LW014A - Certificate in Legal Studies: Contractual Law in Hong Kong

This report delves into the intricacies of Hong Kong contract law, exploring key principles derived from common law and their application within the jurisdiction. It examines the concept of breach of contract, detailing available remedies such as compensation, specific performance, and restitution. The report analyzes the Sale of Goods Ordinance (Cap 26), particularly focusing on the formation of contracts and obligations of parties involved in the sale of goods. Two case scenarios, involving Jessica Chan and Gonga Li, are used to illustrate the practical application of contract law principles, including remedies for non-payment and the potential use of summary judgment under Hong Kong Civil Procedure's Order 14. The report highlights the significance of these legal tools in resolving contractual disputes efficiently.

LW014A-1645 Certificate in Legal
Studies

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Contractual law of Hong Kong........................................................................................................4
Result or the outcome of Breach of Contract..................................................................................5
Case scenario of Jessica Chan.........................................................................................................6
The Sale of Goods Ordinance (Cap 26)...........................................................................................6
Remedies for breach of contract......................................................................................................7
Summary judgment and Hong Kong Civil Procedure.....................................................................8
Case scenario of Gonga Li...............................................................................................................8
Order 14 (rule 1)..............................................................................................................................8
ORDER 13.......................................................................................................................................9
Conclusion.......................................................................................................................................9
References......................................................................................................................................11

INTRODUCTION
In order to deal with the complexities that have arisen within the society and thereby adjudicate
those in the most appropriate manner rules and legislations are being enacted by any particular
country. In regard to the legal system that is being drafted and formulated in Hong Kong the
principles of rule of law and the process of judicial activism has been given priority in the same.
Based on the rules and policies of the national law of the People’s Republic of China the basic
constitutional framework at Hong Kong have been framed which is in complete conformity to
the policy of “one country, two systems”. Though some of the rules and guidelines have been
borrowed from PRC and incorporated in to the Hong Kong law regime but the majority of the
rules and policies are distinguished in nature from the former one. In the present assignment
based on the provided case scenario the appropriate rules and policies of the Hong Kong law
regime will be discussed in detail with the objective of resolving those issues.

Contractual law of Hong Kong
The basis of the contractual law of Hong Kong has been derived from the rules and principles
that are being enunciated within the Common law or the English Contractual Law. As stated by
Hedley that the principles and guidance provided the common law have formed the general
principle that has the potential of governing all kinds of contractual agreements. In the case of
Geys Vs. Societe Generale [2012] 1 AC 5231 it was being decided by the learned court of
justice that the all kinds of contracts and their technicalities can be addressed to by the general
principles of common law. one of the major characteristics that has been incorporated in to the
contractual law of Hong Kong is the aspect of objective principle as a consequence of which
the acts and words of one party can only be construed in the manner the other party has
understood it. This principle was first enacted in the case of McCutcheon Vs. David
MacBrayne Ltd (1964) 1 WLR 1252. In the present case it was being pronounced as a universal
principle that the courts are required to analyse any contractual agreement based on the
reasonable construction of parties towards the act and attitude of each other3.
In addition to this principle there is another scope which is being provided to the parties in regard
to the scope of entering in to any contract is the principle of Freedom of contract. Under the
ambit of this principle the parties are provided with the scope of entering into wide range of
contracts and the same was being validated in the case of Printing & Numerical Registering
Co. Vs. Sampson (1875)4. It was being held by the court of justice that as the basic rule of
1 'Case Comment: Société Générale V Geys [2012] UKSC 63' (UKSCBlog, 2019)
<http://ukscblog.com/case-comment-societe-generale-v-geys/> accessed 24 January 2019.
2 'Mccutheon V David Macbrayne Ltd – 1964' (Lawteacher.net, 2019)
<https://www.lawteacher.net/cases/mccutcheon-v-david-macbrayne.php> accessed 24 January
2019.
3 Poole, Jill. Textbook on contract law. Oxford University Press, 2016.
4 'Printing And Numerical Registering Co V Sampson - Alchetron, The Free Social
Encyclopedia' (Alchetron.com, 2019) <https://alchetron.com/Printing-and-Numerical-
Registering-Co-v-Sampson> accessed 24 January 2019.

