport
Workers Federation
Alec Lobb Ltd v Total Oil (1983)
Lloyds Bank v Bundy (1975)
Excusable non
performance can arise 3
Where they have
become objectively
impossible
Where the performance
obligations have
become commercially
impartibly
Frustration of purpose
that subsequent to the
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.
Students shall be able to
explain the doctrine of
duress.
Students shall consider
whether economic
hardship can act as a
vitiating factor when
ascertaining if the
contract has been
procured under duress.
Indicate when duress
contract
Explain what undue
influence is.
Indicate circumstances
when undue influence
will vitiate a contract.
Students shall be able to
outline an approach to
both doctrines.
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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
Wassermans Inc. v. Township
of Middletown

26

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