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Contract Law in Hong Kong

Contract Law in Hong Kong

Michael J. Fisher
Desmond G. Greenwood
Copyright Date: 2007
Pages: 464
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  • Book Info
    Contract Law in Hong Kong
    Book Description:

    Contract Law in Hong Kong is the first comprehensive textbook on this topic for more than ten years. The 16 chapters of the book cover all basic contract concepts in a reader-friendly style, which makes ample use of case illustration. Particular emphasis is placed on what makes Hong Kong law different from other common law jurisdictions. Attention is drawn throughout to the continuing significance of English case law in Hong Kong and the theoretical and practical reasons therefor. Emphasis is also placed on the substantial similarity in many areas between English and Hong Kong legislation and there is a useful "cross-referencing" glossary. The book deals with all the core areas of Contract Law. The first two chapters introduce the major themes and explain the multiple sources of law in Hong Kong. The subsequent thirteen chapters cover the formation of a valid contract, its contents, "vitiating" elements, the consequences of illegality, the termination of contracts and remedies for breach of contract. The book concludes with an explanation of the doctrine of privity and proposals for reform of the privity doctrine in Hong Kong. The book is intended primarily as a readable but comprehensive and authoritative text for Hong Kong law students. Practising lawyers and professionals who need to acquire knowledge on the topic, however, will also find this book useful and accessible.

    eISBN: 978-988-8052-14-1
    Subjects: Law

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-viii)
  3. Preface
    (pp. ix-x)
  4. Table of Cases
    (pp. xi-xxvi)
  5. Table of Legislation
    (pp. xxvii-xxxiv)
  6. 1 The Nature of Contract Law
    (pp. 1-20)

    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 what it does. In keeping with the largely non-theoretical nature of this book and the constraints of space, the answers to the above questions will be based on traditional notions of contract and more radical formulations...

  7. 2 Sources of Hong Kong Contract Law
    (pp. 21-36)

    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 the common law of England.

    The Basic Law, the constitutional basis for the Hong Kong Special Administrative Region (HKSAR), states that:¹

    The laws previously in force...

  8. 3 Agreement
    (pp. 37-72)

    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 and may also be able to rely on the conduct of the parties. While the law requires the element of writing only in exceptional cases,³ from the aspect of proof it is always advisable to reduce the agreement...

  9. 4 Consideration
    (pp. 73-108)

    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 to ask why we have a doctrine of consideration; what is its purpose? What consideration does not do is to prove that an agreement is fair. The rule...

  10. 5 Intention to Create Legal Relations
    (pp. 109-118)

    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 of intention is unnecessary.

    Given the considerable overlap with consideration, there is some merit in the argument that intention should not be a separate requirement. However,...

  11. 6 Contractual Capacity
    (pp. 119-132)

    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 Act, 1874, which incorporated rules not enacted in Hong Kong, has now been abolished and similar common law and statutory rules are now found...

  12. 7 Formality
    (pp. 133-144)

    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 which are of great significance. First, some agreements are required to be made by deed, notably those stipulated in the...

  13. 8 Contractual Terms
    (pp. 145-190)

    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 party which are not otherwise available.

    Whether the statement is a term or not depends on various factors including the timing and importance of...

  14. 9 Misrepresentation
    (pp. 191-220)

    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 terms, as already seen, is not always easy to draw.¹ One difficulty is that older cases sometimes involve courts eager to find a term, given the unavailability of a...

  15. 10 Mistake
    (pp. 221-248)

    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!).

    The risk of making a mistake is always present when making a contract. However, the law of mistake is only concerned with the circumstances under which relief will be given...

  16. 11 Duress and Undue Influence
    (pp. 249-282)

    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 economic pressure is placed on a party to a contract. While it may sometimes be difficult to distinguish between duress and legitimate, hard bargaining, the...

  17. 12 Unconscionability
    (pp. 283-290)

    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 would apply but where the Hong Kong courts have found a contract to be tainted by unconscionability.

    In this area the law of Hong Kong differs explicitly from English law. In English law, recognition of unconscionability is...

  18. 13 Illegal Contracts
    (pp. 291-322)

    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 the grounds of public policy (such as contracts to commit crimes or torts, contracts to promote sexual immorality, contracts to oust the jurisdiction of the courts, and contracts in...

  19. 14 Termination of Contracts
    (pp. 323-356)

    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 to terminate, no consideration problem arises since each confers a benefit on the other; namely, the avoidance of further obligation. However, there is a consideration problem where X, having completely discharged his...

  20. 15 Remedies for Breach of Contract
    (pp. 357-392)

    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 significantly, that the loss suffered is not too unlikely, or “remote”, a consequence of the breach. Causation is rarely a problem in contract...

  21. 16 Privity of Contract
    (pp. 393-410)

    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 contract law for a considerable period. One reason for the doctrine is that...

  22. Appendix 1 Glossary of Terms
    (pp. 411-415)
  23. Appendix 2 Important Contract Legislation: English and Hong Kong Equivalents
    (pp. 416-417)
  24. Appendix 3 Limitation Periods: English and Hong Kong Equivalents
    (pp. 418-418)
  25. Bibliography
    (pp. 419-420)
  26. Index
    (pp. 421-430)
  27. Back Matter
    (pp. 431-431)