Lahore University of Management Sciences

LAWS 223 Commercial Law

Instructor
Room No.
Office Hours
Email
Telephone
Secretary/TA
TA Office Hours
Course URL (if any)

Uzair J. Kayani

Spring 2015

By Appointment
Uzair.kayani@lums.edu.pk

Course Basics
Credit Hours
Lecture(s)
Recitation/Lab (per week)
Tutorial (per week)
Course Distribution
Core
Elective
Open for Student Category
Close for Student Category

4
Nbr of Lec(s) Per Week
Nbr of Lec(s) Per Week
Nbr of Lec(s) Per Week

Duration
Duration
Duration

1:50

Yes

COURSE DESCRIPTION

Commercial law will cover the following five areas in detail: (i) agency, (ii)
partnerships, (iii) sale of goods, (iv) negotiable instruments, and (v) corporate law. The underlying principles
in each area will be explained through edited cases from Commonwealth jurisdictions. Pakistani cases will be
provided unedited for student presentations and detailed discussion.
We will study six key statutes that govern commercial law in Pakistan: the Contract Act, 1872; the Partnership
Act, 1932; the Sale of Goods Act, 1930; the Negotiable Instruments Act, 1881; the Companies Ordinance,
1984; and the Securities & Exchange Ordinance, 1969.
Specific notes on the law and procedure in Pakistan for the sale of goods, registration of partnerships and
companies, and the rights and obligations of promoters, directors, and shareholders of companies, are
included in the Reader.
COURSE PREREQUISITE(S)

COURSE OBJECTIVES

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Students will be introduced to:
The Companies Ordinance, the Contract Act, the Partnerships Act, the Negotiable Instruments Act, and the Sale of Goods Act.
The jurisprudence of agency law, company law, negotiable instruments, and sales of goods
Scholarly literature concerning commercial law in the Pakistan, England, the U.S., and other jurisdictions.

1.
2.
3.

Learning Outcomes
4.
5.
6.
Grading Breakup and Policy
Assignment(s):
Home Work:
Quiz(s):
Class Participation: 8%
Attendance: 7%
Midterm Examination: 35%
Project: 15%
Final Examination: 35%

Examination Detail

Midterm
Exam

Yes/No: Yes
Combine Separate: Combine
Duration: 8 hrs (take home)
Preferred Date: March 12th
Exam Specifications: Open Book/ Open Notes

Final Exam

Yes/No: Yes
Combine Separate:
Duration: 3 Hours
Exam Specifications: Open Book/ Open Notes

COURSE OVERVIEW
Week/
Lecture/
Module

1.

Topics

1 The agents authority

1.1 Actual authority
1.2 Implied actual authority
1.3 Apparent (or ostensible)
authority
1.4 Usual authority (Watteau v
Fenwick)
2 Agency by operation of law
2.1 Agency of necessity

Recommended
Readings
Reader, pp. 1-26

Objectives/
Application

Lahore University of Management Sciences

2.

3.

4.

2.2 Agency by cohabitation

3 Ratification
3.1 Ratification may be implied
from conduct
3.2 Rules for ratification
3.3 Void acts
4 Relationship between the
principal and the third party
4.1 Principals liabilities to the
third party
4.2 Principals rights towards the
third party
5 Doctrine of undisclosed principal
5.1 General rule
5.2 Exceptions to the general rule
5.3 Set-off and the undisclosed
principal
6 Relationship between the
principal and the agent
6.1 Agents duties
6.2 Principals duties
6.3 Termination by the parties
7 Relationship between agent and
third party
7.1 Warranty of authority
7.2 Contractual liabilities of the
agent the general rule
7.3 Contractual liabilities of the
agent exceptions to the general
rule
7.4 The contractual rights of the
agent general rule
7.5 The contractual rights of the
agent exceptions to the general
rule
7.6 Doctrine of election
1 The nature of partnership
2 The definition of a partnership
3 Specific indications as to whether
or not a partnership exists
4 The partnership agreement
5 Partners relationship with each

Reader, pp. 27-54

Statutory Supplement Selections

Reader, pp. 55-77

Reader, pp. 78-104

Statutory Supplement Selections

Lahore University of Management Sciences

5.

6.

7.

8.

9.

10.

other
6 Partnership property
7 Partners fiduciary duties to each
other
8 Partners relationship with
outsiders
9 Dissolution and winding up
10 Limited partners
11 Partnerships in Pakistan
SALE OF GOODS
1 Contract classification
1.1 Sale of goods within the Sale of
Goods Act
1.2 Contracts of bailment
1.3 Auctions
2 Terms of the contract
2.1 Innominate terms
2.2 Implied terms title
2.3 Implied terms description
2.4 Implied terms quality
2.5 Implied terms goods fit for a
particular purpose
2.6 Implied terms Sale by sample
2.7 Unfair Contract Terms
Passing of property
3.1 property passes when the
parties intend
3.2 rules for ascertaining intention
3.3 Unascertained goods
3.4 Ascertainment
3.5 Equitable interest in
unascertained goods
3.6 Reservation of title clauses
4 Risk, mistake and frustration
4.1 Transfer of risk
4.2 Mistake
4.3 Frustration
4.4 Perish
5 Passing of title by non-owner
5.1 The general rule, nemo dat
quod non habet
5.2 Nemo dat exceptions

Reader, pp. 105-120

Reader, pp. 121-134

Statutory Supplement Selections

Reader, pp. 135-154

Statutory Supplement Selections

Reader, pp. 155-171

Statutory Supplement Selections

Reader, pp. 172-193

Reader, pp. 194-211

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11.

12.

13.

14.

15.

