AACY2201 Legal moan for Basins Lecture 1 The HKSAR Legal Sytem Outline © Ingodeton Somes of aw 4 The doctrine of recede 4 The system of HKSAR courts ‘The creation of legis ation ad delegated legislation The interpretation of epson eee Resolving busines putes Dtference onsen criminal aw Ci aw (Criminal Law GralLaw ‘Anafenee eine ‘righ obligation = The pes | Proscution v defendant Plain v defendant The burden of proof | Beyond a reasonable dota Balance of probabilities ‘Compensation for the lo damaaes Panishment-fine/ imprisonment The consequences inal Lave © Forhiding certain conduct & with punishing those who break the law, wrongly behavior-harms the society Covers a wide rmgeot behavior (murder manslaughter. robbery. rape thet, dangrousfearcless diving ilegal parking, faué assault tax evasion) The legislature will esate new offences in order to enste thatthe criminal law isa reflection of society's caren vale, © Enforced by the police & other government bodies on behalf of ou society & the cours elas umpire to ensue that only those persons Who ae guilty ofa eriminal offence are punished, 4 he cout is satisfied, beyond a reasonable dou, that the defendant commited the offence, he willbe found guy & punished as preserbed by the relevant lw. (Cot Law “Deals withthe private rights & obligations of persons, & in the eye ofthe law a person can be an tndvidl oa company. Includes wide range ofl — the Haw of contac, the lw of tort neligence), the law of shipping Sanily law the Jae eating to wills & the amination ofthe property of persons who have died, & rope ta 4 The purpose of biting a civil claim before the courts és 1 uphold & enforce a person's rights & 0 recover the losses which person may have sufTered ACY2301 Lega Environment for Bane 4 civil claim which is brought othe cours eseribod as an aston sui "Plain the person to bring a evil claim othe cou % Defendant the party who is being seed “& The pain is equired to prove his ease on a halance of aobabilities -nnis prove to the cout that his claim i stronger than the deendan’s claim, The sand of roof is no as high as that require fora criminal preseetion & Insome circumstances, a person may he accused ofa erin offence & be sue in the cil ents Common Law Systerm “& Case law is the law which has evolved over many’ centres fom the decisions made by judges. Sometimes destribed as judge-made' aw. -® Legislation i the Taw made under the authority ofthe gevermment, Somesimes described as “writen la’ because the relevant law is found in a particular document rather than in a number of decided cases incase law & Common Law systems operate in many countrics (DK, USA, Canada, Singapore, Malaysia, New Zealand, Bermuda, the Cayenan Islands & Aust) 4 Am alteatve to common law i civil code ~ a codfether form of legislation, i the only source of| lave. ‘The judges are required t interpret the code, but heir judgments are not a source of law. ‘This {ype oF sytem operates ~ Frae, Germany, People's Repl of China, Maca, Taran, “The Principles of Common Law Principles of common law: hased upon the customs of he people & evolved from the common law ‘ours, which were primarily concerned withthe stil aplication of he kw. © Principles of equity: evolve from courts concerned more with justice & fares than with the strict, pplication ofthe fae. 4 In the event of confit in applying the two sts of principles, the princ applied. es of equity should be Source of Law “Basie Law: the syreme law in HK sine 1997, “One oust Two syste % AML 8: laws previously in fore in HK shall be maintained (common la, rules of equity. lepislation-ordinance, customary las) 4 Legislation (Ordinance) Legislative Council, an ordinance may’ come ito existence For one of thos % An ordinance may coi existing ease la: Codification isthe process of rationalizing the eases & presenting them inthe form of an ordinance (Reading cases can be a Ibori task) The ‘jective isto make the Iw more realy accessible ® comprchensibe‘ACY2300 Legal Environmes for Business % ‘An ordinance nay consolidate existing law Consolidation isthe peooess of either clarifying existing principe & bringing tgeter case law & legislation revising an ordinance as opposed {o adding “amsndment” ordinances. The objective is same as the above (Implemented infrequontly > ake a considerable time to draft & to pas throu the legislature ‘An ondinance ray create new nw the law may be used to bring about changes tthe social system (Smokiag, Noise Cont, Water Pollaion Contol, MPF Scheme), & to regular & accommodate ot increasingly advanced soci. Common Law & Eapity: Case ln; Jdge-made-law; contains in Law Reports National Tas listed in Annex I oF BL. © Customary Law (eusoms) Fe, dowry % + ‘Many ofthe easoms ound in HK are based upon Chinese customary lw ~ re ivorce & 1 to marrage recently, inheritance have been upheld by the HK cours & also influenced the content of leistion. [YEW v HK (1999)] ah 38), The court considered expert evidence on Chinese customary law & recognized that under (Chinese custonsty law a daughter who is nt maried athe date of her Fate's deat ha right The Doctrine of Preseden |. What ase law” comprises % ndings of Fad: the material fects of case are established inthe course hearing, This frm the ‘sss om whi he case wil be followed or cstnguished in he fore, OLater cate ae identical, to cartier one the dessin in the Fas ease willbe followed. Laer cas are similar to ater ‘one > the dopies of similarity determine frst cas i followed or distinguished. @Later cas is lstinguished fom calier one > decision wil be different form cari case ‘Statement of Law: a principle of law is applied tothe legal problem (the point of law) which is raised hy the Fedings of fat in order to solve the problem & reach a decision, Ratio desidendi > the reason ir applying partic pincple of aw wil be explained in the course of judement where there is more than one judge hearing a case > rato is determined by finding the ‘rinciple of law which i a majority ofthe judgment, The ratio is expressed as being "held" & what fttows isthe legal reason for the decision being made. @A judge may or may not agree ‘vith the Statemsnt of rato wal ely onthe fl algment in forming opinion Siaement of Law Made ‘By the Way"; made by the jag o judges hearing the case which ae not based on the ining of fact & are therefore ot rise by the case, Statements are deseribed as the obiter dict, Only the ratio which isa binding precedent, GObiter statements have proved 19 be a nea oF introducing developments to the law, because its persuasive precedent, @A judge may follow this i he able to distinguish the facts ofthe case being heard from 3 previous bindina precedent, “The Decision in relation toh outcome of cour hearing ACY Lega Envrnent for Bones “The Ranking ofthe Counts "% _Aower courts hound by decision given bya higher court & _Thelower court donot made precedents hecause thei decisions are not usually reported The Operation ofthe Doctine of Precedent + + ‘The bass of the doctrine of precedent is that “lke eases should be tested alike. & dissimilar eases should be wested differen ‘When a particlar case (6) is ried upon as being similar Forming a decision there may be an appeal arguing that he particular cave not sicily ake to warrant bein flowed “The értrne of precedent requires that «previous decsin of a higher ranking cour must be followed ‘ifthe facts & points of law which aise n anew case ae intial similar to those i a press ese “The doctine of precedent has the advantage of providing both eonsstney (any points of Iw which hve previously been heard & decided by a higher ranking court must be followed) & flexibility (the possibilty of decisions heing either veruled or distinguished), A decision will be ovcruled if an appeal court comes 19 @ diferent decision, A dzeision willbe which include cheques & promissory notes, mst by definition bein writing, ‘formal Comract, -& Comprises eters or memoranda or oder pices of paper which together const ‘evidence in writing of contact. Some contacts are required tobe “evidence in writing” Dagreements with money lenders, @contract of guarantee, Geonvaets for the sale of land, Unless there is suiient wr contract wil not enexed by the contract. 4 Its the panties whe decide whether they require a writen contact But most contracts made in busines are usually in writing in order 10 provide explicit evidence of what hes been agreed. In the ‘event ofa subsequen dispute, awriten contac is obviously more eiable than spoken words evidence, these -ACY2301 Legal Environment for Busnes Contracts Created by Electronic Means (Electronic Transactions Ord) (5-9) -& IF te ln permits oF requzescettn information tobe "n writing’, an electronic recor satisfies this reguizement provided the record ean be accessed for subsoquent reference 4% Ifadocuent is required to be signed, a digital signature satisfies the requirement if he petson signing use a reliable metho to identify himself & the person to whom the signature is piven approves of that, rethod ori ts supported by digital cetiicte. 4 Certain documents ave exchuded from it: Ouust, Dwills, Opower of atorey, instruments requiring stamp duty, Oased, conveyances & other documents relating to land, @mongages & charges, Goats & affidavits statutory decartions, & @negetible instrument. Inptiee Contracts 4 Many contrasts made in agreements resulting fom the conduct or actions ofthe pares which involves no rites or spoken words. 4% _A-contact may aso be formed by a combinstion of words @ections [WFELTD v HKID LTD (200%) ‘World Food Fair Ltd v Hong Keng Island Development Lx 2007] | HKLRD 498 “© WEF brought an action against ID For breach ofan agrement to grant them a tenancy of food ‘court a ID's shopping mall, After a series of meeting the partes orally reached an agreement ‘aso the rent, management fes, & air conditioning charges, An initial depsit was also paid However, the date of commencement ofthe lease, He term & the rent payable on the exercise of ‘option to renew, the right o sublet & she extent & ext ofthe Kitchen faites to be provided by wD. “FThe tal jude held thatthe partes had never got beyond the stage of negotiation & so had not ‘entered into 8 contact, The CA found that a contact forthe tenancy was orally concluded & suppored by par. perfomance (giving possession “or iting out the kitchens). The CA held | teres no contd great exp hat te ems which ns be aged fr any ase inclde the commencement & duration, option tc renew & all the other terms the partes ltended © have in the lease, Payment of a deposit did not prove the existence of an agreement, ante @_Asitene ay beet an of ovation wes {Ava gence fa stench apes to bea of js mide to oe seep wl conse an of 4 Hinde toa pup of peopel oti agnvinion emake an ofr averse). There cpt ho tay respond Lote wren, and if the repete tonsa nsec: of ofan winked mane of conrad wl et The mie fe ivan seo cep ert eo 4 An nderiseneat fering aya ead fr extn. fama ls propery wl ely constitute an offer.” The petsons who can accept such an offer are limited by the nanure ofthe offer, Se; died at merit whole wor (C¥ CSBCO (189) mee no limit 0 thenACY2301 Legal Environmer for Business ACY230 Legal Environment or Busnes “all v Carbolie Smoke Bell Company [1893] QB 256 Dickinson Dod (1876) 2 Ch D463, % The CSBC advertised in & number of newspapers Har they would pay ()100 to anyone whe aught influenza afer using their “sack bal, an inhalant, as diesed, for 14 days. They also stated that 1 show the sincerity oftheir offer & thee faith in he smoke bal, they had deposited (1,000 ata cetan bank t9 meet possible elas of persons who used he smoke balls but still ceaght influenzi. C bought one of the smoke balls & used ites directed but stil caught infuenza_Sheeaimed the (3100 compensation, but CSBC refsed 10 pa | “@ Dodds offered on a Wednesday to sell some propery to Dickinson, stating that his offer would remain open until Friday, On Thursday, Dickinsn heard fom B that Dodds had sold the property to someone else. Dickinson neveteless wrote a letter of acceptance, which he handed 1 Dodson the Priday. was held that as Dickinson od heard about the om B, who was, the offer was no longer available for acceptance. No contract had been fed reliable spree, “Se was held thatthe CSBC had made an fe 1o the whole would & that they would be Hable | yon who. came forward & performed the required condiions because their performance the offer, Cwas awarded the (100. | ‘An Offer- Layout of Goo in a Shop ¢ 1 goods azeaisplayedon te shelves of a department store or supermarket, the sor ot offering to sell the goods: itis merely inviting ifs eusiomers to make an offer o buy hem. When the customer aks the goods he hay selected fo te ash desk, hes offering to buy them. [PSB v BCCLTD (1953)} Pharmaceutical Sociy of Great Britain v Boost Cash Chemists (Souther) Lid [1953] 1 QB 401 “BCC operated a supermarket system in their stores, Certain dues, which according tothe lw ‘could oy be sld i the presence of a qualified pharmacist, were on open selves around the store. Customers selected ther goods fom the shelves, placed them ina wire basket, and paid for them a the cash desk which was supervised bya pharmacist. %_Iewas held dha the display of drugs oa the open shelves constituted an invitation 9 weat The customer made an offer to bay athe cash desk & the sale was completed when the cashier ‘accepted the ofr. Sine the cash desks were supervised by a qualified pharmacist, BCC had ‘complied with te Low & had not commited on offence ‘Aa Offer ~Tendess ‘When a person wentto buy eriain goods or wants ceiin work to be done, he may advertise & invite offess to perform such a contrat ” [Not al invitations to tender arin the form ofan invitation to make a specific contrac, because some business activities are ongoing. Potetial suppliers who tender to perform the contract wll specify het price & other Yerms of business asa standing offer fo the daration of the relevant period. ‘A tender which isin he forms of standing offer to supply certain goods or services wl be accepted ‘when specific orders or instructions are subsequently made Wathdeaval ofan Offer * Revocation of an off; once an offer has been made, the offeror (the person making the offer) may 8 decide to withdraw his offer at any sme prior Wo acoxptanes Persons fo whom the offer was made can be communicated by -perien (D VD (1876) aie Te Deration of a Ofer ‘An offeror may specific that his offer is open fora certain period of time. Inthe case of ‘Dickinson v Dodds thereare wo offers: An offer to sell the property (he 1" offer) % _Anofferto keep the I" offer open fora period af ine (lhe 2" offer, ‘An offer isnot bound to keep his offer open forthe ered of time he has specified woless the offerce ‘nas accepted that offer (the 2" offer) & their agreement i legally binding, ven if there is no contract to keep on offer open, ifthe offer is fora specified period it will lapse ‘ivalid), when the time limit expires, ane Ifthe offeror does not specify the duration of his offer, it wll lapse after a reasonable ‘whats reasonable depends upon ll he ctcurstanes, including the nature ofthe goods od of time, Acceptance ofthe Offer + * “The process of aceplance which brings. an agreement nto existence & fxes dhe terms of the contact Stolements which axe made afer an offer hasbeen acepted cannot be terms OTE og ‘Acceptance must be absolute and unconditional ~ the “minor rle™ “The process of acceptance must conform with a mumber well-established general rues: % The offerce must agree tall he terms ofthe offer Acceptance cannot be deemed or assumed % Acceptance must be communicated tothe offeror Ares 1o All the Terms ofthe Offer + + ‘The acceptance of an offer is only effective ifthe person accepting, the offre, agrees with all the tens ofthe offer. Acceptance must be unequivocal (notambiguous) Ie the offere says thal he acogp’ but add e=tain conditions or make counteroffer (modification and ‘ejection of original offer ~ its anew offer), tere is no eectiveacceptanes, A counter.ofe must be distinguished fom # request for farther information. _Aceeptance Cannot be Deemed or Assume + * “This rule is sometimes expressed as ‘silence cannot to acrpance’ “The offeror mey sate thatthe accepiance mus be in & particular form, writing, then a verbal aceptance by telephone will be vali 2 Ihe asks for aozeptanee inACY2301 Legal Environment fr Business '€ Ifthe chosen method af acceptance fulfils the offerors intentions, will be binding /ccoptance Must be Communicate tthe offeror ‘@ Itimust be eonmunicted either by offeree or by some person authorized by the offeree. The conc, is formed at he time & place the aceplance is received by the offeror In limited citeumstaces, eoeplance arses fom the condit of the offeee & isnot communicated 10 the oferor, Acceptance ~The Postal Rule “© Acceptance by post nay be effective at dhe tine of posting, rather than when the eter is recived by the offeror $ f'the past is the proper method of communicating an acceptance, then, provided the letter is propery addressed & stunped te acceptance is effective atthe ne it is poste. 4 This rule is considers to be fair, however, because the rsk of the letter being lost is bome by the fro, who has the freedom to choose the mode of acceptance The postal ule can ens problems for she ofeor sue Fer dey ot lst in the pas news reaches him + This rle applies ony to an acceptance; it doesnot apply 0 revocation of an off 4& The postal rule does not apply to more instantaneous methods of comucation, such as telex, telephone, fox, & e-mail, The general rule, thet acceptance must be communicated, applies 10 all these methods of eon munication. (Consideration for an Agreement “Consideration an exchange of promises'something of valu inthe eyes ofthe la (money or something ‘has economic value). Both parties to a contract must promise a benefit tothe ater _ Giving a benefit willbe a burden tothe person who gives A contact may be identified in teris of benefit & burden ‘gained suffered by Sah parts ‘A valuable consdention, in the sense of the law, may eons benefit acrving tthe one party, or some Forbearance, detriment, loss, of responsibility. Be ‘or undertaken by the see © A promise which is performed when a contact is formed is described as exceuted consideration ‘whereas a promise toe performed at some fate time is described a executory consideration “© contact entered ino by deed specialty contract, does not requie consideration “There area numberof well-established sues relating fo consderat Consideration tay be execute or execotor; but it cannot be in the past. Consideration mst mave from the promise Consideration must be legal Consideration mus be someting of value Consideration must be sufficient but need not be adequate > ther in some right interest, rofl, or * eeree suffered, ‘ACY2300 Lega Environment for Business ‘Consideration Must be Something of Value “4 The promises made must have some value, but the amount of valve is only the concem ofthe offeror offesee, ‘© “Tite courts will not help some who subsequently realize tat the goods he has. sold are orth more dan be asked for © itis sometimes dificult to pat ¢ monetary value on consideration: when a business is sod asa going ‘concer, the purchase price will often involve is goodwill. The value of goodwill is dificult to “© Forbearance to sue (je. sesing not to sue someage) is suiiem. consideration albet impossible to qantly Consideration Must be Sutin But Ned Not be Adzquate Whilst the amount of value isa mater to be desided by he pats oa contac, the consieraton for thor apeement must be real or suit ‘>If person promises to cay out 84 wich hei already bound to perf, in ality he oxng aoting of valu the consideration ienat ficien,(S vM (1809), Hw PCI887), [EVN (1960) [[Stitk v Myrick (1809) 2 Camp 317 “During the course ofa voyage rom London tothe Bale & back, two of the chip's erew devered “The captain romised wo share the wages ofthe deserers amongst the remaining ew, ‘such emergencies ofthe voyage. They had provided no consideration, “Harley v Ponsonby (1657) 7 EAB 872 [= wes el hat th prise as nating at th ce were key contac bund OmES | 4 “When almost half the few of a ship deserved, the coptan offered those remaining exra wages (0 ‘complete the voyage, The captain & the crew kaew that the ship was so seriously undermanned ‘hath est ofthe joumey had become extremely hazardous, Teas eld thatthe fact hat he journey was exvemdy hazardous discharged te sallors fg het TU he SEC wages they were: ‘Chappell & Cov Neste (1960) AC 87_ “Nestle offered for sale gramophone records in raum for ST and thee wrappers fom thei chocolate bus. The House of Lords held tha, the wrappers ihemsehes, athough of very tival esonomie valu, were nevertheless part ofthe consideration Consideration Must Move fom the Promisee This rules bes explained a requiring an exchange of promises between the offer & the oferee 4 The rl i that a person whe does not give consideration cannot sue on a eohtact, Any such person js desribod asa ‘stranger’ or “hid pay’ to the eurent, & he cannot enfoee it even if tis made for his benefit eg, A&B havea contract, A promise pay money for C, Cis nota party within the contrac)AACY230 Leal Envi for Bes |ACYEI0 Lap Envionmen fo Bains {This ais called ep of cnt le: only the pars ho ae pry 08 eae that an Foakesv Be: (884) 9 App Cas 5 sucorbesvedonaemiect |S Foakes oid money 10 Bee, & Beer obtained judgment dessin ofthe eoun) forthe dsb > There ae a number of common exceptions {0 the privity of corract rule: hil of exchange. Boer then agreed thst sbe would tke no Fhe ction provided tha Fakes pid (800 cheques, Bpromisiny noes reall np istnens which ean Be sve upon 1 aly By te inmeditly © the cst hy halfyearyinstalimens of (ISO. Foes kept his side of the | pate wo des then up but by tos whom thease seen assed ease) agreement, ut Bes hme he nr payable on fe agent be 4 coniect wish ered int by an aget on behalf of his princi spall binding on te washed dh Beers ited the (DB6D nese which ad accrued. Foes had po prncpl 8 sa general uh agents ot ible lb Re was pe othe ont fect promise take no Frer ston on the jodament any cons Consideration May’ be Executed or Exceutry But It Cannot Be inthe Past Promissory Estoppel~ the Origin telsted to consideration mus be suficient but need not be adequate) © Thisrue is usully sated as ‘past consideration sno consideration’ In circumstances where & promise is made to accept a smaller amount & the promise is relied upon, There are wo sitions albeit theres no consideration fr the promise, the cour of equity ray upbold the promise {The fists whe an ati done voluntary & subsequelly an premade opto that This doctrine of promissory estoppel is subject oa number of imitations ‘act in return fora promise, - canaee ‘ _Itcan only be used as a defence, it cannot be used as the basis for bringing an action, ‘The second sition i where a egaly binding contact hasbeen ade & subsequently on of the teil only operate te promise hasbeen sled upon by promise & it would be inequitable parties es ote the onratby a promise of soe variation or amendmen. (anf llow the promisor io eforee his ict es right). & The 2 siustion is sometimes dificil distinguish from a subsequent promise which simply & Whoever seeks the help ofequty must himself have acted equitably o fait quantifies 9 promise conned ihn an existing contrac, Whilst the consideration for the Irdoesoot extinguish ihe oriin rights ofthe roms: oni suspends ish subsequen prise appear to be past i infact 2000 consideration case the pares 1 Ife promise refer toa pacar time or sate of aff. war conn, he pomiso can reve 0 riginallyundemtood that x subsequent promise would be made eg. ARB havea contract, A will perform service the cost isnot specified because time & effort involved is unknown) © Anotable exception to the general rule: abil of exchaage (cheque & promissory note) i vali albeit the consideration forthe bills past. [E vK (1840)] Eastwood v Kenyon 1840) 11A.