Lahore University of Management Sciences. LAW 223 Commercial Law. Spring 2017

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Instructor Uzair J. Kayani Room No. 1-11 Office Hours By Appointment Email uzair.kayani@lums.edu.

Spring 2017 Course Basics Credit Hours 4 Lecture(s) Nbr of Lectures per week 2 Duration 1 hr 50 m Recitation/Lab (per Nbr of Lectures per week

1 Instructor Uzair J. Kayani Room No Office Hours By Appointment Telephone 5604 Secretary/TA TBD TA Office Hours TBD Course URL (if any) - Lahore University of Management Sciences LAW 223 Commercial Law Spring 2017 Course Basics Credit Hours 4 Lecture(s) Nbr of Lectures per week 2 Duration 1 hr 50 m Recitation/Lab (per Nbr of Lectures per week None Duration N/A week) Tutorial (per week) Nbr of Lectures per week None Duration N/A Course Distribution Core Elective Open for Student Category BA/LLB No Non law students: Juniors and Seniors 1

2 Close for Student Category Freshman, Sophomore 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, 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) None Course Objectives 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. Learning Outcomes 2

3 Grading Breakup and Policy Class Participation: 8% Attendance: 7% Midterm 35% Examination: Project: 15% Final Examination: 35% Examination Detail Midterm Exam Final Exam Yes/No: Yes Combine/Separate: Combine Duration: 8 hours (take home) Preferred Date: - Exam Specifications: Open Book/Open Notes Yes/No: Yes Combine/Separate: Duration: 3 Hours Exam Specifications: Open Book/Open Notes Course Overview Lecture Topics Recommended Readings Objectives/Application 1) 1. The agent s authority: 1.1 Actual authority 1.2 Implied actual authority Reader, pp

4 1.3 Apparent (or ostensible) authority 1.4 Usual authority (Watteau v. Fenwick) 2. Agency by operation of law 2.1 Agency of necessity 2.2 Agency by cohabitation 2) 3. Ratification 3.1 Ratification may be implied from conduct 3.2 Rules for ratification 3.3: Void acts Reader, pp Statutory Supplement Selections 4. Relationship between the principal and the third party 4.1: Principal s liabilities to the third party 4.2 Principal s 4

5 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 3) 6. Relationship between the principal and the agent 6.1 Agent s duties 6.2 Principal s duties 6.3 Termination by the parties Reader, pp Relationship between agent and third party 7.1 Warranty of authority 7.2 Contractual liabilities of the 5

6 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 4) 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 Reader, pp Statutory Supplement Selections 6

7 each other 6. Partnership property 5) 7.Partners fiduciary duties to each other 8. Partners relationship with outsiders 9. Dissolution and winding up 10. Limited partners 11. Partnerships in Pakistan 6) 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 7) 2. Terms of the contract 2.1 Innominate terms 2.2 Implied terms title 2.3 Implied terms Reader, pp Reader, pp Statutory Supplement Selections Reader, pp Statutory Supplement Selections 7

8 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 8) 3. 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 9) 4. Risk, mistake and frustration Reader, pp Statutory Supplement Selections Reader, pp

9 4.1 Transfer of risk 4.2 Mistake 4.3 Frustration 4.4 Perish 10) 5. Passing of title by non-owner 5.1 The general rule, nemo dat quod non habet 5.2 Nemo dat exceptions 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 Reader, pp

10 11) 6. Performance of the contract 6.1 Delivery 6.2 Instalment deliveries 6.3 Acceptance and repudiatory breach Reader, pp ) 7. Seller s remedies 7.1 Price 7.2 Damages for non-acceptance 7.3 Lien 7.4 Stoppage in transit 7.5 Right to resell 13) 8 Buyer s remedies 8.1 Right to reject 8.2 Damages for non-delivery 8.3 Specific performance 8.4 Remedy for Reader, pp Reader, pp

11 breach of warranty 8.5 Special damage 14) 9. Sale of Goods in Pakistan: review with examples 15) 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 16) 2. Documentary credits Reader, pp Reader, pp Statutory Supplement Selections Reader, pp

12 2.1 Revocable and irrevocable credits 2.2 Confirmed credits 2.3 Straight and negotiation credits 2.4 Autonomy of the credit 2.5 Strict compliance with the documents 17) 2.6 Contract between buyer and issuing bank 2.7 Contract between issuing bank and advising or confirming bank 2.8 Contract between banks and seller 2.9 Performance bonds and guarantees 18) 3. Consumer credit agreements 3.1 Types of credit Reader, pp Statutory Supplement Selections Reader, pp

13 agreement 3.2 Obligations of the parties 3.3 Sale by debtor 3.4 Lien 3.5 Dealer as agent 3.6 Early payment 19) 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 20) CORPORATE LAW 1. Corporate Personality 1.1 Doctrine of corporate personality Reader, pp Reader, pp

14 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 21) 3. Formation of the Company 3.1 The company s name 3.2 Registration 3.3 Duties of promoters 3.4 Preincorporation contracts 3.5 Prospectuses and listing particulars 22) 4. Articles of Association 4.1 The legal effect of articles of Reader, pp Statutory Supplement Selections SMEDA guidelines Reader, pp Statutory Supplement Selections 14

15 association 4.2 Alteration of the articles 5. Company Directors 5.1 Appointment 5.2 Removal 23) 5.3 Disqualification 5.4 Powers of directors 5.5 Powers of a company secretary and employees of a company Reader, pp Statutory Supplement Selections 6. Duties of Directors 6.1 To whom are directors duties owed? 6.2 Common law duties 24) 6.3 Fiduciary duties 6.4 Fair dealing Reader, pp

16 provisions 7. Shareholders Meetings 7.1 Requisitioning a meeting 7.2 Proxies 7.3 Resolutions 7.4 Role of chairman 7.5 Quorum 25) 8 Minority Shareholders 8.1 The rule in Foss v. Harbottle 8.2 Just and equitable winding up 8.3 Unfair prejudice Reader, pp Shares, Share Capital and Debentures 9.1 Shares 9.2 Capital 9.3 Debentures and loan capital 16

17 26) 10. Raising and Maintaining Capital Statutory Supplement Selections & handouts 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 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 17

18 shareholders 11. Changing Capital Structure 11.1 Class rights and variation 11.2 Reducing capital 11.3 Reconstructions 27) 12. Insider Dealing and Takeovers 12.1 Insider dealing 12.2 Takeovers Statutory Supplement Selections & handouts 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 18

19 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 28) 14.7 Transactions at an undervalue and transactions defrauding creditors Statutory Supplement Selections & handouts 15. Promoter's Duties and Registration of a Company in Pakistan 16. Director's Rights and Duties Under Pakistani Law 19

20 17. Shareholders' Rights and Duties Under Pakistani Law Textbook(s)/Supplementary Readings 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. 20

THE SALE OF GOODS. P S Atiyah QC, DCL, FBA. of the Inner Temple, Barrister Formerly Professor of English Law in the University of Oxford

THE SALE OF GOODS. P S Atiyah QC, DCL, FBA. of the Inner Temple, Barrister Formerly Professor of English Law in the University of Oxford THE SALE OF GOODS P S Atiyah QC, DCL, FBA of the Inner Temple, Barrister Formerly Professor of English Law in the University of Oxford NINTH EDITION J N Adams LLB Barrister of the Inner Temple, Professor