Contract Law in Hong Kong
Publication Year: 2007
Published by: Hong Kong University Press, HKU
Title Page, Copyright, Dedication
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It is now more than 10 years since the last publication of Betty Ho’s Contract Law in Hong Kong, the only comprehensive student text on this subject. In the intervening period, a great number of changes have been made to the law of Hong Kong (and that of England, which continues to exercise significant influence here). Hong Kong’s contract law has been considerably affected by these changes, both at the specific, contract-law ...
Table of Cases
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Adams v Lindsell 57 Addis v Gramaphone Co 365, 367, 368 Adler v Dickson 178–9 Aerial Advertising v Batchelors Peas Ltd (Manchester) 368 Afovos, The 336 Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and Securicor 174, 176, 185...
Table of Legislation
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Age of Majority (Related Provisions) Ordinance (Cap 410) s2 122, 417 s3 124, 417 s4 120, 130–1 Application of English Law Ordinance (Cap 88) 31 s3 22, 24 Schedule 23...
1: The Nature of Contract Law
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Contracts may take a huge variety of forms, from the simplest, small “one-off” transaction like buying a newspaper, to a complicated commercial contract, written in technical language and intended to be of lengthy duration. Nevertheless, the same basic rules as to formation, performance and enforcement apply to all contracts. The purpose of this chapter is to ask first what contract law is and second...
2: Sources of Hong Kong Contract Law
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Hong Kong contract law, like Hong Kong law in general, has been dominated, for 150 years, by the common law of England. Hong Kong’s post-colonial “constitution”, the Basic Law, guarantees that the common law will continue in force for 50 years from the transfer of sovereignty of Hong Kong in 1997, but it is to be expected that, by a process of divergence, the common law of Hong Kong will become increasingly distinct from ...
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A contract is a voluntary agreement that the law will enforce.1 The parties are free to negotiate the terms of the contract and, in the absence of a recognised vitiating factor such as misrepresentation or mistake, the courts will not intervene or seek to “re-write” the agreement.2 In order to establish a contractual agreement, a claimant can adduce oral and/or written evidence ...
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Consideration is a requirement, in English and Hong Kong law, for all “simple” contracts (i.e. contracts not made under seal). Stated in its simplest terms, consideration means the giving of something of value to the other contracting party. Consideration is essentially a creation of the common law system and is not generally required in civil law systems such as those found in most of Western Europe. That being so, it is useful ...
5: Intention to Create Legal Relations
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While it is well established that agreement (offer and acceptance) and consideration are essential to the formation of a contract, the requirement of an intention to create legal relations is more problematic, with a minority of academics arguing that intention is not, or should not be, a necessary contractual element. The basis of the minority view is that, since consideration is a token of the intention to be bound, to require a separate element ...
6: Contractual Capacity
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The general rule of contract is that any person has the capacity to make a contract. Exceptions exist in relation to mental patients, drunkards, corporations and minors. Of these, only the last two are significant and the rules on corporations are more suitably dealt with in the context of Company Law. The law on minors, previously referred to as infants, is now similar in England and Hong Kong, having once been rather different. The Infants Relief...
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The general rule, in Hong Kong and England, is that contracts can be made in any form. Despite a common misapprehension on the part of the layman, there is no general requirement that contracts be made in writing (though reducing a contract to writing assists the question of proof in cases of dispute). Contracts may, generally, be made entirely orally or even, in exceptional cases, by conduct. However, there are many exceptions to the general rule on formality, some of ...
8: Contractual Terms
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Having examined those elements necessary for the formation of a valid contract, we now turn to the contents or “terms” of the contract. Here a distinction must be drawn between statements made by the parties which are mere representations and which do not form part of the contract and those other statements that are terms of the contract. This distinction is vital as a breach of a term gives rise to certain remedies for the innocent ...
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The vitiating element of misrepresentation is concerned with those statements which are viewed as having played a part in inducing the making of a contract (representations), but which are not regarded as terms of the contract. So, if a term of a contract is broken, the remedy sought will be for breach of contract; if a mere representation proves false, the remedy must lie in misrepresentation. The distinction between representations and ...
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Mistake is the most perplexing and academically complex of all the areas of contract. Some writers question the very need for its existence; others argue that its scope should be greatly limited. Almost all text books now devote less coverage to mistake than was previously the case and many law schools omit Mistake from their curriculum; avowedly because it is now less significant (in practice because it is too complicated!)....
11: Duress and Undue Influence
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Duress is illegitimate pressure put on a person to enter into a contract. It is a vitiating element recognised at common law. It can be divided into duress of the person, duress of goods and economic duress. The law has had no problem with setting aside contracts in the first category. The last category is relatively recent and has, to a large extent, overtaken duress of goods. Economic duress occurs where some unfair and unlawful ...
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The vitiating elements of Duress and Undue Influence are sometimes viewed as two aspects of a more general element of “unconscionability”. However, it is necessary to treat unconscionability separately, especially in Hong Kong, since legislation has intervened, in the form of the Unconscionable Contracts Ordinance (UCO)1 and because, outside the scope of the legislation, there remain instances where neither duress nor undue influence ...
13: Illegal Contracts
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The courts will generally not permit the enforcement of a contract which is illegal. A contract is illegal if its creation or performance is prohibited at common law, by public policy or via legislation. Although writers sometimes disagree about classification,1 it is generally agreed that the category of illegal contracts includes those contracts described as illegal by statute (such as gaming or wagering contracts) and those illegal at common law on...
14: Termination of Contracts
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A contract may be terminated in one of four different ways: by agreement; by performance; via breach; and by the operation of law, principally through frustration. Termination by agreement is usually a simple process as the parties are free, if they so wish, to end the contract. Consideration1 may, however, be a problem in relation to termination by agreement. When both parties still have outstanding obligations and agree ...
15: Remedies for Breach of Contract
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The most important remedy for breach is the common law remedy of damages. Damages are available “as of right” which means that, wherever there is a breach, the innocent party is automatically entitled to damages. There is no need to prove loss but, without loss, damages will be merely “nominal”. In order to establish the right to “substantial” (as opposed to nominal) damages, the plaintiff must show that the defendant’s breach actually “caused” his loss, and, more ...
16: Privity of Contract
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The doctrine of privity of contract states that, “no one. . . may be entitled to or bound by the terms of a contract to which he is not an original party.”1 The doctrine is also known as the “third party rule”. The doctrine is a creation of the common law. As with many common law rules, its rigidity has clashed with the needs and theories of different areas of law such as land law. The doctrine has been a central, if controversial, part of English and Hong Kong ...
Appendix 1: Glossary of Terms
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Appendix 2: Important Contract Legislation: English and Hong Kong Equivalents
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Appendix 3: Limitation Periods: English and Hong Kong Equivalents
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Page Count: 464
Publication Year: 2007