& E438 “© The guardian cf a young gi raised a loan to educate the gil and To improve her warlage prospects. Afr her mariage, her husband promised to pay of the loan. But later the husband refused top ihe ems fe rin ena we promise (CLPTLd vl Led 1947) te passes or conditions change & the promis notifies the Central London Property Tast Lid v High Tees House Ld (1947) KB 130 “11937 CLPT pid 99-year ease on block offs in Cental Condon o HTH aa sna reno €)2.500. Owing to the oueal of Wari War In 1939, HTH Found itil get, tznants forthe ts & 5 in 1940 CLFT agreed tht he eat wold be eed 10 (1.280. In 1945, when the war ende, the fats were al fly tena again & CLPT sued to esver he meas fret Fed hy the 1957 agreement forthe szon alo 1948 [Fase hace gna as poe wich vs Winging pd ang Ue wasp Pel coir 0 con etn Part Payment ofa Deb (ated 1 consideration must be sufficient but need not be adequate) ‘When a person apres to accep a smaller sum of money thatthe contrat amount as full payment. AS a general rule the agement to accept the lesser amount snot binding © Te was held that CLPT was entitled to recover the aneass forthe second hal of 1945. Bu if hey had sued forthe areas fom 1940 10 1945, the 1640 agreement to reduce the Fent Would have efested their claim, HTH had relied on the reduction of reat, & the law of equity required CCLPT to honour the promise contained inthe 1940 agreement Intention to create a eglly binding contract ‘Tae em hich i sometimes used in these ccumstances is sisfetions thus payment of lesser sum 4 Commercial Azreerent versus Social Agreement than the amount ofthe debe nota stisoction of he deb oo ifs rome vo ace a eser amount is supported by fesh consideration, the pris wil be bound ey by their resent. There is he sd to Be "a aoord& satisfaction ofthe Abr. (Eg. the smaller © A comercial contrac (sade in the couse ofa busines) is presumed thatthe parties intend to make 2 “Fayment is mide a's request eve than the dae it was originally payable then B obiain a benefit of legally binding contac, Tete ino need to prove tht they intended to make an agreement which cater payment & cannot subsequently se forthe balance), (F VB (1888) ould be upheld by thee cours The presumption wil not spply (rebut) their agreement expressly sates that they have no such intention -16-ACY2301 Lega Environment for Business Phrase “without prejudice” ~ ensure tha what ssid isnot legally binding. % Phyase “subject to contract” ~ ensure that whatever has been agreed is not binding until a formal contact is dave up. Ifthe parties actin ¢ manner which i inconsistent with their agreement, they may not be entitled 0 withdraw from the arcement, even thovgh their agreement i “subject o contract -& “subject to contact” must be distinguished from a ‘provisional agreement! ‘preliminary agreement ‘commonly found in property vansactions concluded at an estate agent's office & they conan the all terms ofthe transsetion agreed by the paris they ae valid binding contracts states tha formal contract will be made between the paris “on or before” a cenain future date; the Formal contact will then replace the erie contrac Both contracts are valid binding agreements. [A-G v HE Led (1987)] Lo Ching [3 Mam Sun, @ 90-year-old lady, gave all her savings to LC, the youngest of her four sons, to hianage, Part ofthe money was used 1 pay 40% ofthe purchase pric ofan sparen, (60% | sa spice by another on) Four yea ater Mn Su asked LC 0 rua er money. | “This he did, but she claimed interest sn ayguod that the money which had been invested and los should be made good; she also claimed the expenses of rearing LC asa child “®_Tewas held tha he cos of rearing a child didnot foun a basis fora compensation claim and that family arrangements made between parents and children were generally not legally binding unless it was shown that they eleaty intended to enter ino legal relations. LC had acted Ionesty an was not in breach of tras and so Mem Sun's claims fied {Awomey-Cenerat (HK) v Humpliey’s Estate (Queen's Gardens) Ld (1987) PC Balfour v Balfour (1919) 2 KB 571 ® The HK goverrment negotiated with the HK Land Co (a group whieh included HE) for an exchange wherexy the government would aoqire 83 Nats belonging o HK Land and in exchange LHL would take a Crown lease of Queen's Gardens and be granted the right to develop the sit | This exchange was agreed in principle but subject contract’. The government took possession of the 83 fats and renovated them and senior civil servants moved in. the government granted FKL licence to demolish the ol building on the Queen's Gardens site which was expressed to be “revocable al any time without notice’, KL paid the government the apreed difference in value between the 83 fats and the property, and all the necessary documents were drafted and ‘heir content aged, HKL then decided to withdrew ffom the transaction and terminated the ‘government's rit to occupy the 83 flats The govemment argued that HKL. were not ened to thd “> Iwas held thatthe negotiations, which were set aut in @ document expressed to be “subject to ‘contract’, enlll eiter party to withdraw The fact thatthe government has ected hoping thal a Dinding conse would come ino eect didnot prevent HKL. from exercising its legal right to ‘withdsaw from fe transction. The government filed to show that HKL had sctd in @ manner ‘which creted ov encourage a belie that they Would noe witha Social Agreements ‘is presumed tht sovial agreements berveen fiends & agreements between else relatives do not mount to legally binding contact. “Whilst such agement ae made wih the itention tht they willbe cared ou, it snot intended that, «court scton wil bebrovedt if they ae not, The presumption will not apply (ebuted) if ean be shown from the circumstances that they did tntend to be legally hound by thee agreement (eg. husband & wife agree to separate & they signa piece of paper which staies how they wil divide the contents of thee former home) [SE w LC (1996), [B¥B (9159). [MM 970)} [Husband promised to pay wife 30 pounds per month while the worked abroad But he did not _ay._Wife sought vo enforce the promise “$__Held Failed! No intention wo create legal relationship with the wife. Not contact ‘Marni v Mert (1970) 1 WLR 12 “© _A husband anda wife were under separation Field: The presumption thet there is no ICLR is rebetted in such a situation. The husband and wife itended io create a contract Capacity to enter into a contraet © Minors % Aperson under the age of 18 years, A minor asthe capacity to enter into contracts & to enfore= hisights against adults, but adults ae restricted in enforcing contac against minors. "There are exceptions: a contrac is enforceable against a minor i the contract between the minor & an adult is for necessary goods. Ifa minor fis to pay for necessary goods, he could be sued by the seller for he price '% Certtin contrets relating 1 the welfare of « minor seals enforce able against him: contracts of sppreticeship, employment, & education, which ten asa whole are for his benef, have been hel tobe binding on minors ‘Contract which confer some form of lasting benefit on @ minor are enforceable against him after his 18 binhday unless he expressly avoids the contact within a reasonable ime ofthat birthday (ee. share ina company) Mental disability % Aperson who at the time of making a contract is suffering fom a mental disability iiness, drugs, ‘lcabol), will be able 19 avoid his liabilities iP can show that he didnot understand what the contact was about & theater person was aware of bis disbiliy. [TSFC Led v LCM (2007)]ACY230) Legal Enviro fr Business "ese Spt ass Co L'V LC Ming OOD) HEAT a ‘TSF pw he: ons io LT los were ranged U8 and W vcdy the ney ll vento N. Liha hry of ei ines & was ang eden ase Ina! sly land o be scale of udetnig the ae and eto | documents ad ged. Te cr fin tat iid ve the etl eps orn | te oars a hat TSF ad he solcor who sk with he loans oF TSFs etl no now abou Ls ask of men apc hte ng nothing unl L's ppeans A cont wtf bn of ecm ae abi Fase Li i undsiand wt ewas Gig & We conequess BuTSF wari | broth a te Money Lenders Orians Bsa te lan agremen doth | rae of intrest chard onthe Tons 8 reuted by 818 & 30 they wel ees & 4 Cosporate bodies % Prior tothe Companies Ordinance 1997, all registred companies were required to speci their objets (the purpose or sims of the company & the transactions the company may want :o ener ino inorder to fil ts ojos. the company made a contract which was outside the scope of those objects was void ACY2201 Legal Emin or BainesACY25O1 Legal Environmer for Business Lecure3 “Teams of Contrast Quine Negotiating a cont Express Tens $lmplied Terms 4 Exemption Clauses Negotiation: Before comet, ‘Sales puts vs Represemation Sales Pus ‘% A.saloment which issimply an advensing slogan or sles jargon & is of no legal eect. ‘® Iecannot be proved w be te, but the courts will ook a the circumstances in which the statement ‘nade & the panies involved inorder fo determine whether Iisa sles put or whether it des in fact ‘have some legal effec, Representation “® Astatement of fact which induces or persuades a person to enter into @ contact IF dhe presentation ‘proves tobe untrue, i may constitute a misrepresentaion & affect the validity ofthe contract Express Tems Conditions — very imoortant terms 4 Wrranies~ minor terms + Inominte terms inermediate tens) ~ depends on the damages Conditions “© The ital or major tems, & if they are broke the innocent pary is emit repudiate or discharge the contract & to claim damages “© Although the word “condition” is oflen used to deseribe all the terms of conta, the use ofthe word ‘does not mean the ter condition in the legal sense Where a conta previde for performance a a certain date, or by a certain time, & the paris intend that tm To be a condition che phase which is commonly used to express their intention is “ime is of te essence’ © Wa term has been clsified a6 a condition, even a minor breach of it wil ll the ianocest pay to ‘ermine the contra! er sue for damages. (UE Lid v GA Lid (1999), [P VSAP (187-76) ACY230 Legal Enviroment for Business : Lid v Golden Achievement Lid (1997) AC 314 PO) ‘entered into a writen contact fo buy aa, paid a 10% deposit & agreed hat comple the sle would tae place on or Before 30 Sepemberbefore Spm, The contact provided thatthe sale would be rescinded & the deposit foreted if UE filed to comply with any of the contact terms. UE'S messenger arived witha cheque for the purchase money at 5.10pm. The seer ‘insisted is solicitor to rescind the contrat & return te chegue tothe messenger. UE asked the ci to exercise is equitable powers & o order specie performance [2 Thowas held by the Privy Council tha equity wil not intervene in circumstances where time is | expressly of the essence of a contract of sale of lnd, A seller should be able 10 know with, reasonable certainty whether he haste ight to rescind & to el to some other buyer: | | Povscarav Spiers and Pond (1875-76) LR 1 QBD 410 | ‘© Powas engaged by D 1o play the principal role ina aw opera which was scheduled to open on 28 | ‘November, P become seriously il and it was clear she could not appear onthe epening night of | the opera on 28 November. D engaged another singer to replace her By 4 December, P | recovered and was prepared to take up ber role in the opera, but was refused because D had ieady appointed replacement, P sued D for beach of contract. ‘cid: D wa entiied to terminate the contract for D's failure to alend he frst performance was @ breach of onditon going tothe root ofthe matter, This was because P's illness was of a serious ature & of uncertain duration & P was to play 2 eading role in the new opera, If D i not appoint another singer, it would have seriously priced thee ierest. eras {Minor tems whi if ken, ene he ance pay o aim damages However, te werd ania wed nary of sens, in mye ar eed a wary wl fates etn of he ent one. {> Thebechofit doesnot noun to repudtin of econ, [SAG y WTS L897), 6 875-76 Scar AG vWikman Nach Teal Sales Lid (STH) AEDS ‘WMTS exon cones forfour years wih SAG. going SHO be 1 Tio wa WHATS Iachins im Erland Acondton me eomont vie tht SAG's oeenie would it cern fm exch mechs ede SAG's pretation fo cca t 0 |__sor€ WNIT cinedto betel orgie te apeeent fr reach he odo, Tas held he pris ould ot hve end he vs aremnent 1 be «condone dle vase wuran Sani Gye U9IS79LRT GBDIB 1 ange apc sng foe sme TS wals w DV apa Thee Wa a ir cndons a] the contract, namely, P would be in London six days before the commencement of the opera for | reat ured two days bef he comrenenen ofthe opt termine the fr ref he er hPa aACY2301 Legal Environment fr Business _ “® Held The termination by D was wot justified. The term requiring P to ave six days in advance was only waranty, forthe fare to are six days before could only affect P's performance during the fast nook or frinigh, [did not go to the rot of the matter or fundamentally affect | the cont, | moni Tes in vectHac, he cours hve ket «Geet apposth 6 soomasl fem. Rate thm cling terse lier neon or vanes th cous hve consid enter fh oa ‘ich esis om each entat 4 theese of ames re the ace pary ieee om ae pvomane of te ome (le Weeanma sreudtd& be sented obs competed y dang) 4 ifn ofthe damae i mito the ioc pur my ny be ele chim dag. athe aan of eo wh has be ote [KES CO Liv RK Lid 86D) [og Ken Fi Siping Co dv Kava Risen Kad (1962) 2 08 26 [HFS etre io charter a conat ite sip) wih KKK Tr 8 mot he ofa |" Sip samed HAF HKES promised th te ship was ited in every ay for edinry exgo tev’ hat ey wuld mania brn rupee satin bol & chine, Thea was ie fr cig wer bt was eer eas fre fallow ve weeks The tip ale Jaen whet vas dseoveed ah egies wee in ad onion & ned ofa eps ”KKKC te he owners pungent Five eld hr eer he unsavory ie nore dy Cais by KS rh ened KKK terepuit theconact of hie.” Neier breach made ue perma of he const impostle Their ere endo in mages Inmplied Terms + Previous dealings beneen the parties Business efficacy % Custom Pervious Dealings betwee the Pasties “© the paces have dane busines on the same or similar terms previously, the cours will assume that, they intended the same terns to apply even though same ofthe tems were not specific “© Their previous deaiags must have been consistent nt simply ocessional contacts, eherwise they cannot be described ss 2 “course of dealing’ [AW Ltd v A Lid (1995)] ‘Always Win Lid v Awofit Lad (1995) 2 HKC 545 “® AW Lid has set iis BMW car 1o A Lid for ropa on any occasions & lavolees bad been issued to AW Lid whes the care was collected, A Lid argued that AW Lid was deemed to have noice oF ‘he exclusion clause printed onthe back of the invoice Be ACY2301 Legal Enviroment for Business [© Towas held that AW Lid did not have notice of the exclusion clause. When the invoices were received they were paced on the company’s accouns office. AW Lia's agem di not read the invoice or the terms on the back. Business Efficacy 1 the parties fil to include in their contract aterm which hey could certainly have included, the cours wl imply a term a the interest of business efficacy. + The cours will endeavour lo give meaning to vague or incomplete expressions on the bass that t more or less reflects what the parties would have expressed if they had given thought to the mater, However, although the courts will make repairs to defects in commercial contracts, it sa principle of law thatthe cours will not make new bargains forte panies The Moorcock (1889) Some situations such as Ina contract for printing banknotes thee isan impli condition that he printer will not alow the plates o goin to unauthorized hands, © na contact to provie driving instructions aterm will be implied thatthe vehicle provided will ‘be covered by insurance inthe event of an acident Ina contract o supply services, aterm tha the service supplier should cary ot the services with reasonable cre & kil wil be impli [The Mooreock(1889)) “The over of wharf agreed to provide mooring fellies fora ship called The Mooroak The ship was damaged when it hit aock at low ide % Te vas eld thatthe parties must have intended Wer conract t include a provision that the ‘mooring would have ba reasonably safe place to oor the ship. The wharf owner hed broken the implied undertaking & he was liable to pay damages tothe ship owner Custom & Trade Usage © The custom or usage of @ particular wade which is well-known, certain & reasonable in its tems may also be implied, but a custom or wade usage cannot overrie clearly writen or spoken contrat tems However, in order to rely onthe usege of a particular wade, there must be @ common understanding botween the partes. [FGCP Lid v IDE Co (1992)) “Tung Goan Co Pie Lad Jh Dong Enterprises Co (1992) 2 HKLR 225, “A contact was negotiated over the telephone and confirmed the following day by telex. The sellers offer incase the words “usual Chinese export terms’, and the offer was accepted by the bouyet The sellers confirmation concluded withthe word, “the general terms & conditions are the usual Chinese soyabean extraction tems and conditions’. A numer of ‘standard Chinese contrac’ were produced, but they were found tobe inconsistent. Tc was held that there was no common understanding between the partes & that words in the sellers offer & confirmation were void because of uncertainty aACY2301 Legal Envronmen fo Busiass Exemption Clauses Limiation Clases Exclusion Causes | Mos witen contract made in he course ofa busines, wheter formal or informa, wil contin tems ii the ‘which emp 1 exo ity ofthe business inthe event of tat the contacts broken. “& tavempts to depive he ioc party of Fis wemieiesATimilaton clause stemps to rest the avaiable ened - “¢ Biemption clases ae regarded as ir when hey are he esto egaitions Benen the pres, the paris have equal bagsning power, & ther inletions ae lew. However. in many cases exemption tlauses are imposed 3 a strnger party on a weaker one (e.g. bank). This typeof contracts usally ina standard preprined fom & offered on he basis ofaketordeavei, with no opin to negotae the tems 9 The Contol of Exanption Clauses Owinanee (CECO) provides consumess and business people roteton fom unreasonable exemption lass, +> Tobe-effeive, av ecuson clase mst say the teri tims have den incorporated int the contrat {© tama beclearand nambigoss, ‘© eam ot be conraveton oF any provisions ofthe CECO Incorporation By signature & By reasonable notice (Unsigned