Lahore University of Management Sciences

Law 220 –Contract Law

Fall 2018

Instructor Zubair Abbasi

Room No. TBD
Office Hours TBD
Email Zubair.abbasi@lums.edu.pk
Telephone Ext. 8067
TA TBD
TA Office Hours TBD
Course URL (if any) TBD

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

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

COURSE DESCRIPTION

The Law of Contract is the most important branch of Commercial Law. A proper understanding of Contract
Law will lay the foundation for the better understanding of other branches of Commercial Law such as Sale of
Goods, Negotiable Instruments and Partnership and Company Laws. This course aims at introducing the
students to the fundamental concepts of the Law of Contracts. It takes into account the recent developments in
both the statutory law and case law.

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
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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.

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 1872, as well as other materials such as research legal commentaries, case law, articles, and textbooks.

Outline of the Course

I. Formation of Contracts

1. Offer and Acceptance

2. Consideration and Promissory Estoppel
3. Intention to be Legally Bound
4. Capacity and Formalities

II. Operation of Contracts

1. Privity of the Contract

2. Terms of the Contract
3. Exclusion Clauses
4. Interpretation of the Contract

III. Excuses for non-Performance of Contracts

5. Misrepresentation
6. Mistake
7. Frustration
8. Illegality
9. Duress and Undue Influence

IV. Performance, Discharge, and Breach of Contracts

10. Performance and Discharge of Contracts

11. Remedies

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
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logical analysis are presumed. Those topics are not reviewed in any detail in this class.

Learning Outcomes

At the conclusion of the course the Student will be able to:

1. Analyse, evaluate and apply general principles of contract law;

2. Undertake legal research using a range of primary and secondary materials including statutes, case law,
legal commentaries, and research articles;
3. Identify relevant legal issues and apply relevant legal principles to generate solutions to complex
problems relating to contractual dealings.
4. Understand the laws regulating contractual relationships and the theory underlying the applicable rules
governing the framework;
5. 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;
6. Understand that different rules regulating transactions may apply depending on the subject matter of
the agreement;
7. Demonstrate a working knowledge of the elements of a claim under the laws of contracts, or
alternative theories of liability;
8. Apply statutory law and case law to a specific set of facts/issues to resolve issues presented;
9. Interpret statutory language, and trace the relationship between statutory law and applicable case law;
and
10. Develop well-structured, cohesive and persuasive written arguments for a legal audience.

Grading Breakup and Policy

Quiz(s): 15%
Class Participation: 10%
Attendance: None (See Attendance Policy below)
Midterm Examination: 25%
Final Examination: 50%

• 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.

• 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.

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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. For instance, the matter may be on appeal before the High Court or
the Supreme Court, after a decision of the Subordinate Courts)
2. The material facts of the case? (Material facts are the 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.)

Note: In addition to the mandatory and recommended readings students should keep themselves updated to the
latest case law which is the mandatory part of the reading material and will be included in the final
examination.

Examination Detail

Yes/No: YES
Combine Separate: Combined; Grading Separate
Midterm
Duration: 90 Minutes (1hr 30 Min)
Exam
Preferred Date: -
Exam Specifications:

Yes/No: YES
Final
Combine Separate: Combined; Grading Separate
Exam
Duration: 180 Minutes (3hrs)

