General

Although, as compared to earlier examinations, the paper was comparatively easy as only basic concepts were tested, yet the results were not encouraging due to poor expressions, selective study and poor application of theoretical knowledge.

Q.1

This was a question from legal system in Pakistan and as many as 42% students did not attempt the question. Of the 58%, only one-fourth could obtain pass marks. It is evident that students do not cover this part of syllabus in their studies or make only a cursory study. Similar comments were made in the past.

Q.2

(a)

This question was very poorly answered. Circumstances under which non-disclosure of information may lead to misrepresentation were to be discussed under the headings of (i) half truth, (ii) change of circumstances; (iii) duty to speak under utmost good faith, and (iv) where silence amounts to speech. Very few students covered and explained all the points.

(b)

Although all students answered correctly that B could not avoid the contract, having examined the accounts, yet only a few mentioned the legal issue involved which was that although the consent may be tainted by misrepresentation, the contract is not avoided if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.

Q.3

Ordinary and special damages: Many students identified the ordinary damages (Rs.200,000) as special damages and vice versa. The essential condition for recovering special damages is that the circumstances due to which such damages may arise have been communicated to the concerned party at the time the agreement is made. This point could not be highlighted by many students.

Q.4

Part (a) was well answered. However very few students could cover this issue comprehensively as discussed in Section 59, 60 and 61 of the Contract Act 1872. In part (b), many students tried to link discharge of surety to the excess amount of credit allowed by the creditor. According to section 135, a surety is discharged if creditor compounds with principal debtor without surety's consent.

Q.5

(a)

Most students managed to list two or three points but very few could list all the circumstance when an agent can delegate to a sub-agent.

(b)

This part was poorly answered with many irrelevant arguments. In the situation as discussed in the question, both agent and principal will become liable and either of them may be sued.

Q.6

This was a simple question and well attempted by majority.

Q.7

(a)

This part regarding agreement to sell was well answered and many obtaining full marks.

(b)

In this part, candidates properly explained the terms condition and implied conditions. Many students explained various implied conditions such as sale by description/sample etc. which were not asked for. They were only asked to explain implied conditions as to title which are as follows:

  · In case of sale the seller has the right to sell the goods.

· In case of agreement to sell, the seller will have a right to sell at the time when the property is to pass.

(c)

(i)

While describing the circumstances in which an unpaid seller can exercise his right of resale, most students failed to mention about one of the situations i.e. when the seller has expressly reserved a right of resale incase of default. The other conditions were mostly mentioned correctly.

(ii) & (iii)

In these parts, many students focused their answer solely on C getting a proper title without mentioning the consequences as between A and B. Moreover in (ii) many gave a generalized answer that B would be entitled to damages if A resold the goods without notice to B. They should have specified that in such a case B would not be responsible for any loss sustained by A and would be entitled to recover any surplus received by A. The case would have been the reverse, if A has given proper notice to B.

Q.8

This was an easy question about the particulars in the bill of lading. Many students failed to mention the following points

(a)    the leading marks necessary for identification of consignment.

(b)   the excepted perils clause and

(c)     the apparent condition of the goods.

Many students wasted their time in explaining the importance of bill of lading and their types etc.

Q.9

Part (a) and (b) relating to partnership property (section 14) and doctrine of holding out (section 28) were poorly answered.

Part (c) was evenly answered. Since A used the goods for his private consumption, he was liable to indemnify the firm [sections 10 and 13(f)]. Also, since A acted within his apparent authority, the firm would be liable to D for the price of goods bought [sections 2(a) and 27]. The position of A and D remained same if part of the goods were delivered to the firm and part taken by A. Hardly any student could give an exact answer.

Q.10

Most of the students mixed up the marine policies of cargo owners with those of ship owners with a large number of students just explaining ship owners policies. Also many students just listed the names of policies without explanations.

Q.11

Most of the students were able to list the main points and secured good marks.