Contacts) & By consistent prior course of dealings Sigped Contacts ‘The terms ofa conta, including any exemption esuss, wil be binding onthe parties ite contrat is signed, The signer is presumed 1 have read & understood the significant of alle terms contained in the document “However the tems of corract which hasbeen signed will nt be binding where the signer can prove on est Fctum, th not my deed” (Le his signature was induced by aud, that the document he signed was fandamemally, diferent fom what he thowght he had signed, & that he did not act, negligently (UE v FG (1934), [CvOC & D.Co(A9SH)} ACY2301 Lega Environment or Busnes Cutis v Chemical Cleaning & Dyeing Co(951) 1KB 805 1] ~The claimant took her wedding dress to be cleaned & was asked to sign 2 note exempting the cleaners fom ibility fr damage tothe dress. She queved this, but signed it when told not to | worry a its only to protest the company if beacs or Sequins were damaged. The dress was retumed ther badly stained Fhe cause which sated thatthe company was proteced agaist Fiability for any damage was held rot to be effective as the customer had been mised about iis scope, (otherwise, it may be reasonable & valid) Unsigned Contacts © In situations where entering into a contract doesnot require or involve signing a contact, the tems, including ay exemption clause, may be contained ina cket or novice. In this situation, te partes will be bound bythe ters ofthe comact if : ° % The docuntent would be regarded by a “reasonable man’ as a contractual in nature & likely t0 contain an exemption clause = '% The person seeking to rely on the clause can show thal reasonable steps were taken to give notice ofthe clause ts the eter contacting pry & Notice ofthe exemprion clause must be piven before orate time the contract was made, An aterpt to pve noice after the controet has besn concluded will be ineffective [OwMC Ld (1949)),(TvSLP ITH) (lley v Marlborough Cour Hote! Lid (1949) 1 KB 532 “Mr & Mas Olly atived a the MC Hotel & made arangements at reception to say for one week ln ther room was a notice stating, “The proprietors will not hold themselves responsible for “atcles lost or solen unless handed tothe manggetss for safe custody’. Mis Oley closed the self looking door ofthe rom & et the Keys the reception desk. A thi party tok the Key and stolen Mrs Oley’ fur cot. “Sit was held thatthe conract was completed atthe rseption desk & no subsequent noice could fect Mrs Oley ight wo sue MC. “Thomion v Shoe Lane Paking (1971) 2 QB 163 (CA) Uesrange vF, Graisob (1934) 2 KB 394 “ [-Estrange bought a eigareie vending machine for use iv her caf. She signed a sales agreement which provided that “Any express or implied condition, statement or warranty, statutory or otherwise, not stated herein is hereby excluded’. She did not read this document and was completly unaware ofthe exclusion clause contained inthe agreement, The machine id not work propery “> Tt was held that L"Estrange was bound to pay for the machine because, by signing the agreement, she was bound by the exemption clause “E “® — Arnotice printed on the ticket dispensed from the automatic barrier atthe car park entrance stated that the proprietors would not be lable for injuries to customers |} Twas held that the exclusion clause did not form part of the contract because the contract was formed when the car driving slong the mschine atthe carpark entrance (not atthe time when the ticket was dispensed) =26-ACY20 Legal Environ for Business Previous Course of Dealirgs 4 An exemption clausemay be binding even thovgh it has not bee inluded in the contact a question if 4 previous couse of dealings between the partcs on the basis of such tenms can be established However this argument is more reeily accepted in commercial contracts than consumer transactions. (Kendeall v Lillicn (1969) the parties had contracted 100 times in the previous thre yeas on consistent tems) eco + Most ofthe provisens of the CECO apply to exemption clauses which try to exempt lables for ‘ings done inthe course ofa business & from occupying premises used for business purposes. This is defined by the CECO as busines lability 4 The term “business is not actually defined but is ssid to include @ profession & the activites of goverment bodies. Exemption clauses imposed by a trader or a banker in the course of ‘his business are herefoeeconolled bythe CECO. Certain contacts arehowever not within the scope of some provisions inthe CECO (eg contacts of insurance; conacs relating to interests in lad & to intellectual property ~ patens, vademarks ‘copyrighs: contrat forthe cretion & transfer of shares & debentures; & various contacts concerning shipping), + Exemption clauses contained in contracs can be divided ino tw categories % Clauses which exempt ibility for negligence. Clauses which exempt ibility for breach of contact. (Clauses which Exempt Lubility for Nepigence -® A-contac tenn whics excludes bil cffect whatsoever of ae CECO. -& contrac term whit excludes liability for any other loss resulting fom nepligence is effective only if the erm is reasonable, for death or personal injuries resulting from nealgence is of no (Causes which Exempt Liability for Breach of Contract © With respect sbi for breach of contract the provisions vary depending upon the subject-matter of the const, Contacts with Customers ~The ordnance defines a consumer in terms ofa party to a contact who eal asa consumer”. A party deals as consumer i. He oes not mabe the contract inthe course ofa business % Theosber pany des make the contrat inthe curse oF a business % Inthe case ofa contrac: concerning goods, the goods are of a type ordinarily supplied for private tse oF consumption. ‘ACY2301 Legal avirnmer for Business ‘The ordinance requires the person claiming tht a party docs not “deal a a consumer’ to prove that he oes not, oSACY2301 Legal Envionmert for Business Lecce 4 Vititing Factors (avaid Contacts) Ouline ee eee Misrepreseatation Mistake Duress Undue Inflvence Megaity Teams & consequences + * Is contact is dele void, then in fact the is no contact. Neither party eas sue to enforce the contac or elaim dan ages for beach of contract. In addition, no righ of ownership ean pass & any nods whic have chingd hands ean be recovered, Ha conzact is woidable, itis valid & enforceable & right of ownership may pass. However, the fanocent party the pty which she viet ofthe invalidity) has the ight to avoid the contract ihe so choose, But prior his exercising his right the ownership of property has passed to thitd party he wal nt be able to ecaver that property. 1 contact vodasle & the innocent pty’ chooses otto avoid the contac, e is sull ened to lim damages Misrepresenaton * 5 S A*mistepresenttin” is a fle statement of fact made by ene party to the other party of the contract, before o atthe time «PU contract, whic induces the other pany entering into the contact (Objective test: is applied to dotermine whether the conduct in question is a misrepresentation & an ‘ietion to induce the oer party to believe n a certain tte of fst isnot required [GPP Lid v Led (20019) ‘ACY201 Lege Eionmen for Busines ‘© Arepresetation mist also be one of facts & not promises. However what a an proposes odoin tbe future can hea repredenition of his present eno Tis future conduc, in sone eases, even though the repesentor made a sutement of opinion, he could be lable for negligent misrepresentation if theve is duty to exercise reasonable care & skill [gv W (1927), [EP Lav M (1976)) Bisset v Wikinson (1929) AC 177 “® Dwanted to sell some land That land hed never been used fr sheep farming, but P wanted to buy land for sheep farming, He asked D how many sep the lan could hold. D said that it ould carry 2,000 sheep, Relying on this statement, P bought the land. His sttement tuned out tobe wntrve, and P wanted o rescind the contract oa te ground of misepresentation, % Held: D's stalement that the farm would carry 2000 sheep was an expression af opinion “Brranéous opinion, though it might have been relied upon and induced the contac, gave n0 title ished ofrelef unless aud was est sso Peirleum Lid Mardon (1976) QB 807 ‘Groen Park Properties Ltd v Dork Ltd (001) 1 HKLRD 139 (CA) A cna purchase, 1, was ano esp res withFonage ov Nai Roam The wee shops and porn Aas under enovaon. Awad yard behind pera Awa hove TOL Aces the yd cou ony be anes tough poion Lasso shown» xancy plan which sugeste hat he yard med art of pron A Te slr did ot ym heya It was held that there was a misrepresentation by conduct The overall impression conveyed during the inspestion was the portion A included the yar. It was not necessary to demonstrate ny subjective intent onthe part of he seller when making the presenti, (Up Tare is satemet oF fact, 2)The representation induced the represent 1o enter into the contact, (Gye representations false ‘There is statement of Fa + ‘A statement of fact mist be distinguished fom a <2 rent which is merely om opinion. “© Esso represented (0 D, a prospective ieani of @ pean filing Station which was in the process of| ‘onstruction, thatthe throughput of pool at the staion wa likely to each 200,000 gallons per ‘year However the local authority refused planning permision forthe pevol pumps to font on ‘the main street, Insiead, the station had tobe bul ack to from with the forecourt atthe back of | the station and the only acess tothe pevol pumps being from a side steet. Esso, rough their cesperienced official, assured D that this change would not affect the projected throughout of| ‘pewol, In fat, sa result ofthe change, the throughput only reached 78,000 gallos pe yest, D incurred considerable losses in operating the station and he eventually reached the position where he could no longer pay Esso fr his petrol. Esso consequently sought to repossess the station and to recover the money owed 1 them by D._ D countclaimed for damages fr breach of contrat ‘& for negligent misrpresentaton. Esso argued tha their lstement a5 the throughput of pete! of “SHeld Esso had special knowledge and skill in the forecasting of the throughput of petrol & they were held to represent that they had made the forcast with "reasonable care & skill”. On the ‘act it was held that they had not exercised reasonable care & skill and they were therefore lable 1 Din damages ‘The represenation induced the representce to enter into the conract 4 Theres casual ink (case & effet) berween the misreresentation & he contrac, {Rv H (1881), [LWMK v AKFI Ld 2001) =30-ACY2301 Legal Envionnert for Business ACY Legs Environment oe Business ‘Rejgeave v Hurd (1821) 20 Ch DL “Palaver, waned fo sll his house and ake parner info his legal practice. He put an ad For this purpose, 0 become interested in the deal, Inthe couse of negotiation, P told D tht is bosiness was brnging in (()300 19 400 a year P produced books and papers to prove that income, D curority looked a ther, but did aa examin them & agreed 0 purchase the House & take a share in he business for 1,600. Subsequently, D found thatthe practice was utely ‘worthless. He-would have known it hefore making the contract had he examined the papers and ocuments. D fused to complete the contract & P brought sn action for specific performance 1D argued that te was induced to enter info the contact by P'S misrpresenation & claimed rescission of thecontact, > Held; “Ifa may was induced to enter into @ contraci by a false representation, it was not a ficient answer to hin fo sy, Ifyou have wsed due diligence, you would have found eu that this statement was untrue. You have the means affocded of discovering is falsity & didnot choose to val yourself ofthe! induced to make the contract by the fle statement of P Lee Wai Man Keren HK Forex Investment Lud DCI 8766/2001 was not ented to specific performance of the contract because D was ‘one Ms Muk, DY employee. Pincured a total ding loss of about HKS340,00 in the course of six moms, She then discovered that Ms Muk did not hol the appropriate licence issued by the Scourtes Fares Commission t enable her to work for D. She argued that D had made @ tmisrpresentation by is conduct, If was guilty of holding out Ms Muk as its licensed representa “ Pentered ito contract with D to open an account to rade in ferean exchange. P waced with “Held: P was not ndaced into the cotract by D's misrepresentaton. P had no ide tat Ms Mak was holding a ience or not when se entered into the contact with D. tn fact, she did na know Me Mule neededa ince. Her claim fr mistepresentation would fl Held: This statement, although literally tue, erated a false impression on the parchaser. The | vendor's nondisclosure of the fact that the tenants were leaving amounted toa snisegresenation (1936) Ch 575 region wih he pli the defendant i medical patie was wrth 2000 per aman. Howeve, te defendant had become he Bsines had bee, eed Ssbstanily. The plain entered ino conrad wih he defendant o by is rae fo trons ate, biving ht the defends rc was tl wor $2000 per ani [Held The defen shoul ave nrmed the pal wen the eonot was Hold, at Wis stern (i his patie was worth $2.80 per enna) was o longer te, The Gefen was ible for misrepesenaton “Three types of misepresetation * * + Innocent mistepresestation ‘Negligent mistepresentation Fraudulent msrepresentation Innocent Misepresentation + ‘We peo mang meetin basses rounds aleve hat yas when vate anenent ed no, el belle fer ncn smisrepresentation. ae ‘We be ocean i th cour by aga ion or not wil be decided bythe cour, Aktematvely, jon (OC Lid v W (1957), (DBP Lid v HSM Led (1965)) (Oscar Chess Ld v Williams (1957) 1 WLR 370 “The representation i fuse Saying ying at all does got constiute a representation unless @ person is under a duty to disclose setain information & he fails to do_so, However, a person who is_silent_may make ation by his conduet (e.g, nod your head) or the following citcumstaces: ‘Wa Gorrac uberimac fide (utmost good faith ~ such as insurance contrast) "Saying someting which is tue bu omiting to say something whish also very relevant i ales tal’ & may also constitute a misrepresentation [D v H (1866) % Where the rigicl statement was nue.when made but was subsequently become uniue wos) Dinmock v Halle (1866) 2 Ch 21 © Das a used ear deer P wanted to buy a car fom D. D showed Ps agent -® Powas used car dealer. D wanted to sl fo Phis Moms car for @)290. D described the car asa 1948 model, 1 was later discovered by P that the ca was manufactured in 1939 & on that bass, the price oft should have been (175, therefore, claimed the diference, (QTTS, as damages. Held: Iwas an ionocent mistepresetation made by D. P could not discover the truth at fist ‘oenuse the 1939 model looked lie the 1948 model But D did not dshonestly missate the age of the car He had bought a secondhand car. The logbook he found in the ear did not correctly. state thatthe car was 21939 model he had no special knowledge about cas ‘Bentley Productions Lid v Harold Smith Motors Lté(1965) 1 WLR 623, Boley car ‘promising thatthe car just done 20,000 miles sine being fited with a reconditioned motor ‘Subsequently P bought the ear, bu iscovered that's statement was fe. “The purchaser in order to make up his mind whether or not to buy a block of land, asked the ‘vendor ihe firms upon it were It, The vendor tld the purchase ic were, bu the tue facts ete that dhe nants had already given notice to terminate the lease sale F Held: The epresentor(D) sa ear desler who was ina position to Know the history ofthe car & vas supposed 1 have special skills & knowledge in such matters. He didnot have reasonable szounds to believe the stated mileage ofthe er (negligent)ACY2308 Lega Environment for Businss Negligent Misepresenation “& Where the person manga mise cin is no reste grounds for evng hat what ea i a, wl be hile for ie stepson (eg spec laonship has a dry of ae — soir sera) 4 Iismucheaerto cbs a NM than ¢ FM, The ist tha negligence dos not regi proving incton to desing. & the Sion i at the burden of promising hatte Semen 8 negligent risgesetton seer 4} The bude of pidge case usually is wih he oss pry wha as fed a oss However inte cas of m alleged NM, th prion who ade he statements reid to dapeone is eaigsnce “The effect of revesing the burden of proot shat the innocent pry who bas ere a os i more likely 0 besser 4 The jue pty may rescind he contrat & case of FM th objet of awarding damages ist peste the ed party oral the esse sues, so farasmeney cand so. HB & CoLid vt & PLid (196) [YC Lav LWC (000) (ele Syme Cov Heer & Parmer Li (196) AC 468 1 HD waa fim oFedveriing gens & Exsipower Lig (EL) oe of her cons Before placa | | sdverising contacts on EL' teal, HB enquired abou L's crediworbinss, HB asked thet om bank to oitn infomation fom ELs Bank, HA. HAP gave a writen reference which | stated th EL as espectbly consid company considered p08 fo is dn busines | engagements H&P also sted tht th reference was given without responsiblity on the pa of the bank ris cls. Reig on the story rey, HB exceed advertising coma or L but they fst (91,00 wen EL wantin guision. HB sued HA fr the loss hy had sufeed 8 ef the epg preparation of the refrense. was eld it HP were rte hy te expo clause But Hay Be abet hee oF reasmableess when is case arose. li Coneens (HKG) Lid v Lee Wai Chen O00) HCA TDTIT 1 -Hviwed an apne accompanied by S60 ese agents and was eto bsiove by the agen Ta) the inter ajurefotage wis 1,200 & the garden 00, H viewed a second time when A he | ‘eo the om (Lv pret, for pan bt id ot inform the esis ofthe te | sire H arecdt prot he part & sng aProvisonal Sale & Purchase Agreement & pai peiminry deposit o $200,000. balcony & sis wel had hee eal fled in & the legal potion othe apart ws ony 750 squire fee. Helmet to be ened rescind the ssleapeement Fase hat vepcsenation wo size was ute & made te agents we atiorg & cn bealf of. H hd eed onthe eesentaton & hn established that L& the as sible fornelgat misepesenation LA had copy ofthe foe pan ro which ey Homeve FM vas sucsfily died a deiion lining othe sl of share IPM is prove, the injured pay may rescind the contac & may also se for damages. In these circumstances, the oj of evarding damages to compet the njoed pry for al the foss he suffers, so far as money can do so. (D v P (1889)], [PFE Lid v BT Co Ltd & Ors (1990)] [Dery v Peck (185) 14 App Cas 537 [The directors of @ company which operated harse-drawn wams had authority to operate stean-poweed tans, provided the company obied consent fiom the government. The iretorsWlevd thatthe consent was merely femal and iss a prospects ining the Pblc to tuy shes inte company & sisting ht te company had “he ight to we tm over. Dic he stemen & bought shesin he company. The goverment reise 9 | __ consent tothe we of ea and the company was woe op. twas ld tate diets hoes believed thei sntemet waste & thao the sec | snot Halen Polar ar East Lv Bal Tins COL Or (9H) 2URLR AAT PFE, dsibursof Poli produ, need ino aris of contac with BTC a Cia wade, fer he soply offi, reying on BC's conning resentation tht he lm woud Be sold & used ony inthe PRC & would nt be exported or reexpoes fo my cout ose te PRC “he fim was sapped by PPE ata spec dcomied pice, BTC reexpored 96 % of thir pureases vite PRC & Hong Kongo Nort Ameren & Eaope “Fas held that BTC hd devised a deliberate scene to buy fn wa Tow pice to weep fre lb fr dle mitepeseriation PFE ez ied to econ of the corats { daoges Daas were based upon the ric at which the film could hve bee on Hong Kong est he price BTC ad pai Rescission as remedy ‘© Restoring the innocent party tothe poston asi no contract was ever made. & The remedy of rescission may be los if (1) The represent lees to affirm (10 continue with) the contrat, (2) Where an inordinate period of time has lapsed, (3) The paris cannot be pat Back into the postion they were in before the contract was made. (4) The rights of thied panies have intervened [Lv 16 (1950)} eeesACY2301 Lega Gvironmen for Business ACY2301 Leg Envionmen fr Business [Let Intemational Galleries (1950) 2 KB 86 (Couturier v Haste (1856) 1S6 ER 3 “€ The repesentee was told bythe repretenior Wat the painting he was buying was painted by the reat artist Constable. Five years later, the represenee discovered thatthe painting was ot the work ofthat gret aris Sh coat wat made tthe sO Wich pats ae eb Dora ap toad ferie UK Untnow ote pees com hd rented daring ie ge en ade the nearest port & sold in order to prevent total loss. - “ETlekd. Given that ive years had passed singe the making ofthe enact, the represenice could not rescind the contact % Tras eld tha the contest was void There was np sale therefore eve would be no sity for the price af the goods Mistake © Acontact may be ved on the ground of mistake & Throe types of mistake % Common mistae % Mutual mistake % Unilateral mistake Common Mistake + Both parties make th same mistake. include % Common mistteas othe existence of subject mater % Comion mistake as tothe ownership ofthe subject mater % Common mistake as othe quality ofthe subject matter ‘Common mistake a tothe existence of subject matter 4 Unleknown to both parties, the subjet martad ceased to exis, the contract also void. ~ Eg Abought a insrance fiom B onthe life of C, but unknown to both parties, C was already dead at the time the contract as made ~ A and B have made 8 common mistake) (LCK v Lil Led (20m), (Cv (1856)] ‘Leung Chor Kong v Liberty Inematonal surance Li 2002) 1 HERD 383 (D0) “Purchased a damaged vehicle From LIT wich he intended to repair & resell. LI sated the cars chassis number in lees authorizing Pio fly inspect & later tow away the car Pnotced that the chassis nunber had been altered but proceeded with the repairs. ‘The Transport Department refuse to recerify the car for road use beease the alteration to the chasis number (sn indication tat the fist registration tex hod ot besa paid). P could not sell the car & sued LI for the purchase price, the cost of repais & los of profit ‘Common mistake 3510 the ownership ofthe subject mater Eg, Awants to buy a secondshandod car fom B, bu found that the car isthe one A fost lat month, ‘Te contract wil be void because A cannot buy acar which belongs to him {C v P (1867), ‘Cooper v Phibs (1867) LR 2 HL 149) Cough the lease of fiery fom PW tured out hat was the ave owner ofthe fishery “Held: Both partis fad been working under a mistake thatthe Gshery belonged oP, while it had in fact always belonged to C__The contact is void formistake. Common mise ato he unity of he sujet maser S Amiaake 16 e uit ef the sbjet mate does ede he conte oi une the mistake is sto some amen quay of tng. G 0950) ef Intemational Galeries (1950) 2 KO 86 “Salisbay Catal” by Constable wie win Let ugh Re was ang i am ‘memati Galleries 1G). 