3. Contract Law

8/7/2019 3. Contract Law

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Speaker : Barry Chin ()

Solicitor (HK, UK), Engineer (HK, Canada, UK)

B.Sc., MBA, LL.B.(Hons), PCLL

C.Eng, P.Eng, RPE, MIEE, MIMechE, MHKIE, MAPEO

Mobile: 8100 1300 Fax: 8100 2600

Address: GPO Box 6050 Hong Kong

E-mail: [email protected]

http://www.lawyerchin.com



What the Law of Contract Does?

A contract is a legally binding agreement.

An agreement which "the state (China) or

region (HKSAR)" will not recognize is not acontract.

The law of contract in Hong Kong is based on

and similar to English law but it is not identical.



Most of Hong Kong's contract law is found not

in legislation but in the reported decisions of

the courts in Hong Kong and other commonlaw jurisdictions.

The first question is "Is there a contract?"

That is a question of law (Common Law, Case

Law), which depends on the intentions of theparties as decided by the Court, on the

evidence (on the balance of probability).



The Court must be satisfied that the partiesmanifested a willingness to be bound togetherby the contract.

Agreement usually arises from negotiation.

Negotiation can usually be0 divided intoinvitations, offers, counter offers, rejectionsand acceptances.



How are contracts made ?

Intention

Commercial agreements are presumed to be

intended to be contracts.

Family and social agreements are presumed to

be intended not to be contracts.



Whether the parties have agreed is first a question of fact - of evidence - then of law - of construction -- thatis interpretation of the meaning of the facts.

A contract is created only when both parties haveshown a willingness to be bound by contract on termsagreed between them.

Agreement is usually proved by showing acceptance of an offer.



Offer

The proposal of a contract is called an offer,

which is the offeror's manifestation of willingness to be bound to the offeree in

contract, in the terms of the offer. An offer

gives the offeree power to make a contract by

accepting those terms.



An offer may be in writing, by spoken words, byconduct, or by any mixture of those methods.

An offer may be withdrawn at any time beforeacceptance, unless it is an option.

An invitation to treat differs from an offer because it

does not give the offeree power to create a contract. Itis an invitation to make offers. Similarly, the supply of information is not an offer.Whether a stage innegotiations is an offer or not depends on the intentionof the person initiating it.



An offer may be made to one or more individuals, a

class, or the whole world.

An offer may be terminated by the offeree (acceptance,

rejection, counter-offer), Offeror may (revocation, or

lapse by time or by a trigger event).

An offer may be withdrawn at any time before

acceptance, unless it is an option (offeror give to the

offeree 3 months time).



Acceptance

Acceptance is the manifestation by an offeree

of willingness to be bound by a contract in the

terms of the offer.

Acceptance may be by written or spoken words,

or by conduct, or by any mixture of those

methods.



The offeror may stipulate the method of acceptance.

Upon acceptance of the offer, the contractcomes into existence on the agreed terms.

Acceptance is effective when communicated orsignified in the way stipulated, expressly orimpliedly, by the offeror.



If the offeror has signified a willingness to take

acceptance by letter or telegram, acceptance

will be effective when the letter is posted or thetelegram dispatched.

Telexes, fax messages and telephoned

acceptances take effect according to the

general rule, i.e., when communicated.



Communication of acceptance is valid only if authorized (agreed by the offeror).

Agreement may be evidenced without offer andacceptance.

The parties may agree all the terms but postpone the

making of the contract. The words "subject tocontract" will usually, but not necessarily, have thateffect.



Consideration

Those who want the court to enforce a promise

must show they have paid a price for it.

A promise unsupported by consideration

cannot make a contract. It is not binding unless

incorporated in a deed.



A promise to perform an obligation already owed to athird party is good consideration.

A promise to perform a public duty is goodconsideration unless it would be against public policyto enforce it.

A promise to perform a duty already owed in contractto the same promisee may be good considerationprovided there is no unfair pressure amounting toeconomic duress.



Formality

No formalities are usually required, but forthe sale or other disposition of interests in land.

(Note & Explaint "deeds" and "contracts")

An unenforceable contract is one which the

court may recognize but will not enforce.

Effect of Stamp Duty



The basis of contract in the common law of HongKong is bargain not promise.

The party wishing to enforce an agreement must showconsideration has been given for the others promise.

No consideration is required if the promise is in the

form of a "DEED". The terms of the contract may beexpress or implied.



Express terms displace implied terms which

conflictWith them. Terms are promises, to bedistinguished from misrepresentations (not a

real promise).



Privity of Contract

A contract may suffer from different kinds of flaws,

providing different remedies: fraud,

misrepresentation (innocent or negligent), duress,

undue influence, mistake, illegality. or incapacity of a

party.



Only a party to a contract can sue on it.

The holder of a negotiable instrument maybe able to sue on it though not originally a

party to it.



R emedies

Some contractual rights can be assigned.

Contractual obligations cannot.

If a contract is broken, a disappointed partymay do nothing, negotiate, use self-help, seek

arbitration or mediation, or sue.

Remedies provided by the court include

actions in debt, for the price, for damages, for

injunction and for specific performance.



Every breach of contract gives a right to damages.

Equitable remedies are discretionary.

3. Contract Law

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