entering in to contract is that both the parties of competent age and understanding hence there is
no existence of any kind of restriction in regard to contracting. Moreover this rule also places a
responsibility on the justice courts as they are required to address any such issue and thereby
enforce the same5.
Result or the outcome of Breach of Contract
In any contractual agreement the parties that have entered in to the same needs to undertake their
part of the job as that was being decided upon. In case at the event of breach of contract by any
of the parties the basic remedy that is available to the same is to compensate the party whose
position has been prejudiced due to any act of the opposite party to the same. In addition to this
the plaintiff also possesses the remedy of asking for specific performance of the contract
obligations if the suffered loss can’t be compensated with the claim for damages. With the
evolvement in the legal system as well as the complexities that have grown in relation to the
societies the principle of restitution has also being adopted by the parties to society6. The
restitutionary remedy can be adopted with the objective of understanding restricting the
defendants from achieving any kind of unjust enrichment from the contract. In order to institute a
claim against restitution the claimant needs to confine within three forms that is recovery of
money in case of nonpayment of any consideration, recovering in respect of the goods and
services rendered and lastly the gains that has been achieved by the party due to the breach of
contract.
5 'Hong Kong E-Legislation' (Elegislation.gov.hk, 2019)
<https://www.elegislation.gov.hk/hk/cap4A?
pmc=0&m=0&pm=1&xpid=ID_1438403275202_002> accessed 24 January 2019.
6 (Lexisnexis.com, 2019)
<https://www.lexisnexis.com/ap/pg/singaporedisputeresolution/document/428727/5HTV-05S1-
DXYW-T12C-00000-00/Summary_judgment_and_strike_out_overview> accessed 24 January
2019.

Case scenario of Jessica Chan
In accordance to the case scenario provided Jessica Chan being the plaintiff in the present
situation entered in to a contract at the request of the defendant Annie Chow in regard to the
delivery of large quantity of designer handbags and wallets that amounted to almost HK$3
million. In addition to this certain cosmetics were also being delivered by the plaintiff to the
defendant relating to which the payment was required to be made within a time period of 30
days7. The defendant has not paid the required amount to the plaintiff in respect of the items that
were being delivered. Both the parties to the contract did have the capacity to enter in to a
contractual agreement and thereby undertake the concerned responsibility for the same.
The Sale of Goods Ordinance (Cap 26)
This particular legislation deals with the aspect of addressing the issues relating to sales of
Goods that might arise in respect of the act of the parties. The part I of the concerned legislation
provides the statutory provision in respect to the formation of the contract and thereby creation
of an agreement for sale8. In Sec.3 of the Act the factors constituting contract for sale has been
provided which states that if one of the parties to the contract have agreed to transfer any
property in good to the buyer in respect of the payment of any consideration for the same. As per
the case study provided the Jessica Chan has at the request of Annie Chan has decide to transfer
large quantity of goods to the later and the same has been already been transferred to the buyer.
From here it can be stated that there was the existence of contract of sale between the parties. In
addition to this under Sec. 19 of the Act if the contract of sale has been transferred to the buyer
on the stipulated time states about the lawful effect of the contract that has already been
undertaken by Jessica in conformity to the verbal agreement that was being entered to by both
the parties9.
7 Poole, Jill. Textbook on contract law. Oxford University Press, 2016.
8 Tang, Vivian. "Enforcement of Consumer Law in Hong Kong." In Enforcement and
Effectiveness of Consumer Law, pp. 331-347. Springer, Cham, 2018.
9 Schroeter, Ulrich G. "The Status of Hong Kong and Macao under the United Nations
Convention on Contracts for the International Sale of Goods." (2017).