1Gsaiékwas Cone. Leaf oid (8S. yeas ater when he tito auction i, Leaf was tld that i vasa «Constable. He elained rescsion of the cont gan 1,0 st bask, [2 Heid There was «mistake au te quay of ieee mae, sae Bak pari bale | “epicure te a Consbl, tt iste as mone eset or inden But mh 8 “stake does ot oid he contac here war no ital bo he abet mater of he fale fiwas a spa pcne,“Slitury Cae. The partis wee agreed inthe same temson te sane sj me& hat ent mae a ptt Mutual Mistake + No“mesting of minds — when one pany intends o contact with regard io one thing & the other party vith regard to something else. (5 WH (1913), Rv W (1868)] Er was bel tha in Hong Kong the chasis number the primary Tauiicaion of a vehicle and | applying C v H.that both parties were mistaken as to the identity of the subject marter. Also, that | ‘he cans oiSbecae LI a sl snot vere it thine vice ck nt xs ot the time of the contract, P was ordered to return the ear to LII. P could recover the purchase | price om Lit tnt te cost of esos os of po, | ‘Scriven Bros v Hindley (1913) 3 KB 564 “% D bid at an auction fortwo lots oF goods D's manager believed both the lots to be hemp. In fact one ofthe lots was hemp but the other Was tox, Tow was a different commodity & of very Tine value D's mistake was caused because bot the lots had the seme shipping mark “SL and [D's manager had been shown bales oF hemp as samples ofthe “SL”. The auctioneer knew the tne facts, but he was not concerned because he thought that D was merely making a mistake as t0 the value ofthe goods. D refs to take the tw & claimed that there was no contract as tothe =36-ACY201 Lops Saironmen for Business ales v Wichetbaus (1864) | The dfn ed 0 By 135 als of Surat aon ave ex Peres om Bombay.” (Held: There wat no binding contact between the partes asthe defendant meant one ship & the sale of tow: ] ACY2S0! Lega Environment er Busnes [Philips v Brooks Led (1919) 2 KB 243 “S Hila: P was sling one lot of hemp & one fot of low. D's manager thought he was buying (wo lots oftemp, Therefore thee was no meeting of minds tall. No cont. appeared that te ship mentioned in the agreement was intended by the defendants to be the Peerless sshich sailed from Bombay in October, whereas the plain offered 125 bales of Surat __ cotton fom attr ship called Peerless which sailed fom Bombay in December pi another Unilateral Misoke ‘One pry ees oie coat under a mistake, wile he oe party knows the facts Mistake so sent: wen A const with B, believing hin tbe C. There are 299 stustins: % Contracts madebyconespondence % Contracts made fee face Contacts made by comespondence e General Rule: wherea contzact is made by correspondence, fenders the contact void [Cv L(1876)) a misake ast identity f one ofthe parties [2 Nor, a rogue, went into Ps jewellery shop He pretended o be Sir Geoge Bullgh who was a rich & famous person, Pslé him a damon rng, Non made the payment by cheque which ‘ys forged by him. He ten paeed the rog wih D for @)350. Dad 0 nowledge of Not’ fraud. Nor disppeved& his cheque was dishonored, P sued D forthe retunof he ing of, temas, fr is vale Held; (1) P intended to contract with the person prevent before him & there was no mistake a5 to ‘he person with whom he contragied, (2) D had good tide to the sing The contract berween ‘North & P was valid" when made. The contact passed a good tile in the ring 1o North, ‘Therefore, North passed @ good tile to D when he pavned the ring to them. D's title could not be challenged because it had acquired the ring bone ide without the notice of North's fraud & for ‘valuable consideration. Lens v Averay 1971) 108 198 “Lewis sold his ear to a man who claimed to be Rihard Gresve, a popular television star The rman paid by cheque, providing @ lm studio pass as proof of his identity. He sold the ear to ‘Avery. The cheque had been taken fom a stolen cheque Book & was later dishonoured. Lewis sued Avery to ecover the car, forthe tor of couversion. Tras beld that Lewis intended to del wih the marin front of him despite his randuleat claim to bbe Richard Greene, The contract between L & che man was not Void for mistake but was oidable for fraud. Since Lewis had not avoided the contact atthe ime the man sold the car to ‘ney v Lindsay (1876) 1 QD 348 % LACo, a linen manwfoczurer, received an order fora Taige numberof linen handkerchieis from Blenkarn, who signed his name in such s way that it looked like “Blenkiton & Co’, 2 well-known respectable fim, L&Co dispatched the goods on credit to Blenkar, wh resold 250 dozen to CCundy, Bleniam id not pay for the handkerchiefs, L&Co sued Cundy to recover the handkerchiefs, ic, fr the tort of conversion. and Blenkarm was void for miftake L&Co mended to deal with Bknkiron & Co, not Blenkam. Cyndy was lable fo return the handkerchiefs to L&Co because a right oF ownership had passed 10 them a Tewas held darth contact between L ‘Contacts made fae to face * ‘General Rule: when te parties see one another, thee cannot be any misake a oem ofthe person ‘wih whom they ined todo business. The contact, therefore, ‘But stil ea sve for Faud mistepresenaton— voigabe) ‘A bona fide purtiaser ~ one wi at no knowledge ofthe fraud or mistepresenaton for valuable consideration The quer can only wace back the goods before tt (Pv LW (919), vA 972)) 0 vd ichas passed toa bona fide purchaser ae ‘Avery. Avery aoguited good right of awmership& was nt lable to retur the car to Lewis. Documents signed by mistake * ‘As a general culg, person who signs a document is assumed to have read, understood, & agreed to its comtéat. However, in Timited circumstances 4 person may be abe o plead non est fctum (that isnot ry deed’. this context, the word “deed” is used to ean wansaction, & the plea may be made i ‘spect of ny document “The mistaken pasty must prove that % (phis signature was induced by fraud, % (@)ihe document he signed vas fundamentally diffixent fom that thought tobe signed & % G)he did not act negligently te person signing isiliterate, his inability to read will ot be regarded as negligent. Cleary if parson signs a dosent witout eve lansing ati, be wl be neligent TSP (1986)) o38-‘ACY2S0L Leg Envionmen or Bsns [i ters 94) ees nee [@ DAC eared ot coin baling wank Tor R&S Ran acount or (46, Res pad (250 ACY230 Lega Environer for Business ‘Saunders w Anglia Building Society (1970) HL % Gwas a]8-yearold widow. She was visied hy hernephaw PandbyL. La document which he said was 2 deed of gift oFher house to PG had broken her glasses & could | not read without them & so signed the document without reading it, The document as in ft | an assignment, ie, 9 transfer, of ber lease tL, The ABS lent L (32,000 on the stength ofthe | eed, G brows sm action aginst L_& ABS, claiming tht Ue deed was voi “Fe was field that G's plea oF non es fetum mus Fal. Although ber signature had becn induced] by oud, the dawment she signed was-not fundamentally ferent from tat shich she thought she had signed. In addition, G had aot taken the trouble to read the document, se a aot _veresed reasomble care, & ad heen negligent. ung Pakewan v Teng Sav-pig (1986) % Cheng. wo ws iterate & could not speak Cantonese, owned a at & was persuaded by Tong to give him te ile deeds & to sign a power of attorney. Cheung thought she was signing a guarantee for dheretum ofthe ile deeds. Tong then assigned. ie transfered, the fat to X. Duress Teas held ta, being Mirae, wae not negligent of Cheong o be deceived & te have singed the power of aturney, Both the power ofaltomey & the assignment were void ‘When a person is threatened or subjected to violence & forced imo frming a contract, his fami is subjected to sich abuse, the court may hold thatthe contac is voiableat common law on the rounds of duress [Anncessary clement of duress is fear~ a genuine & reasonable fearon the party ofthe ici, the degree of compulsion 80 grea ast otaly deprive him of any practical choice, the contract ean bbe avoided (B vA (1975)] Barton v Armsitong (1975) bout, despite demands, didnot pay any more. Rees then complained about the wor that had been done & offered (300 in settlement, stressing that was all that would be paid. DAC acceped the (500 because without it dsr fir would have become insolvent %Thwas held that unfair pressure had Been put on DEC to accept the lesser sum, Rees had not acted fail, & consequently could not rly on the cotrine of promissory estoppel, D&C ere riled ose forthe fll amount ofthe deb. Pan On & Ors v Lau Yiu Long & Anor (1979) HKLR 225 (PC) PO is my were te Sarde of ompan whid oven Wing On Bung Thy] eed sel al of ei sha o FCI. a company cvmed by Lav his be. —Te pret {S10 smo waste pd ne for of hes m PIC a dened vale of 2.50, Under this apument he mala agement PO aed a ey wold et 60% of i shres in FCIC or ne year fom he dat of he apeenet i. 30 Ap 197, nor to have sme proc sgn alin sharpie, & in foun for he 6% recon Lav agreed — he sry opermen 10 uy 60% of shes alloted oO a $2.0 one yea ater 4 PO mbseucaty refed o complete main arene cue they wre tii wise bay apeanen Last aed gure: te ve of 60% of PO shares weld 2.0 May 19748 hat wold inet 20 if cs ice was es on at 4 On | May 19% he ste pce was 36 cents & PO camed almost $35 milion under the indo “Tras eld that these ceumstances didnot amount t economic duress. Lau had entered ino the Indemnity voluntarily, he considered the mater thooughly & formed the opinion that the risk of | vn the indemnity was move apparent han eat —that s, thee was commercial pressure but no coercion, the indemnity was valid & Lau was lable pay the diference inthe pice. Ache former airman of a company, dueatened Baron the managing director, with death i the company di no purchase his shares & pay him a large sim of money. Baron, acing on behal of the company, carried out the agrecment, Baron subsequently sought » declaration that the Undue intivence % ‘A contrat made under undue infuence is voidable sgreement as nade under duress + Undue infence arses wien the parties toa contact have unequal bargaining power. was eld tht he contract was voidable Yor dures. 4 The stronger pany willbe able io dominate the woaker party & may insist onthe inclusion of tems hich are very unf, Beonomie duress 4 Such pressure would not have amounted to duress ~ because there was no element of violence t0 the I rece years, the nuts recognized economic duress asa factor which rendered a contract voidable person involved ‘To avoid a contact 1 this basis the plait must show tht: Involve: (1) Presumed undue influence, (2) Actual undue nfluence, (3) Rebuting the under influence Pressure was one ofthe reasons that induced the contrac & % The pressure was such that st was beyond what would be accepted as a reasonable commercial practi. (D & CB v R (1966)], [POR OVLYL & A 779]} =. Presumed unde inflacnce + ‘Undue influence is presumed when a contracts made batween the following parties % Doctor & patient, % Solicitor & cient % Parent & child ~40-ACY2301 Legal Environment for Business % Religious leader folower >In each of hese casts, if the weaker party subsequently challenges the validity of the contact, the stronger party wil have to prove that independent advice was given toe the weaker party. oenise the ‘contract wil beset a, [should be noted tha the relationship of husband & wif is no, without more, one of undue influence © According to MeKrick 2011), there appear tobe 3 elements (or stages) of PUI (1) Trust & confidence placed on D (2) Transaction calls for explanation (manifest disadvantage requirement) @)__Disatempeo rebut the inference of UL ‘Actual undue intluence & Where there is no presumption of undue influence, the weaker party wil have to prove that he hes tered ino contri whilst being unduly The defendant had te capacity to tluence the plain © Some inluence was infact exerted % Theinuence ws an undoe influence and % Theexereise oF mdue inluence resulted in te pl However, the cours have subsequently sessed that 2 banker-cusiomer relationship does not necessarily give rise undue influence, The customer wil have to show that 2 eatonship of trust & confidence exits between them & that he telied on the advice ofthe banker. I'he banker-evstomer telalionship is ne itis difficl to show such a relationship, influenced The prove suchas: if entering into the contact Reburting the undue instunce % Une influence can 3 rebutted by showing that te plain. % Exercised fre independent wil or % _Knewall the fads & could not be misled bythe defendant's conduct and {Had received conpetet & independent advice [LSY v BOC LT (2004)) ‘Li Sau Ying v Bank ef China (Hong Kong) Ltd (2004) 7 HKCFAR 579. “Li became frienls with V in 1992 & owed her money. Li entered into a series of montgages & remortgages as advised by Y & in 1996 granted a mortgage over ber Mat othe bank a scuity to ‘he bank for theindebedness of a company (S). $ was controlled by X, business asociate of Y. Lid no interes in S. The 1996 meonigage vas signed athe Bank's sliitors where the salient terms weteexplined to Li, The moriaage repayments were not made & the bank sold the a “F The Cour of Final Appeal eld that Li & Y's relationship id nos Tall within tbe eaegoe undue influence is presumed & on the evidence Y had not unconstionably abused the ist & ‘confidence Li fad in him, The Bank had also taken reasonable steps to satisfy itself that Li understood the inplisations ofthe morgage ‘where legality & Acontat is illepa iit is catrazyto a rule of common law oF a satwory prowision, male ACY2301 Legal Environment for Business “A contrac is contrary to public policy if i fills within one of the iavaldating grounds as being “injurious to publi wel 4 Acontract may be egal for two reasons %tiseorrary tothe law to form sucha conract (eg, steal contract) One of bth ofthe parties intend to contravene the la in performing the contract. (eg. Aire are 1 B, Buse to smgaing) ‘includes: (1) Contact illegal at common law, (2) Contact illegal by statute, (3) Contract contrary ot public policy, (@)Contrats in restraint of wade Contract iegal at common law Contacts to commit a crime or tor (civil wong) Contracts that ae sexually immoral % Conirats to comp pubic life (eg bribe) 4 Contacs of trading with an enemy in wartime 4 Conrses to ‘Stee prosecution’or which ae prejudicial tothe administration of justice + Void unless in performing the contract someone contravene the law Contact ilegal by statute 4% Where an ordinance declares a certain activity to be an offence or to be prohibited, But such ‘ordinances donot always make clear the consequences ofillegality, ‘Contract cantar public policy ® Hfaconiac iavolue conduct whichis mo actually egal bu is undesirable © Conaess contrary pubic poicyat common law inlode: % Contacts 10 oust the jurisdiction of the cours ~ 8 contact states thatthe cours have not jurisdiction over tht contact. "% Contacts Prejudicial to the Staus of Mariage Contacts in restraint of ade 4 Contracis which restits the future ben (freedom) of a person to carry on his business, wade, oF profession in any way he chooses. common example: employment) Are contary to public policy & void unless the restraint is shown tobe reasonable, not only between the parties to the contract but aso inthe community. + The cout wil consider the feof particular ease before desing if he restraint is unreasonable with regards 1 rea, duration, or he trades it forbids 4 The resrsnt must not be wider than is reasonable necessary to protest the parties interest, [UM Lav A 2010)) 42ACY230 Lega Evironment for Business a - Huramingbird Music Lid v Acconci 2010) | HELD 5&7 “The judge considered the agreements desc Two brother, J & D, a singing Jsong writing duo known as “Soler entered ito an oral) agreement appointing HM as their manager. They singed 2 fomal agreement atthe end of 2004 ‘ala time when both parties were novices in the music industry & a second agreement in 2006 | thereby commiting them to work fogether ual 2010, The agreements restricted G & D ftom | working with other managers & gave copyright in their music to HM. Their relationship etricated & in 2007 G & D decided to end the relationship & argued thatthe agreements smnountd to an nla retain of tad ng ti Tit ova ot cer eR having equality of bargeining power The second agreement was also justified by HM as | reflecting a rope pctn oft lepine comme incre. The g's canclson was tht pele agement was in resin of wae. The Cou of Appeal upheld the ude’ decison {L___that neither agreement was in resent of wade. The Court of Appeal upheld the judge's decision. | a ACY2301 Lega Emoronment or sins1 Legal Environ fr Business Lecre 5 Discharge of a Comtact Outing By perfomance By agreement not operform By acceptance of beach By frustration Introduction “& A-contac is discharged (comes to an end) hen no frter rights and obligations exist unde it 4 contract may be discharged by: (I) performance 2) agreement; (3) Sustration; (4) breach Discharge by Performance (General re) + When both pate have fulfilled their cbligations under te contract, its dscharged, only one par Rly performs his obligations but the other does not, aly the pany’ who has fully performed his obliations is discharged. Also, this party has the sight of action against the ‘non-performing pvt for any Loss oF injury caused to him due to the non-performance ifthe contact isan “entire conract, precise and exact performance is required and no clam can be sade for partial performance [C v P (1795) ‘Cuter v Powell (1755) 101 ER 575, ACY2301 Legal Environment for Business ‘Acceptance of paral performance + Ifone ofthe partes ly partly caves out his side of he cong, bu the ther party, exercising 2 emuine choice, ficely and willingly acceps the relovnt goods of services the court wll imply & promise anda new contract to pay for what he has received -& The ten used to desenibe a claim for the work done is quantum mei, as muchas he each Substant If. contact is substantially performed, the pary wo did not commit the breach, (le. the innocent ary, cansot treat himself as diseharpe from his obligation to pay), “The party who committed the breach isentiled to recover the contact priceless an allowance forthe Aiference berween the substantial performance and the performance required to mee the contractual promises (ie. the innocent pany will have a reduction for any loss he suffers as a result ofthe ‘incomplete performance) The doctrine of substantial performance will only apply ithe cost of remedying the defes is relatively small (H » 10952) Hoening v Isaacs (1952) 2 All ER 176 a performance [Texas at interior decorstor and furniture design, agreed to decorate Hoenig’s Oat and fa | bookcase and wardrobe far £750. On completion of the work, Hoenig paid £400, but he complained about the faulty workmanship and reise to pay the balance of £350, Tt was held that the coneaat had been substantially performed, (sacs was enliled to the culstanding £350 less the cos of remedying the defects, which was estimated a £5, “Calter agreed serve on a ship salling across the Adantc Osvan fom Jamaica to Liverpool. He vaso be paid £30 on ativan Liverpool, C died at sea “Fe was field sha is widow could not recover anything forthe work he had done befor he died ‘Cuer's contact was an entre contac: and he was bound to complete the voyage before he was “Expositions to the general rule (1) Di Substanial performance, (4) Prevention of performance Divisible Comace 4 Ha contract is divisible (.e. te promises canbe split into stages or pars), payment maybe claimed for ‘ach completed stag> (eg delivery of goods by instllmenveanstructon werk) If évisibiity isnot an express tem, there isa presumption against a contract being divisible. The ary wishing to recover payment for performing only & part ofthe contractual promises