16.

estoppel
5.3 Nemo dat exceptions sale by
mercantile agent
5.4 Nemo dat exceptions seller
continues in possession
5.5 Nemo dat exceptions buyer
in possession
5.6 Nemo dat rule exceptions
voidable title
6 Performance of the contract
6.1 Delivery
6.2 Instalment deliveries
6.3 Acceptance and repudiatory
breach
7 Sellers remedies
7.1 Price
7.2 Damages for non-acceptance
7.3 Lien
7.4 Stoppage in transit
7.5 Right to resell
8 Buyers remedies
8.1 Right to reject
8.2 Damages for non-delivery
8.3 Specific performance
8.4 Remedy for breach of warranty
8.5 Special damage
9 Sale of Goods in Pakistan: review
with examples
NEGOTIABLE INSTRUMENTS
Introduction to the statute and key
definitions
1 Bills of exchange
1.1 Definition of a bill of exchange
1.2 Transfer of bill of exchange
1.3 Holder for value
1.4 Holder in due course
1.5 Liability on the bill
1.6 Payment and discharge of a bill
1.7 Documentary bills
2 Documentary credits
2.1 Revocable and irrevocable
credits
2.2 Confirmed credits

Reader, pp. 212-221

Reader, pp. 222-240

Reader, pp. 241-263

Reader, pp. 264-282

Reader, pp. 283-304

Statutory Supplement Selections

Reader, pp. 305-324

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2.3 Straight and negotiation credits
2.5 Autonomy of the credit
2.6 Strict compliance with the
documents

17.

18.

19.

20.

21.

2.8 Contract between buyer and

issuing bank
2.9 Contract between issuing bank
and advising or confirming bank
2.10 Contract between banks and
seller
2.11 Performance bonds and
guarantees
3 Consumer credit agreements
3.1 Types of credit agreement
3.2 Obligations of the parties
3.3 Sale by debtor
3.4 Lien
3.5 Dealer as agent
3.6 Early payment
4 Enforcement and remedies
4.1 Damages for breach
4.2 Minimum payment clauses
4.3 Extortionate credit bargains
4.4 Repossession
5 Negotiable Instruments review
with examples
CORPORATE LAW
1 Corporate Personality
1.1 Doctrine of corporate
personality
1.2 Lifting the veil of
incorporation
2 Acts of the Company
2.1 Commission of crimes and
torts by the company
2.2 Corporate transactions
3 Formation of the Company
3.1 The companys name
3.2 Registration
3.3 Duties of promoters
3.4 Pre-incorporation contracts
3.5 Prospectuses and listing
particulars

Reader, pp. 325-440

Statutory Supplement Selections

Reader, pp. 441-455

Reader, pp. 456-473

Reader, pp. 474-489

Reader, pp. 490-506

Statutory Supplement Selections
SMEDA guidelines

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22.

23.

24.

25.

26.

4 Articles of Association
4.1 The legal effect of articles of
association
4.2 Alteration of the articles
5 Company Directors
5.1 Appointment
5.2 Removal
5.3 Disqualification
5.4 Powers of directors
5.5 Powers of a company
secretary and employees of a
company
6 Duties of Directors
6.1 To whom are directors duties
owed?
6.2 Common law duties
6.3 Fiduciary duties
6.4 Fair dealing provisions
7 Shareholders Meetings
7.1 Requisitioning a meeting
7.2 Proxies
7.3 Resolutions
7.4 Role of chairman
7.5 Quorum
8 Minority Shareholders
8.1 The rule in Foss v Harbottle
8.2 Just and equitable winding
up
8.3 Unfair prejudice
9 Shares, Share Capital and
Debentures
9.1 Shares
9.2 Capital
9.3 Debentures and loan capital
10 Raising and Maintaining Capital
10.1 Allotment of shares
10.2 Wrongful payment of
dividends
10.3 A company may not
purchase its own shares (Common
Law)
10.4 A company may not provide

Reader, pp. 507-520

Statutory Supplement Selections

Reader, pp. 521-535

Statutory Supplement Selections

Reader, pp. 536-550

Reader, pp. 550-566

Statutory Supplement Selections &

handouts

Lahore University of Management Sciences

27.

28.

financial assistance for the

purchase of its
own shares (Common Law)
10.5 Statutory Exceptions
allowing companies to buy their
own shares
10.6 Company cannot make
unauthorised return of capital to
shareholders
11 Changing Capital Structure
11.1 Class rights and variation
11.2 Reducing capital
11.3 Reconstructions
12 Insider Dealing and Takeovers
12.1 Insider dealing
12.2 Takeovers
13 Restructuring Charges
13.1 Fixed and floating charges
13.2 Priorities as between
charges
13.3 Crystallisation of floating
charges
13.4 Registration of charges
14 Liquidation
14.1 Purpose of liquidation
14.2 Duties of a liquidator
14.3 Fraudulent trading
14.4 Wrongful trading
14.5 Avoidance of a preference
14.6 Avoidance of a floating
charge
14.7 Transactions at an
undervalue and transactions
defrauding creditors
15 Promoter's Duties and
Registration of a Company in
Pakistan
16 Director's Rights and Duties
Under Pakistani Law
17 Shareholders' Rights and Duties
Under Pakistani Law

Textbook(s)/Supplementary Readings

Statutory Supplement Selections &

handouts

Statutory Supplement Selections &

handouts

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Commercial Law Reader
Commercial Law Statutory Supplement
The readings are primarily cases and statutes. The cases have been distributed to the class electronically as a
reading packet. The statutes have been distributed electronically as a statutory supplement.
Most cases are heavily edited or summarized cases from the UK and other Commonwealth jurisdictions.
Unedited Pakistani cases will be provided at the end of each section. Students will present on the unedited
cases to demonstrate their familiarity with Pakistani commercial jurisprudence.