Recommended
Topics Objectives/Application
Readings
I. Formation of Contracts

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1. Introduction
Offer and Acceptance
- The Offer
- The Acceptance
- Invitation to Treat
2.
- Advertisement, auctions,
tenders, and display of goods
Pre-Acceptance Reliance: Unilateral
3.
& Bilateral Contracts
Counter Offers; Revocation,
termination of the Power of
4.
Acceptance; and Communication of
Acceptances
Modes of Acceptance and Ignorance
5.
of an Offer
E McKendrick, Contract Law
(Palgrave, 2017), Chapter 1, pp 1-
13.
Introduction to the law
of contracts.
T Soomro, The Contract Law of
Pakistan (OUP 2015) Chapters 1
& 2, pp 1-25.
• McKendrick, Contract Law,
Chapters 2 and 3, pp 17-47.
Students will be able to
• CONTRACT ACT §§ 2, 9 explain what an offer is,
and differentiate it from
• Further Readings other statements not
• Harvey v Facey [1893] A.C. amounting to offers.
55
• Carlill v Carbolic Smoke Ball Understand acceptances
Company, [1892] EWCA Civ to be an objective
1 statement/act showing a
• Leonard v Pepsi co, Inc. 88 definite intention to be
F.Supp.2d 116 (1999) bound by the terms of
• Raffles v Wichelhaus (1864) the offer.
Court of the Exchequer 2
Hurl. & C. 906
Students shall consider
pre-acceptance reliance
on promises in the
T Soomro, The Contract Law of context of commercial
Pakistan, Chapters 3-5, pp 29-52. transactions, and in
particular, subcontracts
for construction work.
Students shall be
• Contract Act §§ 3-8
familiarized with the
concept of an offer
• Punjab Privatization Board, ending. An offer can be
Government of Punjab v
terminated in 4 ways:
Muhammad Younas Malik rejection, revocation,
2008 CLD 356 lapse of Time, & Death
or Incapacity.
• T Soomro, The Contract Law
of Pakistan, Chap 6, pp 55-61. Manners in which an
offer may be accepted
• Contract Act §§7, 8 shall be introduced.
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• Pakistan Steel v Indus Steel
1996 CLC 118
• Contract Act § 4, 5
• Lahore Development
6. The Postal Rule Authority v Sunbeam PLD
1984 Lah 430 (Acceptance is
complete as soon as it is
posted.)
• Contract Act §§ 2
• McKendrick, Contract Law,
Chapters 5, pp 66-115.
Consideration and Promissory
• Pau On v Lau Yiu Long
7. Estoppel (1)
[1980] AC 614
• Foakes v Beer (1884) 9 App
Cas 605
• T Soomro, The Contract Law
of Pakistan, Chap 7, pp 65-87.
• Central London Property Ltd
Consideration and Promissory v High Trees House Ltd
8. Estoppel (2) [1947] KB 130
• Williams v Roffey Brothers &
Nicholls (Contractors) Ltd
[1991] 1 QB 1
• Contract Act §§ 10-23
• Exide Pakistan Ltd. v Malik
• Abdul Wadood PLD 2008
9. Unlawful Consideration (1) Karachi 583 (Restrictive
covenant)
• Sana Ullah v Muhammad
Manzoor 1993 CLC 2348
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.
Students shall be able to
state consideration as an
essential element of in
the making of a binding
agreement
Students shall
understand why certain
promises can be
enforced under the
theory of promissory
estoppel when a promise
is not supported by
consideration.
Ibid
Students shall be able to
understand that certain
objects/exchanges have
been prohibited by law.
Contracts may also be
unenforceable owing to
public policy arguments.
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(Inadequacy of consideration)

• Hossain Ali Khan v Firoza

Begum PLD 1971 Dacca 112
(Validity of compromise
agreement by the mother
rendering the child
illegitimate.)

• Messers Pakistan State Oil

Company Ltd. v Malik Hadi
10. Unlawful Consideration (2) Hussain 2013 YLR 2769 Ibid.
(Validity of an agreement in
restraint of legal proceedings.)

• Syed Asadul Haq v Messers

Balochistan Glass Ltd. 2011
CLC 294 (Validity of an
agreement in restraint of legal
proceedings.)

• Contract Act §§ 24-30

• T Soomro, The Contract Law

of Pakistan, Chap 10, pp 127-
164.
11. Void Contracts
• Mst Rubina Makhdoom v Mst
Sajida Ahmed 2002 MLD
1546 (If the meanings of a
contract are not certain, it is
unenforceable.)

• Contract Act §§ 31-36

• T Soomro, The Contract Law

of Pakistan, Chap 11 & 12, pp
167-87.
12. Contingent/Quasi Contracts
• Messrs Shaikh Yusufaly Sons
Ltd v Messrs Mian
Khairuddin Rukunuddin PLD
1975 Kar 661 (Wagering
contract)

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• McKendrick, Contract Law,
Chap 6, pp 116-21.
Intention to be Legally Bound
13.
• Balfour v Balfour [1919] 2
KB 571.