will have (0 row thal civisibiliy was intended whe the contact was made + A contract which provides for payment by installments is evidence that the parties intended to create & “divisible contract. nas Prevention of performance + Aparty, who is prevented ftom carrying out is promise bythe otber ary, coud either % Claim damages for breach of contract or Bring an ation to ecaver peyment forthe work hehas done, on the basis of quantum meruit (Pv cass) - Plane v Colburn (1831) 172 R876 “The piv (P)agesd 1o write a book on costamean armour which was to eppear in serial form in the defendant's (D) periodical. P was tbe paid 100 on completion. After Phad done some esearch, and written some of the book, but before he had completed i, D stopped publishing the periodical Held: te plain had been wrongly prevented ffom peforming the conc, and he was nttled to quantum merit Discharge by Agreement % Bilateral discharge Substitution Unilateral discharge a 46ACY2301 Legs Environ fr Business Bilateral discharge “© Bath parties have net performed their ligation and agree to abandon thar oxginal contac. ~The now agreement mast have al the essential elements for a valid contaet 4 The mutual abandonment constitutes the consideration forthe discharge ofthe contest, Subssition -€ Where the parties wish co continue with a contractual eelatonship but on terms differing ftom those in the orignal agreement, anew agreement can be substituted. Ifthe alteration of contractual terms is designed forthe benefit of both parties, both parties have given consideration fo the new promise tte stration of contractual terms is designed forthe benefit of one party, that party has given on consideration, (However, promissory estoppel) Uniatrl discharge “Hone party (A) has holly performed his obligations under conuact and she other (B) has ot. A may release B form his obligations i % Therelease is by deed or © The consieratim is given by B forthe agreement Frasration Where a conratual promise has becom incapable of being performed Which (1) [snot the faut of ether party, (2) Prevent the ful ment of the purpose ofthe contract and (3) Is beyond wha he partes contemplated (unforeseeable) when they made their contrat 4 Te docizne of frusation wil apply ony in circumstances wire it would besos to hol the partes bound by ther contractual promises. [Fhe terms ofa contact anticipate an event which may prevent their pesformance and the event oesus, they wil be bownd by ther contract and there snot frastation © Frustration oceus % Where dere is death or personal incapacity, % Wheres contra, legal when made, may subsequently become legal by outbreak af war er by a change in the law, % Where tere is destruction of specific thing necessary forthe performance ofthe contract: % Where de contact depends on the happening ofa certain event which does not occu % Where tere isa vital change inthe cicumstances. ‘without default of ether party © [TC (1863)], [MNF Lid vOT Led (1935)] 9 ACY2301 Legal Environment or Busnes Talyor v Calévell 1863) EWHC QB JL ‘Taylor hired a musi al ora series of ontranslowever, afer making the conirae and before |L__the dat of the ss performance, the hall was destroved by fie [5 towas eld thatthe eoneet was discharged and ie paris were leased fom Wer obligations ‘Maritime National Fish Lig v Ocean Trawers Lid (1935) AC $24 (PC) > M chartered (hired) a boat from O to be used in a feet of fishing boats (Sin wil). M filed to ‘bisn 5 permits (3 ONLY), _M did't named O's bat for 1 ofthe permis. Hence, M would not vse O'' boat for ishing, MS claim hac the char of the boat was fasted vas rejected as failure coused by M's aul “Heid: there hed besn no frasration of the chartepury, af the absence ofa pena (licence) was «othe election of M, ho remained able Fr the hire ‘Contractual obligation is incapable of beng performed, because of radical change inthe circumstances Where the subjestnater of the coawsct has been destroyed (eg, change in the law, making performance of a contac legal) and where a change ir circumstances has a substantial effect on the sain purpose of the contact [K-vH (1903)] Krell v Henry (1908) 2 KB 740, “The plaintiff sued for defendant to recover te balance due ona contrat forthe hire of rooms Rom ‘which 10 view the coronation procession of Edwatd VIL, which had been cancelled because of| King Bdward’s ness. “The contact was held to have bow frosted besauce the contrac was not mvaly forthe hte ofa oom, but aso for the provision for a view ofthe coronation procession, which was no longer possible (Similarly for firing hotel room for watching firework in Victoria Harbour ifthe fee for the hotel room is abnormally high), Every hardship, inconvenience or material loss does nt atrac the doctrine of frustration & [T& Cole vNTG (1962)} "Takirglou & Co Lid v Nobloe Thor] Gabi (1982) AC 93 “A coniact for the sale of groundnuts included the cost of Wansporting th nuts Bom Sudan (Northeast Aftce) to Germany, Bath the seller andthe buyer assumed the veyage would be via the Suez Canal. When the seller found thatthe Enypian government had closed the Canal and realized the goods would have tobe transported around te coat of Afi, he wanted to avoid the contract and arguod that ithad been frustrated by the closure ofthe Cal, [Teas held a the contact had not been fasuated. The situation didnot mean that performance | ofthe contract was radically different from that which was envisaged in the contract it was simply |___more costly for the sell. ¢ The doctrine of frustration will also not apply if: The panies have foreseen the likelihood of such an event occuring and have made express provision for iin the contract, ce|ACY2501 Legal Evironnes for Business "One of the pars is responsible forthe fustrating event © An abnormal isso alin prices or a sudden depreciation cutency in itself, would not state # sontac (the sh aniipated), The consequences of Frastation + Law Amendment and Reform (Consideration) Ordinance (LARCO) applies to moult the effet of frustration a common aw: Money paid befie fustaton is recoverable Money due befere frustration ceases to be due % At the coun’s siseretion (oot a8 of right, recipient when handing back money paid before fruswation can deduct expenses from repayment % The court has discretion to order a party to pay fora eneft received before frustration Discharge by Breach one ofthe panies fils perform his contractual promises ox deviates fom the tenns ofthe contrat ‘the party who ea fe sad io hve breached the contract panty is may entitled io claim damages. © The innocent pasty may also be ened to repudiate che contract. A contract which is lawfully repite is discharge © The courts may detrmine the satus of the team which has been breached (condition, warrany, innominate). Alteraivels, the courts may consider the consequences of the beach; only ifthe consequences ae significant wil dhe innooent party be ened 1 repudiate the contract. Anticipatory Breach + Ieprior to te date o performance, «party to contac tates that he does ot intend 10 cary ut his side ofthe contact, cr pus himelf in a position whereby he will be unable to perform. The innocent pany then has a choice: % To accept the breach, tea the contract as discharged, and sue immediately for brea of contrast, To wait forthe ime of performance to see whether the other party does infact perform {LSK & A WWF & A (1699) [H VDLT (1853)] ((LeeSar Kwong & Aror v Wong Wing Fai & Anor (1999) | HRLRD 33, [© X bays eee ino a poisons SP agree fra Mat with ¥ Galle), but ¥ brated is ‘greement by faling to sign a formal S&P agreement. X waited until the completion date, ut Y | sill led to complete the tansaction, % then commenced an action for specific performance ot amages, However, the value of the flat subsequently dropped and Y then agreed to sll ito X (specific performance) and submited that X had lost she right to cloim damages. Flt was held thatX eid nt lot the ight of eleoon as Y had committed an anticipatory breach X sill an choose damages or specific performance =e ACY230! Legal Environment or Business 7 a nee Hochsterv De La Tour (1853) EWHC QD 372 | ® The defendant agreed to employ the plant fom | June, but on 11 May informed the pla shat would not employ him. “FTe was Held thatthe pln was ented Yo Gaim damages mamediately witout waiting unl | done <5ACY2301 Lega Environ for Business Lecture 6 Remedies for Breach of Conrat Outing & Common Law: Damages © Equitable Rem (4) Specific Performance (2) Injonetion (@) Resession (#) Restintion Common lw semedies ~ Damages -& Damages are designed o compensate the innocent pty for the damages, loss or yur he has suffered trough the breach (receive monetary compensation) Ihe as nt in fet sutered any Tos, the damages are described as nominal. In practice the court will often award the cost binging the ation as nominal damages. Damages re not awarded 0 punish a wrongdoer — not penalty Liguidtes damages ‘The parties t igcude in their contract provision whic state the amount payable as damages inthe event of breach of contract “They area fixed amcunt inte contract “They ave enforceable if is 2 genuine pre-estimat of actual loss that will ow ftom the breach Le sum is excessively high, itis called a penaly and is not recoverable Lia eoneaet provides that one sum i payable as damages for a whole rane of possible breaches, is likely to be reparded as a penalty and not as @ genuine pre-esimate [DPT Co Lid v NGM Co Lid “(915)) Dunlop Preumnati re Co Lidv New Garage and Motor 9 Lid (1915) AC 79 eeee agreed to pay £5 by way of Tigudated damages’ for every item Sold below list price “DPT supplied yes to NG under an agreement by oshich, in retum for a wade dssount NG |ACY2S0E Lega Envicrmen or Business How to ascertain that amount of damages? & Causation © Remotenes of damages & Duty 10-mtigate the loss Causation “The plsief must prove thatthe ossdsmage he has suffered is consequence of the defendant's breach “© The “but for” test the lossidamage would not have been suffered but fo" the defendant's breach, Remotenes of damages The defendant may not, however, be! & Damages ate recoverable when: % They may fairly and reasonebly be considered a5 arising naturally (Je, sesording to the usual course of things) from the breach, and le forall he loss certain losses may be 100 emote % They may reasonably be supposed to have been ic the contemplation of both parties when the contract was made 4 Events which were not contemplated by both partes when the contract was mad and do not arse tually from the breach ae foo remote [vB (1854)}, [VL Lid NI Le (1949)} Hoadley v Bexendale (1854) 156 ER 145, “The operation of mill was stopped by broken sha and W was necessary fo send the shaft the makers as pattern for a new one ‘The caries were only told that the article to be carried was @ broken shall, The caries delayed in delivering the shat and, asa consequence, the operation of ‘te mail was delayed even longer thant should have been. The owner of the mil lst profits that he could otherwise have made “Iwas held that the owner eovld nat recover for his lost profits because the information given (0 ‘he exer 6 not show that delay would result in suc a loss. The owner ofthe mill may have ‘had another shaft. The loss of profits dié not low naturally ffom the breach and was not a ‘consequence ofthe brech a could fail and reasombly have been contemplated by both partes ‘Vieira Laundey (Windsor) Ld v Newnan Industries Lid (1949) 2 KB 528 Te war held th. since the Sum as nol exiravagan, it was @ genuine alempt by the pares 1 Unlguidoted Damages If there ino such pror agreement sto the sum to be paid + Ondinaryireal damages ~ they are pecuniary (money) compensation imtended to pu he plain inthe postion he would have enjoyed had the contract been performed + Nominal daniages ~they are awarded where the innocent pany’ lepa rights have been itringed, but no actual loss has bean suffered 363 resul oss ‘stmate the dariage which price undercutting could cause DPT. The $$ was liquidated damages. | VL Lid, a firm a lounders and dyers, wished to expand their business and for is purpose ‘contracted to buy anew boiler fiom NI Ltd. The agreed date of delivery was S June. The boiler _vas in fet dived in Noverber, As a consequence ofthe delay, VL Ltd lost the profits they would have eared Between June and November and » highly profitable dyeing eontact which they would have obtained from the government. VL Ltd sued to recover these loses. i was held that NI Kaew VI Lid required the bole for immediate use and must be presumed 10 | now that some lost of profits would occur They did not, however, have knowledge of the highly profitable éyeing contract and could not have reasonably foreseen tha, this loss would be suffered ~m-acy: Duy vo mitigate the toss © Once a breach of contract has occured, the innocent arty is under a duty 10 mitigate (oinimize) his toss. He cannot stand back and allow the loss to get worse (B v C&Ors(1895)} 1 Legal Evora for Business /ACY2301 Lege Enionment for Business thee (6 To caforce a contract where the partes have expres indicated in thir agreement tha Eauedee’ Wessue st seestenete Lumley v Wagner (1852) EWHC (Ch) 196 Brace v Cader & Ors (1895) 2 QB 253, Ds, a parneship consisting of 4 members, agreed o employ P as manager of a breach of their | asiness fora certain period P entered nto ther service under the agreement, but, before the peti had exped, 2 ofthe parner reid, andthe business was transfered to and carried on by the other 2, The continuing partners were willing to employ Pon the same terms as before for tte remainder ofthe period, but P declined “SD agreed to sing at P's thea, and during @ certain paiod to sing nowhere else. ARerwards, she ‘made a conse with another person fo sign at another theatre, and refused to perform her contract with. “The court ehsed o order specific performance oF he positive engagement to sing a Ps thea, bu ranted a injunction to retain the breach of her promise not o sing elsewhere, There must bean express negative stipulation and D must have acted in reach of that stilton Hila: an an action for wrong dismissal, thatthe disoltion of the partnership operated as & ‘wrongful disrissal of PP should have mitigated his loss by accepting the offer of| re-employment That way he would have suffered n0 Toss, P was entitled 10 nominal damages only. Equitable remedies ‘Where an award of damages wuld be neither appropriate nor adequate the law of equity developed ‘other remedies to ensure that justice was done “All equtabe emedies ave discretionary the cour isnot bound o give such a remedy and will consider the meris ofeach imividual ease “4 Refusing to comply wit hem may he imprisoned fr cotemp of cout “The courts may grit an equilaletemedy Sora pty if hey blieve that i is just and fai for Box, parties + Theos important equitable remedies ae (1) Specific perfomance (2) junction ()Rescison (8) Reston Spite prernce Requires acl perfomance by D of his obligations under the comma ‘May be gran ination o damages {Circumstance where spe perfomance wil be rani (0) Contacts forse of tandinereats in an no two pieces of and arte same) (2) Contacts os or niu ites Speci perfomance wil not be grant (Q) To enforce comract of personal service [Lv W (185231 (2) To enforce a contract requiring Conisiarit supervision of the court {CIS Lid v As Ltd (1998)} (3) To enforce a comract which will eause undue hardship to the de (2) To enforce a contract whichis impose wo peor (5) To enforce an illsgal contract“ 3. ‘Cooperative Insurance Society Ld v Argyl Stores (Holdings) Lad (1998) AC 1 “When A, the tenant of retal premises comprising the main unt ina shopping eer, closed is supermarket in beach of "keep open” covenant in the leat because it was operating a alos, C, the landlord, sought specific performance of the covenant and/or damages. The judge made an order for damages, but refised to order specific performance on the grounds that it would be inappropriate and against sce practice. His decision was overture by the Court of Appeal and Asppedled Inyunction ‘© Aninjuncton sesks to prevent apart fom breaching aestitive covenant ora negative provision ina require a defendant 9 cay one business would not be granted ] Held allowing the appeal, that thee was a seed practice that mandatory injunctions which —__—___1 Commonly found in contracts of employments Like specifi pesformance, an injunction wil only be granted where damages are inadeauate “The court has the discretion to grant or refuse to grant an injunction (WBPI w N (1937), [MEX Co Led ¥G.0900) ‘Warmer Byos Pieures Ine v Nelson (1937) 1 KB 209 Nelson, an acres, eered info a one-year coral with WBP in the United States, The conact Provided that Nelson would work ‘solely and exclusively for® WBP and would not perform on stage o ina fim without the consent of WEP. During tha year, Nelson lft the United States and signed a contrat wo at for another person in England “} _Itwas held that WBP was entitled 1 an injunction to restrain Nelson from performing the contract with another person, which would have been a brea: of her contract with WBP. [ Mesropoitn Eleari Supply Co Ltd v Ginder (1901) 2 Ch 799 “ D promised expressly t0 tke the whole of his supply of electricity fom P, but in bres of this promis, D agreed to buy some electricity from C % The promise held 0 be # negative promise that he would take none ffom elsewhere, and an Junction was accordingly granted to prevent D fem taking any electricity from C. zpACY Legal Gaveonmen for Business Rescision ‘© Ait to restore the pastes 1 thei ee-contracual postions. Ifthe misrepresenation is aso tem of ‘he contact and the term as boon broken. the innocent party may have the choice of claiming rescission and beng put back into the re-conracual poston or repudiation and awarded damages on ‘te bass oF beng nthe position he would have been i de contract had been performed tis ony allowed where the stan quo can be restored Resstution “Where defendant gains some benetits from his wrongdoing 19 which eis aot ented or which i obtained atthe plains expense el be unfair she dofendat i allowed 0 retain the goods or services without payment ssACY2201 Lega Environmen for Business Lecure 7 Contes for Sale of Goods Quine Introduction: A comet of sale Iimpied Terms of contact of sale ssl4 17 “Transfer of Propery: ss 1820 Sale by non-owner * + 2 * © Pexformance Remedies ofthe seller Remedies ofthe bayer Hite Purchase * “Tiles retention Goods 4 The definition provided bythe SG Ordinance describes goods as items of personal prope (5 2(1)) Personal property ielodes such thing as clothes, jewels cars, fmt, elecrical equipment. and emetic animals, 4 Excluding: iamovatle property (land, building); things in action (shares, cheques, bills of exchange), inelleeual property copyrights) ‘Contract of Sale % Aconirat oF sles defined by ways of two quirements {% The terms ofthe contract mst provide for uansferring the ownership of the poods fiom ihe seller toe buyer and % The goods mustbe exchanged for money (s3(1)) © Contets forthe hire-purchase of goods are not regarded as contacts for the sale of goods -& An agseement to sell(s3(3): 2 cont for the sae of goods which ist be performed at some time in the future. W becomes a contact of sale when the contract is performed. (5.34)) & The raster of owne'sip i distinc fiom depositing goods as security (eg & pawnbroke) ‘@ The exchange of goods for money is distinct From conaeis which involve an exchange of goods for ‘goods (eg, barter), However, if goods are sold “in pat exchange’ (parly by exchanging goods and arly by money), the SOGO wil apply 4 Other example notin SOGO: Gif (tere is no consideration provided), Lease (there is no transfer of ‘ownership, Contra for work and labour, Credit sale (property passes once) Implied Terms under SOCO "% $OGO provides that certain conditions and warranties ae implied int that contract % Acoli thatthe seller has the right 0 sll he goods (1413) ACY2301 Lega Environment or Business A vsarany that Ue goods are fre Hom any claims ty thd parties and thatthe buyer wil not has wit possession ofthe goods (s 141}(6)) % A conction thatthe goods will eorrespond with their description (5.18) % A condition that the goods supplied are of merchantle quality (.16(2)) % A-condtion that the goods are reasonably fit for she npose(.16(3) SLA(L Ka) The Right to Sell tbe Goods +The implied condition thatthe seller has the right ta sel is concemed with circumstances where the seller isnot he owner of goods and is not given dhe authority to sel them, (True ownership) (@g. in possesion of stolen goods) [R w D(1923)]IN w CM Co (1821)] the seller isi possession of a ear under hive-purchase agreement, he is merely the hirer of the car and doesnot have the right to sl © It isthe seller's implied promise that he hus 2 te to the goods whieh he can rightly pass on to the buyer ino sale of goods transaction. © the slleedid not have the Rowland v Divall (1923) 2 KB 500 *% Rovland bought a car from Dial for £348 and used the ear for Tour months een wanspired 1 buyer. thatthe car had previously been solen and Rowland was required to retum the car to the CUE ‘owner. "Rowland sued Dive to recover he fll purchase price he had paid Ete was Held the seller, Dival, id not have the tt sell and was in breach ofthe implied ‘condition. In addition, there was a (otal failure of consideration, because Rowland received no part of what he bargained fo, je, lawful ownership. Rowland was therefore ened to recover the whole purchase pice and Rowland's ute ofthe est di no reduce his claim, ‘ible v Confectioners’ Materials Co (0921) 3 KB 387 “© Dan American company, sold 3,000 tons of milk toP. When the goods arrived in England, they ‘were detained by the customers on the grounds of inffingement of a trademark of an English company, | © Hel: as the English company could have obtained a injunction to prevent the sale ofthe milk, D ad no right sell hem 1410) - redo om Css agus the Gods ® The mpd warany ha he poods ee om ims by hind paris a ht Ge bye wll xy qu postesin (Onnerhip wit dimes) 4+ Mond eplis in eye of cms hich ae not dled ote yer foe he one ade Input tcc enh may ona extenel Tinted (AG v RM (1973) Mbes AG v Vinh Road Mating (975) 1 WLA218, TAMER SD ‘AL ws ad afi te oat marking mec ad been ld “Teas held thatthe buyer's use ofthe machine was restricted by the patent and thai he was entitled toda damages fresco the imped warn qt potenACY2301 Legal Environment for Businest $15 —Comespondence wih,Dessription All descriptive words ave bon eated as though they create Liability: (B wT (19679) 4 The arguments wed deny lability under S15 include: {That the words amount. a representatin (-e nota term ofthe contract) {% That the words do fot relate to the identi’ of the goods and are therefore not part of thet escripton (AP Lid v CH Lid (1972)] % That the panties id not intend the words to amount toa description, $8.18 applies where: % The buyer has nor seen the goods, but is relying on the descripsion slone: % The buyer as en the goods (Sls in supermarkets and departmental sires). 