The delivery of the specific goods that is designer bags, wallets and cosmetics all were being
transferred to Annie on the term that payment for the same would be made in 30 days of
delivery. This condition was being breached by the buyer thereby giving rise to the violation of
the duty under Sec. 29 of the concerned Act.
Remedies for breach of contract
Part V of the Sales of Goods Ordinance states about the remedies that might result from the
breach of any of the contractual terns. As in the present case scenario Annie was required to
transfer the desired amount of money to Jessica but the same was not being undertaken by her.
Under Sec. 51 of the concerned Act in conformity to the contract of sale Jessica have the right to
claim against Annie in order to receive the complete payment for the goods transferred. In the
case of Sime Winner Holdings Ltd v Tan Wan Hong (2009)10 it was being decided by the
court of justice that the breach of fiduciary duties by any of the parties to the contract would
made the later liable for the same. In the present scenario based on the request of Annie the
verbal agreement was being entered in to by the parties and the delivery of the specific products
was also being delivered but the contractual duty was not being undertaken by Annie11.
Summary judgment and Hong Kong Civil Procedure
The civil procedure that is being followed in Hong Kong there a separate proviso has been made
by the high court whereby the parties to an aggrieved party can claim for summary judgment
with the objective of avoiding full trial procedure. Based on the grounds and the merits that are
10 'SIME WINNER HOLDINGS LTD AND ANOTHER V. TAN WAN HONG AND
ANOTHER – Hong Kong Case Law' (Hongkongcaselaw.com, 2019)
<https://www.hongkongcaselaw.com/sime-winner-holdings-ltd-and-another-v-tan-wan-hong-
and-another-3/> accessed 24 January 2019.
11 Cheung, Sai On. "Court-connected Mediation in Hong Kong." In Court-connected
construction mediation practice: a comparative international review. Routledge (Taylor &
Francis Group), 2017.

being provided by the claimants in respect of any case discretionary power have been rendered
on the judicial courts to dispose of the case promptly on the points of law and thereby provide
judgment in shorter period of time. In order to establish the claim of summary judgment the
applicant is required to prove the existence of a prima facie case and that the defendant has no
valid grounds to defend the same. Under the Rules of the High Court and order no.14 the
provision relating to the summary judgment has been stated.
Case scenario of Gonga Li
As per the case study provided Gonga Li has sold and supplied cosmetics worth $2 million to
Macy Lao who stays at Hong Kong. As per the contractual agreement the payment for the same
was not being made by the later despite of subsequent request from Gonga. Under order 14 of
rules of High court Gonga can claim for summary judgment against the same as the defendant in
the present case have no strong grounds to defend her12.
Order 14 (rule 1)
Under this rule after serving an action of claim in the form of writ against the defendant and the
later is interested to defend the same and that there are no grounds left for such the claimant has
the right to request for the same. This particular claim can be made only id f there has been
filling of writ for the same.
Rule 2
Under this rule based on the statements made under rule 1 summons are being served stating the
grounds on behalf of the claim with an affidavit for the same. The claim shall include the
statement that the claimant is of the belief that there are no grounds that can be defended by the
respondents. In the case of Ritzland investment vs. Grace Management & consultancy
services [2014] 2 SLR 134213 it was being decided by the court that in cases where the applicant
12 ALEXANDER, Nadja. "Hong Kong: Mediation and the future of dispute resolution." (2018).
13 'Ritzland Investment Pte Ltd V Grace Management & Consultancy Services Pte Ltd.Pdf |
Lease | Leasehold Estate' (Scribd, 2019)