• Contract Act §§ 11, 12

• McKendrick, Contract Law,

Chap 16, pp 311-16.

• T Soomro, The Contract Law

Capacity and Formalities of Pakistan, Chap 8, pp 91-
14.
100.

• Suleman v Kala 1994 MLD

747 (Validity of a contract
entered into by a mentally
challenged person.)

II. Operation of Contracts

• McKendrick, Contract Law,
Chap 7, pp 122-54.
Privity of the Contract/Third Party
15. • R Flannigan, Privity – The
Rights
End of an Era (Error) (1987)
LQR 564.

• McKendrick, Contract Law,

Terms of the Contract
16. Chapters 8, & 9, pp 157-90.

• McKendrick, Contract Law,

17. Classification of Contractual Terms Chap 10, pp 191-201.

• McKendrick, Contract Law,

Exclusion Clauses
18. Chap 11, pp 203-29.

• McKendrick, Contract Law,

19. Unfair Terms in Consumer Contracts Chap 18, pp 334-51.

• Christopher Staughton, How

Interpretation of the Contract Do the Courts Interpret
20.
Commercial Contracts?
(1999) 58 (2) The Cambridge
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Law Journal 303–313.

• Lord Nicholls, ‘My Kingdom

for a Horse: The Meaning of
Words’ (2005) 121 Law
Quarterly Review 577.

III. Excuses for non-Performance of Contracts

• Contract Act §§ 17, 18

• McKendrick, Contract Law,
Chapters 12 & 13, pp 233-65.
21. Fraud and Misrepresentation
• Mercantile Fire & General
Insurance Co. of Pakistan v
Messrs Imam & Imam Ltd
1989 CLC 2117
• McKendrick, Contract
Law, Chap 14, pp 266-92.
Excuses as to performance (Mistake,
22. Impossibility, Commercial • T Soomro, The Contract impartibly; c) frustration
Impracticability, and Frustration) Law of Pakistan, Chap 15, of purpose that
pp 223-34.
• McKendrick, Contract Law,
Illegality
23. Chap 15, pp 293-310.
Students shall be able to
define misrepresentation
as a false statement of
fact or law, which
reasonably induces a
party to a contract.
Liability in
misrepresentation has
roots in the law of tort.
Excusable non-
performance can arise 3
ways: a) where they
have become objectively
impossible; b) where the
performance obligations
have become
commercially
subsequent to the
formation of the
contract, that the
performance of the other
party has no value to the
primary party.

• McKendrick, Contract Law, Students shall be able to

Chap 17, pp 317-333. explain the doctrine of
Duress, Undue Influence, and
duress and indicate
24. Inequality of Bargaining Power
• Haji Sharif Khan v Raja Abdur when duress will vitiate
Rahman 2000 CLC 4 an apparent contract

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Explain what undue
influence is and indicate
circumstances when
undue influence will
vitiate a contract.

IV. Performance, Discharge, and Breach of Contracts

• McKendrick, Contract
Law, Chap 19 & 20, pp
355-369.
Performance, Discharge, and Breach
25.
of Contracts • T Soomro, The Contract
Law of Pakistan (OUP
2015) Chapters 16 & 17,
pp 235-63.
• CONTRACT ACT §§ 73, 74,
75
• McKendrick, Contract
These classes shall
Law, Chap 21, 370-400.
Damages for Breach of Contracts introduce students to
26. Liquidated Damages • Aijaz Ahmad v Messrs how damages are
Quantum of Damages Amin Fabrics Ltd PLD calculated for breaches
1983 Kar 63 (Assessment of contract.
of damages for breach of a
contract)

• McKendrick, Contract Law,

Chap 22, 401-423.
• T Soomro, The Contract Law
of Pakistan, Chap 18, pp 267-
Mitigation
95.
27. Damages: Expectation or Exceptional
Damages • Federation of Pakistan v
Messrs Al-Farooq Floor Mills
Ltd 2000 CLC 215 Obligation
to mitigate losses for breach
of contract.)
• 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.