4 Any aonconformiyy with the description, however slight, is generally cegarded as a breach of condition ofthe content. [AL v R&S (1933)] S15 apmlgs when gods are sold by a person who sells inthe course ofa business and when hey’ sod _by a private seller ‘Beale v Teylor (1964), “The seller advertised his ga forsale as “Herald, conveible, white, 1961 Ht was bought by the ‘buyer afer examination. Infact, the car was made of two parts which had been welded together, ‘only ane of which was from the 1961 mode A201 ta Eom ons “> Candiens apy tothe gods ecu bought and pckge And contines in which he Bods ae i «+ The tem “achanable uly’ isnot sucinelly dened and requis cision of wha reasonably tex ad of al ofl The pups fr which sich gots se asay boat and of sparc ad ish, safety and durability ~ The dsp appli the oo. % Their price : A oter eean ckcunstnes 215) > embed esish case under is condln becae he dein bond. However, the cou ive essed tht the purposes fr which goods we uly bogie their rary pases nd at hese donot havea be pecially mide known tot lle 4+ Howe. the implied condton of mecharable qty dees not ply if, before he conrad e ther: "Defects are specifically drawn to the buyers atenticn or {% Trehuyer examines te good and that exainstion ugh o reveal certain defects. 16(2)) © Ifthe contracts forsale By sample the implied condition doesnot apply if defects would have been apparent ona reasonable examination ofthe sample, s16Q)e. (WNKFV v YLC (2005)} “Ft was held that the words Herald, 1961” were part ofthe comractdeseiston and atthe car ot correspond with ha description ‘Aaingtion Piggeres Ld v Ciisopier Hi Lud (1972) AC 441 [HL herring meal ws sold a one ofthe ingredients for making animal food. Both panies knew | tha the fod was intended for mink The contact stated that ‘Nonsepian herring meal of fait average quai’ would be used. The hering meal contained a oxic substance, DMNA, which Sule a large numberof the mink “ETeowas held thatthe presence of DMNA didnot result in a afferent substance fom the herring ‘meal inthe desrpton ~ the defect was 2 mater of quality eather than dseription. In adtion, the word far average quality” were not prt of the description. ‘The purpose ofa description is to idenify goods. The words “air average quality’ were an express ferm 35 to quality and not par ofthe description ‘Arcos Lid EA Rowassen & Son (1933) AC 70 [The buyers conracted 1 purchase timber to make cement barrels which the contract stated were 10 | be haan inch thick. In fc, only five percent ofthe timber which was delivered conformed to this equcemert the en was highly hiker bur til sable for making bar's “E_Tewas eld tha the buyers were entitled to rejet the goods for breach of 3.18 '16(2)~ Mesehantable Guay ‘© Conditions are imple only where the sle sels goods “in the course oFa business not implied in the case of private sale ‘Wong Ne Kai Fung v Yau Lai Chu (2005) 4 HKLRD 134CFI “@ Acpet shop owner (S) sold a puppy fo P and indicated inthe invoice Gat it was examined by a vet in the fllowing 24 hours and found wo be sick he would exchange it for another dog. P did not have the puppy examined, The puppy died of distemper within three weeks of the sale. P aimed the puppy was not of merchantable gualiy, § sgued that he had brought the possibilty Te wa held thats, 16(2)(a) only excluded the implied condition of merchantable quality vo a defect brought tothe buyer's attention. A general reference to th possibility of risk ora latent defect, without saying more, would not suffice, The sell must have pointed to the very defect thatthe toyer complained of. With this understanding of the law the case was remited to the Small Claim Tribunal for rea '$16(3)~ Fines for Purpose 4 Conditions are implied only where the seller sells goods in the course of business" not implied in the ‘ease of a privat sale © Conditions apply to the goods actually bought and to package and containers in which the goods are sold © The ites for purpose condition is implied when the buyer makes known tothe seller the purpose for hic the goods are being ought. The buyer may expvesly make known his purpose to the sll & However, all goods have an implied purpose which is derived from their nature and their common purpose (eg, bieycle is fr riding)ACY Lega Environmer for Business + + + * [If goods are to be use fr thee mpl purpose, the huyer need net specify tha purpose inorder 10 Be protected bythe Section However, where good ae to be used for a specil o particular purpose, the buyer will need to notfy ‘he seller of that purse ihe wishes to have the benefits of he implied tems. [G v PC Lid (1939)] onal a Tonga the gller knows the purpose for which the goods are brought, the reliance is ipod Paria eianceom the kil or judgment of algo requires proof of relies on the seer’ skill and judgment. If the buyer does not rely otis tumeasonable for him o-rely onthe seller’ sil and judgment, the seller will nt be Hable albeit the goods are not fic fo heir purposes 16(3)) [CL & C Lid v MB & B Co Lid (1934) Galt v Peter Conway Lid (1939) TAIER 685, ACY2301 Legal Environment for Business vith the importer () of the catapult fom Hong Kong, where they were manufacture, Godley v Perry (1960) 1 WLR9 “A boy of sit was ijured when properly firing @ lone Rom a toy plastic catapult which he bad bought fiom 2 rea shop. The boy's eye was seriously injured. Subsequent examination showed tat, the catapult was made of cheap materal. It was one ofa small qasity bought by te retailers wife (R) fom a wholesaler. Before ordering, she had tested a sample by pulling bock the else, and had similarly tested each cata before displaying them inher shop window. “The same test ofa sample catapult had been made by the wholesale (W) before he placed an order F Held the sles by he W to Rand by to W respecvely were sales by sample and as the defect in the eatapit ws not apparent on a reasonable examination of he sample, there was.a breach of| F Tt was hel that he buyer's sensitive si The buyer contrcted askin disease fFom @ wool coat which she Kad Bought from the sellers It vs found as ait thi he buyer had unusually sensi skin and that he coat would not haw harmed person vith normal skin. required coal ih special use and hal as he Buyer land not made kn the required use othe sell, Ue coat was fit for is purpose, vel Ls & CLA v Manganese Bons & Bras Co Lid (1930 AC 402 ‘The seers agreed t construct two ship's propellers for the buyers. These were 19 Be made according 10 cata specifications lid down by the buyers, but certsin matters, such as the Thickness of the blades, were leR 10 the sellers. One of the propellers proved to be useless because of defets 01 aid down in the buyers speifieation those te wastield that he sellers were lable for breach ofthe fitness for purpose condition, because there were many issue not dealt with by the specication and therefore let the skill and judgment of SIT~Sale by Sample + * If ere isan expresso implied term that a contrat is or saleby sample, then three conditions implied nt hat contact: '% That the bulk ofthe eoods will corespond in quality with the sample {That the buyer will have a reasonable opportunity of comparing the bulk of the goods with the sample; '% That the goods wil be fie fom any defects which vwoulé not appear on reasonable examination ‘ofthe snp and which renders the goods uimerchantble (6.1). the sae of goods i by sirople and by description, the goods must comespond with bath the sample and the description (&.13(1)) (Gv P (1960) an plies ena. Transfer of Oomership In the eyes ofthe law, the ovmership of goods and the physical possession of goods are two completely separate, The fac that someone has possesion of goods does not mean that he isthe ovmer of them, and vice versa 4 The moment in time wen the ownership of goods is transferred from the seller to the bayer is very amportant because generally determines % Who is responsible forthe goods, Who will bear the los ifthe goods ae damaged, desroyed, or soln; % Who is emied to claim the goods inthe event of inslveney. 4 Theresa presumption that, risk and ownership will be wansferred othe buyer a the same time (s 22). 4 Assale of goods conract involves transfer of ownership (uanser of propet). “The General Rule ~ Intention “With respect to every contact forthe sale of goods the moment in time when ownership of the goods is transferred othe buyer depends upon the intention of Both the buyer andthe seller Their mention is gathered from the terms oftheir contact, their conduct, and the eieumstances oftheir eas (19. The “Rules! tthe partes o the contact give mot indication oftheir intention, certsin ‘rules’ spply. The rues vary Akepending upon te state ofthe goods. The goods may tein any one ofthe following states & Specific % Unascenained % Ascensined © Specific goods are those goods which are identified and agreed upon tthe ime ofthe contract of sl. 4 Uniscertained goods are goods which are not identified or ares upon atthe time ofthe contrat of sale ‘The goods may exist ~ for example, they may have been manufactured ~ but they have not yet been scpaate fom identical goods destined for ober buyers o fez/ACY2501 Legal Emin for Basins ‘© Ascrtaned goods is the term used to deserbe unascentaned goods when they ae identified. does not conse specie gods, because it could not be identified at he time of the connat of se Specie Goods With spect ta speciic Rood, §.20 provides that ownership is ransfered according 10 Rules $20-Ruled b~ ‘Ifthe contracts unemditiona and the goods are in a deliverable State ownership passes to the Bayer at lhe time they make te contract If the ue of payment or ime of delivery reat some ltr dat, this wil hewn of emep.The tne wich mates tei te eons mds & An unconditional contract is a contract which requires no further act before ownership can be ‘uansfered, ~ - 4 Daler seis deel ase ste when te byer woul nr he ans, be Bound owe very of the goods (5 2(4)). {K v TO & C Lud (1927) [U Lid v BCB & CS (1922)} ~ [kore v Tne Opsions& Conracrs L929) 1KD298 Os TO Sep BE, Proll heDal he merce nbs ovng na Lavan aD was tons 15 yea iw heir” On 16S 1920 he Latin Asem psed aw confining fet nein then HEE te ret was ol ona fr eas pel ods a8 vee we Tey ret difed” Th uiner sot ne deere sew ie purchases ad eee Tadenvand id Bp Cle rick Cone Synaear (1923) KB 348 A ending seine was sold baer fol. ee on fou. Tie lag vee Wetore ‘bound to deliver the machine to a certain ship. The machine weighed over 30 tonnes and was. cemented wth seer fcr or" The machina tobe dma This va ape Uke tout wn neck andes 10 var da ie [totter wn te on was made not ina deliverable state and that ownership bad no wansfered 820-Rule2 ‘If the seller is bound to do somthing to put the goods in @ deliverable sate, onnership s pot teansferred tothe buver unl de acts done andthe buyers given notice tat it hasbeen done, “4 “seller hast do ste. packing, repairing, dismantin,servicing...(in order to put the goods into 3 elverable sate) [PH & S Lid VS L1d (1970)] Philip Head & Sons Lid v Showronts Lid (1970) 1 Lloyd's Rep 140, |ACY2500 Lege Environment for Business $20-Rules 4 Ifthe ggods are in a deliverable state but the seller is bound to weigh, measure, tes, or do something «else to ascertin the price. owmership i transferred to the buyer when the acts dane and the buyer has notice tha thas been done. It shouldbe noted that this rule only applies vo ais to be done by the ‘aller $20-Rules ‘> Ifgpds are aver on approval er ‘sl or eum! cageship stanford othe bye when: (e) Heroes the sl athe aces the pods or (0) Heselsthe gods robes as ie wis the our of tem {© Hees not oi esl a eter his acpi or sje, bt eee gots afer he dace aren forthe ris sucht oan ese tine Unascertsined Goods “With espec to unascertsined goods, the overriding rue i tha their ownership cannot be transferred to the buyer until the goods are ascertained (5.18). 4 Theres also one further leit .20, which is connected with contracts for unascertined goods. $20-Rules 1 “% Where goods which comply with the const description are in a deliverable state and unconditionally sppropriatd tothe contact wih the assent ofthe partes, owmership i transferred tothe buyer. © Goods are “unconditionally appropriated tothe contac’ when gy are aSetained or idemied and are earmark articular convac in such a way that the seller cannot subsequently change his mind Unconditional appropriation is deemed to occur when the seller dalives unaszerained goods 1 the bower oto a carrier in order to transport them to the bayer. However, ifthe seller as reserved the right of ownership, delivery to the buyer or carer i not dzemed tobe unconditional appropriation and ‘ownership snot vansfered to the buyer (52). {H w Ht. 88 (1917)] [Healy v Howes & Sons (1917) 1 KB 337 ‘The plain (P) entered into a contact withthe defendants (Ds) to sel to them twenty boxes of | mackerel. P dispatched 190 boxes and instructed he rly officals to earmark 20 ofthe boxes for , and the remaining boxes to to other consigness. The tain was delayed before D's boxes were earmarked, by the time this was done the fish as deteriorated. “% Held the propery in the mackerel hadn't passed to D before the baxes were earmarked They wore, therefore, still athe seller's risk when they deteriorated. _D was entitled to reject the fish} “© P sold carpe oD. The carpe was required to be laid. The expel was delnvered to DS promises, bo was stolen before it could be lid. The carpet was no in a deliverable state. Therefore he propery nthe carpet ad not passed to 2 Sale by Non-Ovner Can a seller who is not owner of the goods confer a good ttle on the buyer? ‘The law has to reconcile and balance out 0 competing interests and principles “© Protection of private property ~to protect the tue owner + Preston af commercial ransseion = (o protest a bona ide pur 8ACY2O1 Legal Enviroamen for Business “The General Rule ~ NemoDat 4 Asa general ule, where goods ae sold by a person ho isnot seir owner and who doesnot have the ‘over’s authority ts, the buyer not become the owner ofthe goods (5.231) “What the rule meanss that if he sller isnot the owner of goods which he pretends to sl, the yer whilst he may obtsin possession, cannot be Become ther owner 4 Exceptions to Neto Dat Rule: (1) Estopple (223(1)), (2) Sale by mercantile agent, (3) Sale marker ‘overt (52), (4) Sale under voidble te (525), (5) Sale by seller in possession (<27(1), (6) Sale by ‘buyer in possession (2712)) (1) Esoppel ‘The orginal owner's words or conduct stop him ffom denying that he person whois in possession of the goods i selling hem with his authority (523(1). -® estoppel is o be invoked there must be Some at which positively misleads the thisd party, beyond eraly allowing a noe-owner to have possession of the goods. Cases of estoppel may arse in two ways: Where the oer has, by is words or conduct, sepresented tothe buyer that he seller is the rue comer (0 has authority to sel % Where the owner, by his negligent flue 1 act, allows the seller to appear as the owner (or has authriy to sel (2) Sale by Mercantile Agent $ $2302) of SOGO: $ 21) of Factors Ord (Cap 48) “mercantile agent 4 aercantile agents ating in th ordinary course of business, the contract made by him is vali as if he were expressly authorized by she ovmer of goods sell “This exception operates only if the person taking the goods aes in good fi and doesnot know that the agents acted without soit (6 25(2K) (6) Sate in Market Overt -& Where goods are openly sold in a shop or market in Hong Kong, in the ordinary course ofthe business ofsich shop or mare, the buyer acquires ownership ofthe goods he buy, provided that he Buys them ‘in good feth and witout knowing thatthe sellers not the owner (524). -& “inant overt"-a maken a public place whereby goods are sold o anyone there (eg, Supermarket) © Wshould be a retails (4) Sale under woidabe ide “Where goods have bon sold but the contact of sles voidableby the seller and te buyer resell the goods before the sdller has actally avoided the contract, the sub-buyer will acquire ownership, provide he buys thet in good faith and without knowing of the voidable contact (525). {C v.C (19659) ACY2301 Legal Environment er Business Car & Universal Finance Co Lid v Caldwell (1965) % Cold a caro N and accepod a chegue in par painent oF he price. When e presented he cheque tothe bank the nent moming, i was dishonosred.C reported the matter to he police and asked them to reciver the car, The car was foand being driven b X under a contract of| hie-purchase with C & UF. The question to be decided by the court was whether the owner of the car was C or CUE _| Tr was hel dat C was the owner ofthe car, because had avoided the contact of sale to N when he asked the police to recover the car. Even though C could not find N or communicate with N, (6) Sele in Possession 4 Where person who has sold goods remains in possesscn of them (or the relevant document of te), and subsequently sells, pledges (pawns), of makes some ether arrangement for the goods 10 a person ‘whe acts in good flth and without notice ofthe previous sale, the buyer will become the owner ofthe goods (5:27 ()). [PMA Lid v MC Le (1965)] Pacific Motor Auctions Lid v Motor Credit (Hire Finance) Lid (1968) AC 867 PC) “SM, a dealer in cas, sok eas o F But remaed in possession. M seccived payment, and was aushorized by Pto sells P's agent. Provoked the authority, but M resold ittoD. “SH: D got good tile under $29(1) (6) Buyer in Possession Where a buyer has bought or agreed to buy goods and obtains possession ofthe goods (or document of title to goods) with the consent ofthe seller, any sale, pledge (Le. pavn, or other arrangement by him to a person acting honesty and without noice of any right ofthe orginal seller, as the same eect as ‘the person making the delivery of wansfer were a mecantile agent in posession with the owner's consent, The subbuyer will become their ovmer (52712), “The Generat Duties ofthe Seller and the Buyer Soller Delivery of goods @ Buyer Acceptance of goods + Payment Remedies of the Seller Real remedies remedies asserted against the goods therslves % Unpaid seller's tes; Right of stoppage in transit; % Right ofresale 4 Personal remedies ~ actions against the buyer % Action for price % Damages for non-szceptance ~10-ACY230) Legal Envzonmen far Business Remadis of the Buyer “Right so eect goods ohere a breach of condition, repudistion) “© Action for damages fx non-dtvery Specific performance (where damapes are insuicien) ire-purchase contrat & Goods are hired by ter owner toa person fora period atthe end of which the hirer may exercise an ‘option o buy the goats, usualy by making furher modest payment 4 Hinespurchase agreement give possession and use to the hie while property emains with the slr © $0GO does not apply Retention of Tile “© Reservation of tile eauses/Romalpa clauses © The propecty in gocds will remsinreserve with Ue Sller until fall payment fiom the bu security ACY2301 Leys Environment for BusinessACY2301 Legal Entronnes fr Business Lecture 9 Law of Agency uline @ The Nature and Purpose of Agency @ Types of Agency The Appointment ofan Agent 4 Types of Authority ofan Agent & Duties of agents Right of agents © Relationship benweon a Principal anda Third Party ‘© Relationship benseen an Agent and a Third Party © Dermination