is of the view that the defendant has no reasonable and fair cause to defend the claims and that in
order to resolve the dispute in a speedy manner summary judgment can be resorted to. Moreover
even if the defendant is intended to defend the claims and thereby put a counterclaim for the
same and consequentially the defendant is not able to prove the same in that case also the court
can issue summary judgment.
ORDER 13
In case where a claim of liquidated demand is being made by the claimant and the defendant is
unable to showcase his intention for the same in that case the claimant has the right to move
solely against the defendant and receive ex parte order on the same. The whole amount that was
being claimed by the plaintiff shall be received in addition to the litigation cost that has being
undertaken by the plaintiff to move against the court. Hence in case if Marcy does not responds
to the claims or any summons that might be served in that case Gonga would receive an ex parte
order against the whole claim and no further contesting will be carried out.
Conclusion
Hence it can be very well concluded that the principles of common law have been given the
status of general principles of contract that ids being followed in England. The contractual law in
Hong Kong is in complete conformity to those basic principles and the same has been
incorporated into relevant statutes. An addition to this the first case scenario was being addressed
based on this and the second deals with the aspect of summary judgment.
References
(Lexisnexis.com, 2019)
<https://www.lexisnexis.com/ap/pg/singaporedisputeresolution/document/428727/5HTV-05S1-
<https://www.scribd.com/document/346048342/ritzland-investment-pte-ltd-v-grace-
management-consultancy-services-pte-ltd-pdf> accessed 24 January 2019.

DXYW-T12C-00000-00/Summary_judgment_and_strike_out_overview> accessed 24 January
2019.
(Lib.hku.hk, 2019) <https://lib.hku.hk/Press/9622092896.pdf> accessed 24 January 2019
ALEXANDER, Nadja. "Hong Kong: Mediation and the future of dispute resolution." (2018).
Cartwright, John. Contract law: An introduction to the English law of contract for the civil
lawyer. Bloomsbury Publishing, 2016.
'Case Comment: Société Générale V Geys [2012] UKSC 63' (UKSCBlog, 2019)
<http://ukscblog.com/case-comment-societe-generale-v-geys/> accessed 24 January 2019.
Cheung, Sai On. "Court-connected Mediation in Hong Kong." In Court-connected construction
mediation practice: a comparative international review. Routledge (Taylor & Francis Group),
2017.
Fisher, James C. "Uncertainty, Opportunism and the Intermediate Term: The Hong Kong Fir
Principle in English and Irish Contract Law." Hibernian LJ 14 (2015): 96.
'Hong Kong E-Legislation' (Elegislation.gov.hk, 2019)
<https://www.elegislation.gov.hk/hk/cap4A?
pmc=0&m=0&pm=1&xpid=ID_1438403275202_002> accessed 24 January 2019.
'Mccutheon V David Macbrayne Ltd – 1964' (Lawteacher.net, 2019)
<https://www.lawteacher.net/cases/mccutcheon-v-david-macbrayne.php> accessed 24 January
2019.
Poole, Jill. Textbook on contract law. Oxford University Press, 2016.
'Printing And Numerical Registering Co V Sampson - Alchetron, The Free Social Encyclopedia'
(Alchetron.com, 2019) <https://alchetron.com/Printing-and-Numerical-Registering-Co-v-
Sampson> accessed 24 January 2019.
'Ritzland Investment Pte Ltd V Grace Management & Consultancy Services Pte Ltd.Pdf | Lease |
Leasehold Estate' (Scribd, 2019) <https://www.scribd.com/document/346048342/ritzland-

investment-pte-ltd-v-grace-management-consultancy-services-pte-ltd-pdf> accessed 24 January
2019.
Schroeter, Ulrich G. "The Status of Hong Kong and Macao under the United Nations Convention
on Contracts for the International Sale of Goods." (2017).
Schroeter, Ulrich G. "The Status of Hong Kong and Macao under the United Nations Convention
on Contracts for the International Sale of Goods." (2017).
'SIME WINNER HOLDINGS LTD AND ANOTHER V. TAN WAN HONG AND ANOTHER
– Hong Kong Case Law' (Hongkongcaselaw.com, 2019)
<https://www.hongkongcaselaw.com/sime-winner-holdings-ltd-and-another-v-tan-wan-hong-
and-another-3/> accessed 24 January 2019.
Tang, Vivian. "Enforcement of Consumer Law in Hong Kong." In Enforcement and
Effectiveness of Consumer Law, pp. 331-347. Springer, Cham, 2018.