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Textbook(s)/Supplementary Readings
 Lahore University of Management Sciences

Recommended Textbooks

E McKendrick, Contract Law (Palgrave 12th edn, 2017)

T Soomro, The Contract Law of Pakistan (OUP 2015)

M Mahmood, The Contract Act 1972 (PLT 2018)

Treitel, The Law of Contract (13th edn, 2011 ed Peel)

Anson’s Law of Contract (29th edn, 2010, eds Beatson, Burrows, Cartwright)

L Cartwright, Contract Law: An Introduction to the English Law of Contract for the Civil Lawyer (Hart
Publishing Limited 2007)

Further readings

Offer and Acceptance

Hepple, “Intention to Create Legal Relations” [1970] CLJ 122-137
Nolan “Offer and Acceptance in the Electronic Age” in Burrows and Peel Contract
Formation and Parties (OUP 2010)

Intention to Create Legal Relations

Hedley ‘Keeping Contract in its Place: Balfour v Balfour and the Enforceability of Informal Agreements’
(1985) 5 Oxford Journal of Legal Studies 391
Freeman ‘Contracting in the Haven: Balfour v Balfour Revisited’ in R Halson (ed) Exploring the Boundaries
of Contract
Ibbetson A Historical Introduction to the Law of Obligations pp 233-234 and 247-248
Simpson ‘Innovation in Nineteenth Century Contract Law’ (1975) 91 LQR 247, 263-265
Allen ‘The Gentleman’s Agreement in Legal Theory and in Modern Practice’ (2000) Anglo-American Law
Review 204
Balfour v Balfour [1919] 2 KB 571
Williams v Roffey Brothers & Nicholls (Contractors) Ltd [1991] 1 QB 1
Esso Petroleum Ltd v Commissioners of Customs and Excise [1976] 1 WLR 1
Rose and Frank Co Ltd v JR Crompton and Bros Ltd [1925] AC 445

Consideration and Promissory Estoppel

McKendrick Contract Law: Text, Cases and Materials (4th edn, 2010) pp.148-217 and 250-258
Atiyah ‘Consideration: A Restatement’ in Atiyah Essays on Contract (1986) 179
Treitel ‘Consideration: A Critical Analysis of Professor Atiyah’s Fundamental Restatement’ (1976) 50
Australian Law Journal 439
Treitel Some Landmarks of Twentieth Century Contract Law (OUP, 2002) chapter 1
O’Sullivan ‘In Defence of Foakes v Beer’ [1996] CLJ 219
Ibbetson A Historical Introduction to the Law of Obligations pp 141-145, 204-208 and 236-241
Fried Contract as Promise Chapter 3
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Chen-Wishart ‘A Bird in the Hand: Consideration and Contract Modifications’ in
Burrows and Peel (eds) Contract Formation and Parties, OUP, 89.
Chen-Wishart ‘Reciprocity and Enforceability’ in M Chen-Wishart, L Ho and P Kapai Reciprocity in Contract,
Faculty of Law, University of Hong Kong, 1.
Chen-Wishart ‘A Bird in the Hand’ in M Chen-Wishart, L Ho and P Kapai Reciprocity in Contract, Faculty of
Law, University of Hong Kong, 15.

Privity of Contract
C MacMillan, “A Birthday Present for Lord Denning: The Contracts (Rights of Third Parties)
Act 1999” (2000) 63 MLR 721
A Burrows, “Contracts (Rights of Third Parties) Act 1999 and its implications for Commercial Contracts”
[2000] LMCLQ 540

Misrepresentation, Mistake and Duress

Taylor, “Expectation, reliance and misrepresentation” (1982) 45 MLR 139
Andrew Tettenborn, “Agreements, Common Mistake and the Purpose of Contract” (2011) 27
Jo Contract Law 91
Atiyah, “Economic Duress and the Overborne Will” (1982) 98 LQR 197

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