of Ageney ‘The Nature and Purpose ufageney 4 _Agoney: triangular relationship (The principal -the agent ~ she rd party) 2 ‘Aeeney is ela Babwssn the agent and the principal who gives he agent tbe authority to act on behalf of him. “A figuciary relationship: acting in he best mterest ofthe principal Types of Agency 4 Acooading othe degree of author LU) General agent: % Who has aon to actin all matters concerning @ particular ode of business % He represerts the principle in all respects or in all espocts in parteular section. E@ a vector of alimited company) The principal wil be Fiabe: (a) the agent is setng with his express instructions: or (b) the agent as disobeyed those instructions but is caring out atansttion Which ap agent ofthat ‘would nocmally be expected to make (a “reasonable” agent) (2) Sposil agent: % Who has auto to act only ona panicalar occasion, or fra specifi purpose. The princial will only be lable if the agent was acting within the principal's express Various “Mercantile Agers™ + Facts Ordinance (Cap 48), 5 2(1) A mercantile agents an agent having, inthe customary course of his business, suthoriy 1 sell g00ds, 10 consign goods for the purpose of sl, orf buy goods, oF: raise money on the ssurty of goods. (1) Factors: "A factors eneusted with the actual possession and control ofthe principal's goods. -B- ACY2S01 Legal Envionmen for Business {A factor normally has the authority to sell the goods in his own name without disclosing he fame ofthe principal He is remunerated by commission, (2) Brokers Brokers have neither possession ofthe goods nor documents of ile They are mere negotiations or intermediaries % They are not ened to sel goods in ther own name Eg: insurance brokers, stockbrokers, mongage bokers,shipbrokers, etc (6) Dat Credere Agents They arrange sae of goods for ther principles. '% They ave a contingent pecuniary (monetary) ability % They ave pai extra commission fr promising Ut if he buyer were unable to pay dhe price of ‘he goods they will makeup the deficiency. (4) Esate Agents: The primary job oF estate agents so find buyers or tenants for their principal's propery Their jobs: ntoducing Pt business opportuni, describing P's property, making statements sto the value ofthe property and soliciting oes fom prospective Buyers. “The Appointment ofan Agent Methods of Creating Azeny) 1, Bees Agency {Created express wos (verbal % Theauthority ofthe agen may be confer byconrct~ the contact of agency in wring). {The scape of an agent's authority wil be specified ine contac of gene. 2. mpeg Ageney {Aco of agency maybe impli fromthe suas or conduct of the parties {Parner an implied agent wh can at fr heparan, © Acompany’schiraa: ha impli authority to eierinto contac onthe company’ behalf 3. Agency by Exoppet: Doctrine of estoppel is based onthe principal hal athe pry is ented o assume hat an agent tas such authority as the agent appears to have @ would normally have, whether of nol the inal as in fc granted such autor ‘Whore one person (he principal) by his word or conduct makes anche (ie thrd pay) believe that (1) someone i bis gi; he tid party onthe faith of such represenion ees ino 8 ‘ranseetion with the agent. fee fo - The principal is estopped fom deny sucha wansaton (Sv L (1973) le existence of an agency relationship, and is bound by ae‘ACY2301 Legal Environment or Busines 5. Agency of Necessity % The bass ofthe doctrine of agency of necessity sta, a person can act for others ina situation of ACY2501 Lega Environment fr Business - Spiro ine (979) WLR TOO? _ - — “The owner ea house sed hs wif vo pu Rn the Hands of sae gas wh & v1] sole Shou no authority t inset he ext gets ener ne a ining const of sae rsibenerancy bora conn was mat, ined by the pani prcheser an by th esate agen as agen | f= _Twomain condions ms esi forthe vender. Subsequently, the owner tested the plain the purchaser, allowing him to | (a) Ther is eal and definite commercial necessity: ngage bude to ary out reais on te hos, bt he one efiseo complete (ois imposbleinpraccable fo he age to obin he neces authority om the penal The Cou ef Appel held that when the over earned tht te pli belived the Owe Canpossible to communicate {$ v GWR. Co (I52} [ONR Co § (1574) P v BS & H Ld was under a binding obligation 19 him, the owner was under a uty to disclose the azn _ nonexistence of that obligation. Failure to disclose thet his wife had acted without authority [Springer v Great Wesiem Railway Go 1921) KB257 mounted © a representation by conduct that she had that autoriy and the owner was Consignment of tomatoes, storm at sea railway ike; rallway company sold them locally. stopped fl asering thal the contact had been entered info without authority. The CConsignee sued for damages. . Tels aay cpa cola i TTT) Sg ay woe agus oT aD if was ented to specific performance ofthe contract of the consignees, because they could have communicated pi 4. Agency by Ratification ‘Great Norther Railway Co v Swalield (1878) LR 9 Ex 12 '&Nomilly wo person can bind anther by ransseron made on his behalf without hs authority % However, where some transictions are made by one person on behalf of another, without his “® Railway company carried a horse, no one receive i, no eppropriae accommodation Tor it the Iowiedge or prevedent authority, but the liter elects to adopt those as his own, he is bound as horse was placed at a livery sable, The railway company claimed the charges from the principal aa ‘i consignes. {% Ratification is giving approval o an antecedent act and providing reifoactive validity to it |] Held the rsbway company had aced in an emergency os an agent of necessity, and ould claim '% Ratification may be express or implied fom the conduct ofthe parties. (Eg. A buy goods for B indemnity from the owner ofthe orse. ‘without B's authority, but B takes delivery of the goods and sells it to C.) 7 ‘Prager v Blatspiel Shamp & Heacock Ltd (1924) 1 KB 566 % Tobe effective ratification must comply with the following conditions: ox © Pisa fur dealer in Bucharest, 8 a London dealer, P asked B to buy and deliver skins worth of | (Tagen mes have camel expres be coating 9 agent” and mst ave aed the E960N path prise pr, dtvery spree byte ore oF war Bend wincpal (onthe prinpd (KM & Co vb OD) thesis (1) The principal must exit and hve hod consi copacy Ue tine he aget mae the Fle B we Hae Tor envio The Sins wei wt HE Wo aa papas worl 50 conn the was not neti er teal (e) Atte ine of te atieton he prin st hve il knodge ofl materi fs {@) Therteaon mus whe place win a exonsle ine {pes of uri ofan aga (©) The cama mst not be void 1 exer mtr (0, Topic mst i ect contrast and ney at Gn avity gated 10 an agent by the fms of «writen of oa suement i the cons of The, Manted Co v Dua (1901) AC 240 = [ap agent os ahr oss quay of Whe wa cran pce fr inslnd RN, Normally cated by an expres gency. nis prin oa jit cout. cnluded a cone wih Dat higher pies and hertre “Genet per of atomey appomtd by Deed ontved sty, ebory Tinie te the ‘toot urs) als om pane and wii Gcosing tthe ws al acing for KM purpose fr hic t i ve). Chet the KM weld aif the ona as ig on iit cums. KM refined ake 2. Impleaa meberiy vy oft ast | San azet asthe uty odo what iil eran age Fs profes oo Te was held that A had made a conivaat for himself. and wot with te authority or on behall of KM | % Examples: “The ant cali tered by KM sao reer hm abla me te. | (a) Aber toosemanaer as usa uot my ia or ese - () A facior bas usual authority o sll She principal's goods in the factor’ own name aise x16ACY2501 Lega Evironment for Business {} An auctioneer has ws authority not only t sl propery on bet of the principal, bat also 10 sing a conta of sale 3, ApparenvOstensble eathorty % Created under “Agency by Estoppel” % _Nomlly arises ao situations: (a) Phas not appointed A, yet by words or conduct leads the TP to believe that ns the authority, () Ain the past Aas authority to at, but this hasbeen terminated subsequent Duties of agens $ The bass of such dates: '% There‘ special eatonship oF bust and eoafidence between P and A '% The Pespects honesty and integrity from A i whose hands lie P's commercial intrest % isa fiduciary elatonship! (1) Duy to fellow the principal's insrections % An agent must ote she lawl instrutons ofthe prinepal % Fhe fits 1 do s, he will be lable in damages % Where P does na gi agent would do ina similar situation), (Tv B(I883)) “Turpin v Bilton (1843) 134 ER 64 An insurance broker was inswucied to aang or te insurance of Ps ship. Ealled wo do s0.| “The ship was os. | any instructions, mist ac in the best interest of P (do what a reasonable ACY2301 Lega Environment for Business (6) Agent most not misuse confidenta information [Cv P1842) -« Castel & Latta (1887)3 TLR 371 [Agent cA) was soked o purchase a yacht forthe prnapal (P) He Bought for himself and vesold oP _Peing unaware dat he was buying A's own poperty. Confer oFimerest_A must give up the profit De Bussehe v Alt (1878) 8 Ch D286 “Am agent was authorized wo sel his principal's hip inany pow in India, Japan, or Cina ata specific price but found no buyers, He obined his principa’s permission to appoint a sub-agent in Jepan to sell the ship ata specified price | “&_Tivas eld that this was clearly a permissible delegation of authority bythe agent Industries and General Morigage Co Lid v Lewis (1949) 2 NER 573 _ “The defendant wanted o arrange aToan and employed an agent ro obtain it for him. The plait who agreed 10 provide the Joan, made a promise tothe defendan’s agent that he would reseive one-half of the commision that they would charge the defendant. In an action or interest due on ‘e loan, the defendant counter claimed forthe amoun’ ofthe bribe as damages ide I assumed that the defendant had suffered damage because, probably, He inlerest Ge efendant was obliged to pay was higher than it would have been so as to cover the plaints payment ofa bribe tothe defendants ages, andthe defendant's counterclaim was upheld. Once a bribe is established, there ian iebutelepresumpticn that it was given wih a intention to induce the agen o act favourably to the payer and therefore enfavourably to he principal ‘Caner v Palmer (1842) 8 ER256 ai $_ Held: the broker was able in damages 0 P (2) Dayo exercise de cre and skill A profesional agent is deemed fo have the necessary knowledge connected with his profession (Ep, 4 account, an insurance broker, an estate agent) % A professional eat must exercise Ski andere which members oF hs ade or proeson ould noma cise. KW 92) : Repel Wiel (1927) 1KB S77 @ Toselatlock o's. Received an of fom Xs Gnas SOc, veda bigher of fon Y. The agent failed 1 communist te nw oe ote pin. and P accepted the earlier offer. a 7 Held te ape oved he ome 8 Gy aban he bn possible i vena Saas The agents le in damages i diffs baween Xs fr ane V's of, (3) Duty to act in good faith | f {Adin elimship ised on ws and seni, © “Ai agen as ork with sy and yay and ved any conic Fines ree hl tod he ipa {Therefore anes agin ms os his oom prope o Por by propery {a) Agent must avoid conflict of imerest (Lv C & L (1887)), [DB v A (1978)] (b) Agent mus. not mak see poi & OM Co Lid v (989) “© Ahad been P's eonfidemial propery adviser, A acquired some of P's property and resold fat @ profit “$_Held: A has account forte prof (4) Duiy 0 et personally (Gelegaras non potest delegare) % The agent cannot delegate his duty to another, becwse his relatonship with the principal's ig persona on. % [Fan sub-ageney occurs, Pis not bound by such a contact entered into on his behalf (6) Duy to acount (2) Agent mast account ta P for al money oF goods rseived on behalfof P. The agen isa "uustee” of P, should Keep them separate om his own money cr goods () Agent must keep proper accounts of al wansactions Rights oF agens| 1. Right remuneration (commission) Where an agent brings abou the sale or purchase of property he is usually en ‘ofthe vale ofthe tansation, Im ordr to protect dei interests, agents often incorparate a clause in their agreement with P tat, in the event ofthe repudiation of the sale and purchase agreement by tbe buyer, they would still be ‘entitled 1 commision (G VB (1863)] UTB v G@BC Lid (1910), = 18 toa percentage“& Am agent held an auction to sel his principals house, but filed te find @ purchaser. A person who | ‘was interested inthe house came to the auction and obained the P's mame and aes fom the agent, After the ation, he directly contacted P and purchased the house fiom hin The agent |___ claimed his comission onthe sale (3 Tie since the cle was really Brought about By the ac ofthe agen, he was ened io commission Tames T Burchell v Gawie & Blockhouse Colliers Li 614 PC) [Ved ten aa rings psn ino elton with his pnp as an tedng pcan te nt has dane the most effective, and, possibly the mst laborious and expensive, pat af his work, and shat ifthe principal takes advantage of that work, and behind the back of the agent and known te him, sells othe purchaser thus ought into touch with him, the agen’ et may stil well beth effective couse ofthese ACY2301 Leal Environment or Business () Where the third party comes to know of the existence ofthe principal afer making the contract vith the agent : Relationship btwween an Agent anda Third Party Normally, when an agent sctng in his capacity as agent sakes a contact with a third party, he neither becomes «party nor incurs pessoal lability unde © Fowever, an agent may be sid bya third partyin the following situations’ 1) Under the doirne ofthe undiselesed principal, the the party elects o sue the agent. (2) Under te dostne of ratification, P doesnot ai the contrat (no agency by raiication) © Where an agen exceed his authority, oF represen that te has certain authority which in fct he does ot have, he commis reach of waranty oF authority ~The third party ean sue only the agent, but not the principal. (C v W (1875)] 2. Reimbursement and indemnity WAR. {In alton to remain, an agents enliledoeinbursemen frees, sts an bles ingredin the cand of te P's usin. he econmodation fr he has) {Only whe te spt as worked win the Spe af i ary, ote ae the get's 3. Liew E44 {enables the po etain he propery uni is somo, adem) ae pal {Alon is" ight ei th ood mone dcamers or chee feather BS fre yet fr ones rf the performance of an lation” Relationship bween a Principal anda Third Party ‘© Agency: the agen makes a contract an behalf ofthe principal = Nonlly, he agent is excluded from the beni and the burdens ofthe contract, However, sometimesit is hard 10 sell whether a person has made a contract for himself or a a agent forthe principal - & Weaveto distinguish stations whether the principals dislosed oF no, (0) Disclosed Principal % Where the existence ofthe principal disclosed tothe thd party, the agents contracts have the same legal consequences af the contracts were made by the priveipal himself. (The principal is bound by the contact } ‘The prineipal may sue the hid party andthe tid party may sue the principal © Under the doctite of apparent authority, a principal cotinses o be liable tothe thd pany on the transstions made by the agen unless the third party has notiee ofthis oct. CAgency by estoppel) (2) Unaisclosed Principal UIP) % Undisclosed agercy refers tote situation {2} Where a tice pany deals with te agent in ignorance ofthe fst tha hat agen is ating forthe principal - Collen v Weight 120 ER 41; (1857) 8 EL & BI 647 “Aas an estate agent for P. A agreed to grant T alease of Ps Tam for twelve and a half years ‘honestly believed that hed the authority to do 50, although in Fact he didnot. P refused to _exeute the lease ceised ta rally). died in the meantime. Held A's executors were Fale for he lss suffered by T. Determination of Agency (Termination Revocation) How can an agency come 9 an end (1 By agreement (2) By notice of termination (3) By completion of tak (4) By expiry (created for limited period) (6) By frsrtion (6) By death, mental incapacity, benkxupty,o losing dew of business (winding-up, dissolution, et.) a20-ACY2301 Legal Eavzoamen for Business Lecture 10 Hong Kong Employment Law “The Legal Frame Who isan “Employ Common Law Duties © ” + & Probation « * * ’ Important Employees Benes Implied by EO ‘Termination of Employment Termination Paymens Labour Tran! “The Legal Framework & Why contact of employment sso special? + Consider whose hugaining power is stronger (Weaker) between an employer and an employes? [Fader the principe “Freedom to Contract’, employees’ interests may be jeopardized due to their weaker bargaining power Sources of employment law in HK & Common Law To decide who é an employees ‘© implied duties under common lav; ity of employer Employment Ordnance (Cap 57) Giving taut procection to an employee % Vicarious Application of EO 4 Enacted in 1968 4 EO aplies tall employees in HK, excep: (1) A family member wo lives inthe same dvelling as the employer, (2) An overseas contact workers (OCW); (6) Pesson serving uner a crew agreement (4 An appeentce (under Apprenticeship Ord, (Cep47). ‘Who canbe employed? 4 Persons aged 18 a ahove -EO: fly employable (witb HKPID of work vi “© Petsons between 15 and 18 ~ Employment of Young Persons (industry) Regulations: © Persons between (3 std 15 ~ Ensploymen of Children Regulations (with writen conseat of parent): Persons under 13 ~ snemplayable ACY2301 Lega Enviroment for Business Whois an “Employes” “In onder to decide whether EO is applicable, you have w decide whether the person in question is an employee or nt 4 Contract of employment (Contact of service) an employer-employee relationship, 4 Contract for service: no empleyer-employertelationship Contracts of Service Ihsan agreement between two partes which creates the elatonship of employer and employee Maybe writen or orl, 4 May include express terns sd implied terms implied from EO. Whetter 2 person isan employee 4 Teistoaly question of fact, Normally, ll aspects ofthe relationship must be examined © Court have developed some tests 0 distinguish these tve situations: % The convol tes, % The integration tes % The mul-factor tesvThe economic realty test. The Contol Test, ‘© What constitute “contain asuiien degree —the power of deciding © The thing tobe done: The wy’ in which it shal be done; % Thetime when, andthe place where it shall be done ‘The Integration Test “© Whether the performers work was integrate into the eployer’s enterprise, or was it merely aneillary ‘The Mukifector Test, -&Isthe person performing the services as a person in busines on his own acount? -€ Whether th person provides his ovm equipment, hires his own helpers? & What depres of responsiblity for iavestment and manageneat he has? (LTS vCCK (1990)] ‘Lee Ting Sang v Chung Chi-keung (1990) WLR 1173 “© LTS was injured while working as @ mason on a consiution ste The question arose esto whether he was entitled to compensation under tc Employees’ Compensation Ordinance as an employee, or whether he was not entitled 10 compensation because he was an independent contractor, LTS was shown a plan oF where to work He was not actually supervised, but his \work was occasionally checked. The tools were supplied by CCK. He was paid according 10 the amount of concrete chiseled, He also worked for other controtars but gave priority to CCK =a‘ACY230 Lega Entonmnen for Business —_ “It was held tht English common law standards should We applied i determine wheiber LTS was | working 4s an employee under 8 contract of service. The tess indicated that LTS was working ss an employee. The fact that LTS was skilled in his work justified the lack of supervision “The fet hat LIS also worked fr other contractors di not peslud him from being an employee | ofCCK. | Contacts for Services © Unier a contact for services 9 selfemplayed person (an independent contractor asses to pesform a parila task for anater person, [CY V REKGC (1997)] Example % _Atasi driver ~()) NoTong-tenm seationship between the pasenger and he driver (2) An “one of” % Acompany driver ~(1) The company owns the vehicle (2) Driver goes whenever and wherever direst; (3) The eompany controls the driver, (8) The driver is integrated into the company’s ‘Cheng Yoen v Royal Hong Kong Golf Club (1997) HKLRD 1132 % PIf was a cadtie. The arrangement between pif and def was that he would work when he wished Pit was given a number, a locker and a uniform by def. He went 10 the chub nearly every day. Heewalted with other eades for his turn to offer his service tothe members. ‘There ‘vas no guarante that he would get any work on any day though he averaged two rounds 2 dy, tthe en of ech day, he was paid in cash by df elub which debited the member concerned Held: there were no mutual obligations benveesplfand de Def allowed pf to offer himself as cada forincividual golfers on certain terms dictated by the administrative convenience of de and is members. Def was not obligated to pve im work or wages. It was the golfer who ‘ould tel the cde what he wanted and how be wanted it done. PI was ot oblige to work for ef Hence, pif was not an employee of def Common Law Dates (1) Dates of the emplayeimpliod unde the common law % Tony: % Toindemnity, To provide a safe work % To provide areasmable amount of work (2) Duties ofthe employes implied under the common Law: To cary ot awl orders given