Contract Law in Hong Kong

Appendix 1: Glossary of Terms

Appendix 1 Glossary of Terms The following provides a simple denition of terms that may be encountered in the text and may be difcult, unfamiliar, or used differently from the norm in a legal context. Burden (or “onus”) of proof The responsibility for proving something. The general rule is that the burden of proof lies with the plaintiff. However, there are many specic exceptions. Where, for example, the reasonableness of an exemption clause is an issue under the Control of Exemption Clauses Ordinance the onus is on the “exemptor” to prove that the clause is reasonable. Collateral Running side by side. Thus, a collateral contract is one that is additional to, and runs alongside, the main contract. The device of the collateral contract may be used to evade the privity doctrine (see Privity of Contract) in carriage of goods situations such that when X agrees to carry Y’s goods subject to a limitation clause, there may be an implied “collateral” agreement that Y will confer the same restrictions on liability to C (an apparent third party). Conversely, an exemption clause in a main contract may be defeated by a separate, overriding “collateral” promise to a party without which he would not have agreed to enter into the main contract. Common Law Common law can be dened in several ways, often by way of contrast. Common law “systems” (originating from the English common law) may be contrasted with the civil law systems which exist in some countries (often based on written codes). More important, in the context of this book, are comparisons with legislation and with equity. When contrasted with legislation, the common law means case law based on precedents established by the courts over the years and, in this context, includes equity. When contrasted with equity, common law is conned to the case law historically developed in the common law courts as opposed to the courts of equity. (See Equity.) Condition There are two relevant meanings of condition in the legal context. Condition may be used in the contract law context just as the layman would use it to signify a “dependent on” qualication. Thus, “this acceptance is conditional on approval of the goods by a qualied analyst”. 412 Contract Law in Hong Kong A second meaning of condition is “serious term”. Breach of such a condition entitles the innocent party to terminate the contract and/or claim damages. (See Warranty.) Consideration What is given by a party in return for the other’s act or promise (“the price of the other party’s promise”). No agreement, unless it is under seal, can be enforced unless the party seeking to enforce the agreement can show consideration. This usually takes the form of showing that something of value has been given to the other party or that some “detriment” has been incurred by the party seeking to enforce the agreement. Damages Financial compensation. Damages, the most common remedy for breach of contract, are awarded “as of right” (automatically) to the innocent party whenever the other is in breach. No loss need be shown but, in the absence of loss, damages will be only “nominal”. The term “damages” should not be confused with “damage” (loss). Estoppel Prevention. There are many different types of estoppel found in different areas of the law. All have the effect of legally preventing a course of action. In the law of evidence, for example, a person who has stated certain facts to be true may be prevented or “estopped” from later denying the truth of the statement. In the area of contract the doctrine of “promissory estoppel” arises, whereby a party who has made a promise to give up certain legal rights, intending that the promise should be binding, may be prevented or “estopped” from later enforcing these rights where the other party has acted on the promise and it would be unfair to allow the promise to be broken. Equity A system of case law, separate from common law, based on principles of faimess and exibility, historically developed only in the English Court of Chancery. Equity is now administered, in all modern courts within common law jurisdictions, alongside common law. Equitable remedies, such as injunctions, are discretionary and more exible in nature than the common law remedy of damages (nancial compensation). Where there is a conict between common law and equity, then equity takes precedence. Executed Completed.Incontract,thetermisusedparticularlyinrelationtoconsideration. Consideration which is “executed” is that which has...