by dhe employer, % To perform his work with easonable care and kil % To work faithflly and honestly for his employer (4 actin good faith) [eg not 0 setup his own business in compaition with the employer] © Notto disclose wade secret or confidential information obtained daring or afer dhe employment ae ‘ACY2301 Legal Enwronment for Busines Probation “Its lawful and reasonabe 1 provide fora pri of probation, which intended to enable each party to evaluat he ether: {Tae employer can have an opportunity to assess the employee's long-tem capability % Tae employee can also assess the quality ofthe employer and the working conditions “& How probation may be terminate? S 6(3) EO: © Either pary may teminate the contract at any time during the fist month without node or payment in ew of noice Aer the fist month, either party may terminate the contac by giving not less Uh seven days? notice to the other pry Inmporant Employee’ Benefis implied by EO 4 continuous conser + You can benefit fom £0, only ityour employment contrat is a continuous contract. % his: Aperod of consecutive 4 or more weeks of employment and % Workings least 18 hours a week, ‘Continuous Contact if the continuows contract i susied, the Benefits wi parse © Where any dispute arse, the onus burden) of proof tha isnot «continuous contract wll be vested on the employer fend to an employes, whether fulltime or Benefit under EO (1 Wages (2) Rest days (3) Holiday (Statory holidays & annval leave), (4) Paid sickness days (6) End of year payment (bonus) (6) Macenity leave (9) MPF: retirement benefits (1 Waes “What is your most important concem when you are signing an employment coneast> Calculated on a daily, weekly or monthly basis. In general, wages are regulated by market forces Bu. FDHSs (foreign domestic helpers) & Minimum Wage Ordinance, Cap 608 Long title of Cap 608: “An Ordinance to provide for» minimum wage at an hourly rate for certain employees." eoee aeACY2301 Legal Enonnat for Business The Sttuory Minium Wage comes into force on 1May 2011 andthe ital Statuory Minimum Wage rates $28 per ber. Application a defined in $7 & $2EO: What are “wages? "© Wages are “all emuneration earnings, allowances, including traveling allowances. attendance bons, commissions, overtime pay. tps and service charges, however desined or calculated, ‘capable of being expressed in terms of money, payable to an employee in respect of work done or to be done under the contrat of employment” $ $25-Time of payment of wages % An employer should pay wages to an employee not Inter than 7 days afer the end of the wage etd, otherwise it wil Ifthe wages are not paid within one month flom the day when the become de, a et terminate his contract without notice or payment in iew of notice ($ 104) 4 Deduction of wages '% Hf vages are calculated upon a time bass, the deduction must be proportionate tothe time he a criminal offence ployee may cmmployee is absent Fem work & smE0 (a) A deduction may be made fom wages where an employee has damaged goods, equipment ot propery belonging tthe employer or has lst money for which he is required to eccount (6) The employer must show thatthe damage or loss is diretly stinbutable to the employee's neglect or default, ths total aunt in aay one ase shall not exceed the equivalence in value of the «damages or sses suffered by the employer cr $200, whichever i the les. (6) Total dedscions in any one wage period cannot exceed 1/4 of the wages payable for tat pviod () However, (2) Rest Days © Sec.17 EO: employees who have been employed under a comtinaous contract bythe same employer ae ‘atte ont Less than one rest day in evry period of seven days 4 your employer expels you to work on Sunday, what would you do? (only if he wil appoimed sot ses day in lie of Sunday) (6) Holidays| 4 Statwory holidays (te minimum holidays) [839 EO] 4 Annual Leave Subject to any greater annual leave provided by the contract oF employment, (@) An employes wih 1 years services ented wo an annual leave of 7 dys: () Aa employes with 9 or more yous service is ented 10 8 maximum of 14 days" annual eave, Anal eave wih pay isan acervedright. You are ented toa payment in Liew ‘ACY2301 Leg Enionmon for Business (4) Paid Sickness Day “© “Sickness day” is # day on which an employee i abset from work because of unfiness to work on account of injury or sickness 4 $33 EO- where an employee as been employed under a continuous contract for period of | month of ‘more immediately preceding a sickness day, an employers required to pay a sickness allowance, $ Entlement toa sickness allowance: % accrues atthe rate of 2 paid sickness days foreach completed month of employment doing the first 12 months ofthat employment, % Wacrues at the rate oF paid sickness days foreach subsequent month ean be accumulated yp ta maximum of 120 days. (5) Maternity Leave $A female employee is entitles to a continuous period of 1C weeks matemity leave (6) End of year payment (bonus) ‘Double Pay/13" month payrrent + Whether or not theres entilement toa bonus depends onthe contrat of employment (7) MPF. Retemen Benefss MPF: Mandatory Provident Fund Objective: to provide adequate financial provision ypon retirement MPPSO (MPF Schemes Oxd, Cap 485) was enacted in 1985, Ie commenced on | December 2000, tis supervised by the MPF Schemes Authority (MPFA) ‘Who fa 0 join the MPF scheme? ~ all employees and seemployed persons aged 18, % Exceptions: (2) Domestic employees () Self-employed hawkers: {c) People covered by satvory pension or provident fund schemes, such as evil servants and subsidized or grant schoolteachers: (@) People from overseas wi enter Hong Kong for employment for ess than 13 months, oF who ate covered by overseas retirement schemes; and (e) Employees ofthe European Union Ofice ofthe European Commission i Hong Kong 4 The amount of contnbuton % Both employers and employees are required to pay & minimum contribution of 5% of relevant veers Voluntary contribution (4) I ess than $5,000 (increased to $6,500 wel. 1 Nov 2012), (©) Any income in excess of $20,000 per month MPP Providers ~ Master Trust % MPF schemes ae privately managed 26ACY2501 Lega Evironment for Business % isa “Tras % Seton Tras % At common lav, trustees have a duty to Took afer the interests of beneficiaries ~ a fiduciary relationship ‘&emust invest nds wisely and act forthe bes imterest of beneficiaries Beneficiaries ‘Termination of Employment $ Termination by giving notice % Employer: vlideeasons for dismissal % Employee: no special reasons Termination by beach % Where emplaye: breaches he entact % Where employe breaches the con ‘Temnination by giving novice © Ether the employer or the employee can terminate the contract of employment by giving % Notes, o % Payment in lieve notes 4 Where the contracts silent abut the period oF notice, no ess than one month's notice must be given Alternatively, an amunt not es than one month's wages shoul be paid © Restetons upon noice (unlafil dismiss) '% _An-employer stall not dismiss the following employees, otherwise he would commit an unlawful dismissals (2) A pregnant emale employee; () An employee on pad sik leave: (© An employe who isa witnes in the cour against the employer (to protect he employee who {s giving evdence) fe. Who witnessed an accident ona construction site) (@) Anemployee who is rade union member (wo acively seek to improve working conditions) {€) An injured employee befor having seling the compensation ‘Termination by Breach © Breach from the employee % Vali easons fr dismissal (a) Misconduct of employees () Lack of capacity or qualification of the employee to perfor his work (eg driver who loses his driving ence for diving with excess alcohol) () Redundancy, o ther genuine operational requtements of he business % Unreasonable dismissal (@) Unless the employer can show avai reason forthe dismiss, dhe dismissal unreasonable. (6) “misconduct”: eg. persistent lateness, drunkenness, fighting, gambling, immorality... (TV ¥ en -ACY2301 Lega Environment for Business 'SCMPP 2008), “Thomas Vincent v South China Morning Pos Publishers (2005) 4 HKLRD 258 (CFA) © Pifwas a sports sub-edior with SCMP. He has plagiarized many parts ofan mticle from the ‘Sunday Times, and passed i off as his om inthe paper's magazine, Premier Soccer. SCMP- ismiated him for his misconduct. “Fea to dismiss him for «fst offence without aay formal disciplinary processes and without loss to the def was unreasonable. The pf shovldhave received atleast a warming, In CA: the misconduct must be factual and rea. Summary dismissal ($9) loediate Dismissal (6) Its action of last resort (&) A contract of employment requires good faith on boi sides () Conduct amounting toa serious breach of good fit can justify summary dismissal (6) The contract can be terminated without notice of payment in ew of notice, (6) When the employee: (1) has commited very serious misconduct; oF (2) fails to improve himself afer repeated warnings; (3) wilfully disobeying a lawful and reasonable order; (4) With fraud or dishonesty (the) (5) habitually nelecting tei dates (whois regulary ate), “Breach from the employer — constructive dismissal % When de conduct of an employer may compe te employee to quit (the employee has no option ‘bul to terminate the contract) % leatment: eg, assault, sexual harassment ‘© The employee is the right to terminate his contract without giving natice or payment in lew of notice tthe employer “Termination Payments All outstanding wages: Payment in eu of notes Payment in eu of any untaken leave, End of year payment: ‘Severance payment; Long service payment seeeee Severance Payment © An employee is eligible for seveance payment ihe: '% Has been employed under a continuous contract for not less than 2 yeas (24 months); and Is dismissed by reson of redundancy 4 fthe employee quite voluntary, he cannot claim severance payment “Redundancy The essetil issue i, whether the employee Who hasbeen dismissed is surplus tothe employer's requirement % Formula: last month wages x 2/3 xreckonable years of service -2-ACY2501 Lega Environment for Business Long Service Payment 4 Whore the contact isnot less than $ years Te same calculation formula with Serve Payment “+ _Aitention: an employee cannot be simultaneously ened to both severance paynen and Tong service payment Labor Tribunal (LT) (QU: Wht isthe jrisdition of LT? Disputes rising under EO or AO Claims exceeding HK $8,000, 4 Claims not exceeding HK'S8,000, must be made to Stall Cains Teibunl (2: How can we eal the jade siting in LT? 4 The LT is presided over by a presiding officer ora deputy presiding officer ght cour” after 5'dock S17: Place of hearing ~ a presiding officer shall sit forthe disposal of the business ofthe wibunal a ‘sich places and time a, having regard tothe convenience ofthe partes and witnesses, he may thin fi. (03: What isthe procedueto be followed in LT? (Section 20) Hearing tobe informal (1) The Hearing oF aim shall be conducted in an informal manner (2) The presiding officer may subopen winesie,omdar the produation of any document, record, book ‘of account or other exit and put oa party of Witness Such questions as he may tink fi (6) The presiding oficer shal investigate any mater which he may consider relevant the claim, ‘whether or nati has bee raised by a party. Isthe decision ofthe LT final? (Review and Appel) [A presiding officer may, within 14 days fom the date of the award, review the award, He may re-open and rear te claim wholly or in pat, and mey eal or hear fresh evidence and may confirm, ‘vary, or reverse bis aevinus award. The decision to review an award may be made either by the residing officer himself oF by one ofthe panies. However, if one ofthe parties has applied for eave to appeat and does net agree to withdraw his application, there cannot be a review (5:31). “© Any party who is disatisfed with an award by the tribunal may apply Tor leave to appeal t the Cour of Fis Instange, Tie grounds fr appeal are twofold: wither thatthe aardis errr ofthe la, that the award is outside he jristccon ofthe vibual. "The application must be made within seven days of receiving & copy f the award A Fflsal othe Coun of First Instance to grant leave is final, and there ean be no Further appeal (32) 2 ACY250\ Legal Environment or Business ‘© On bearing the appeal, the Court of Fits In di the matter to the buna with eiections fre new hearing or some other ation (838). IFany party ig isss isd with a @esfion ofthe Court of First Instance, hey may appesl tthe Cour of Appeal. As the ease of an appeal tothe Court af First lastance, leave is equited © Ifthe Cour of Apes! considers tha question of law of general public importance i involved it may grat leave _ z © Onhearing the appl, the Court oF Appeal may also allow the appeal, dismiss the appeal or return the rate (othe buna for new hearing oF same oer alin (354 and 358) (QS: What kinds of cout order may the LT make? (4 Order for reinstatement % The employer shall eat she employee in all respects as ihe had not been dismissed or as if there had been no varition ofthe tens ofthe employment contract. (restoring wo the orginal tate) (2) Order for r-engagement: The employee shall be e-engaged by the employer in employment on tems comparable 10 his crigial terms of employment or in eer suitable employment (6) Terminal payments (4) Compensation % Where an employe i ~ injured, or dis, or contracts aspeciied occupational disease % Arising out of an inthe couse of employment, the employee, or his family members can claim ‘eompensaion under ECO (Cap 282). © No compensation is payable where (4) Where the injury does not incapacitate the employee fiom earning fll wages at work: () Where the injury or death results fom a deliberate, self-inflicted injury by the employee: (©) Where the acident is caused by the serious and wilful misconduct ofthe employe: (a) Where the accident is caused bythe employee's addition to drugs or aleobol (not resulting in eats or serious injury) -30-ACY201 Legal Etnmen fr Business Lecture 1) Lew or Tor Outine + Types Negligence Duy of care Caparo three-fold est Breach of Duty of Care Causation CConeabatory Nepligence oo6E Tort ~"Wrong”(a civil wang) & Three main pes: '% Imeniona iors {you beasts sb) Negligence youcarelesly drive a ar and hit sb. down) Strict tabi (eg, vicarious hibit) “Ton of Nealigence 4 Nesligence 8 a fors of tort which evolved because some pes of loss or damage eecur berween paris tht have no contact berween hem, and therefore there is nothing for one party to sue the other + Cese-Donoghue v Stevenson (1932) % The House of Lards devise thats person should be able co sue another who eaused them los or darmage even if ere no contractual eationship, % Donogve was siven a botle oF ginger beer by a fiend, whe had purchased it for her. Aer dining half the eontems, she noticed that the botle contained 2 decomposing snail and sutTeced nervous shock aa result % Under contact li Donoghue was unable 1 sue the manofacurer because her friend Was party 0 the contract, nother % However, the House of Lords decided 10 create a new principle of law that stated everyone has a duty of eae 10 thei neighbor, and his enabled Donoghue wo successfully sue the manufacaer for anaes © In order 10 prove nesigence and claim damages, a claimant haste prove a number of elements (0 the “(t) The defendan owed them a duty oF care (2) The defendant breached that duty of ear, and (@) They suered os o damage as a dee consequence of te beach Even if negligence is proved, the defendant may have a defence Feduces the amount of damages they are lable fe. protests thes fromm lability, or 31 ‘ACN Leg Ensim for Bsns Element 1 The du ofeare % Theconcept ofa dy af eae was reson the Donophuc ase. >The House of Lords sated that every person owes a Guy of ato hes eighbout The Lars went nto expain in that neighbour” actully mean person 1 closely and diel fete by my at that. Loup reasonably o have em in contemplation as beings fetes ‘> The Inter eases of ants v Merton London Borough Counel (1977) and Caparo tnusris ple v Dichaan (1990) resid the detonate by inodwsing ‘proximity andfamess > Proximity simply means tha the ates ms be slice clot” so tha is ‘easnaby foeseabe* that one pays negligence would cause loss or damage ote ate “mes mean tht iis fr, jt andseasonable for one pry 1o owe he dy tana Case: Anna v Merton London Borough Council (1977) ~the claimants were tenants in a block of flats, ‘The fas slTered om structural defeats duo inadequate foundation which were 2 Gin dep instead of 3 dsp a8 required, The defendant Council was responsible for inspecting the foundations ing the construction ofthe ats, The House of Lords held hat the defendant did owe a duy of care 0 ensure the foundations were ofthe cot depth, Lord Wilberforce introduced a two sage test for imposing a dy of ae Case: Caparo Industries ple v Dickman, (1990) Cl bought stares in a company whose accounts had ‘cen audied by Dickman. Cl eid on the company’s published acouns and eventually bought 0 ray shares tht it was reuicedo make a akeover Bit ar the company, Cl hen discovered ha the accounts dis not reflect the company’s francial poston and sted Dickman (We audi). The question ob decided by the court was whether Dickmar oved a dy of arto, Hwa ld that ‘jean was ot able wo CI Beewse there was insu proximity Dewees them, Dickman oly “owed a diy Gf care to the company whose accounts he was auditing. He did not owe a duty of care to the company’s shirholdes or pote! investors, The court emphasized the need to establish the three elements ~ foreseeable drags, proximity, and reasnabeness~ in deiing wheter inpose dy of exe Element 2~ Breach of duty of care ~ © In many cases brought before the coun it is evident shat a duty of care exists between the defendant ye slaimant. The el issue is whether o not the acions ofthe defendant were sufficient to mect “To determine this, the court wil set the tandad of eae that they shoud have met ~The standard consists ofthe actions which the court considers a ‘reasonable person’ would have taken inthe crcunistances. Ifthe defendant fulled wo act cascnably given their duty of cae, then they will be found to have breached i, -¢ “The easonable' standard may be adjusted given the actu circumstances ofthe case © Cireumstances which may be taken into account include: © If the claimant is vulnerable, such as being disabled or tal, i is reasonable 10 expect the defendant to have paid them special atention or take extra care over them as compared 10 Someone wo if iad bealthy‘ACY2301 Legal Envios Basins The soon the een ak arin ine with common peace andy rcomnendaion, 1f they wer then is Tiely that he defendant wl be found to hve met tr dy ales the common pact ise sod to be negligent {There was some social heeft 10 the defendan’s actions. Hf here 8, then he out may consi tiny ropa er them ob Fund to hve eased thei ay. S The defendant's ton hada high probability of rk aac ttm. they di, then the eo vel expect thm io show hey tok extn recon to reve sor damage {There were praia issue that prevented being ke, oF uneAsoneble east wou hve ben isola in taki them, f thre were then the cour i uly to exes fe defendant ove taken hem in oer fo met heir ity ee. {The defendant sa pofssioa crying on ther profession, hey were, ten the out wi {nde hei cts nuns a resonable profesional tvdinay pason If pofesional guises ar in lace them he cour wl judge the defendants ction agin tse rather tha is vn expectations tei ine of work, rather than just any tenet 3 Los of dams a sl of the enh (aust) {Te claimant simply so pve ht eof danigr ws. it onscquence ofthe deen’ beac of ay ere In er words tes hin a say Ham he dete cons the claimant's loss or damage. 4 simple os caled tebe ti api, Al he cian aso pov hat te a tf te aos ot eed thn hy. od othe seed dag 4+ Mr tte sortie psi cue ofthe oo damage ted va oly be Hae ian be proved a tacos rhe est ely eas {Cue Bane y een nd Kenn IMC (196) cs dpe dor nee tr pct hee ten i.” Howes Ge doar was no und te fo aes bezae he pale wes leg om enc poten nd Would have died no mater va the negligent doctor could have done “The loss itself must tbe “too remote’, It isan important principle that people should enly be liable for losses which they should have reasonably foreseen as potential outcome of thes actions % Case’ Wagon Mound (1961) ~ il leaked out of the deendan’s boat within Sydney harbor and ‘came imo contract with some cotton waste which had fallen into dhe water. The oil was of a paniular ype which would not foresecably catch Fre on water However, the cotton ignited and ‘his is tum set he oi ablaze eausing damage othe claimant’ wharf The defendants were not found abe for re damage asthe actual cause of the fire was eld to remote “© Other evens, which fe ouside the contol oF the defendant, may intervene in te chain of causality ~ ding some confsica fhe oucome of acase. The good news is that there are some simple rules to Feinember tht dea with them “The defendant wil orl be Hable if their actions and tke most probable cause of the loss or damage ae ACY2301 Legal Ervzonmen foc Business ‘They will not be lable if an intervening at becomes she real cause. Examples of intervening aes ‘which remove ability fom the defendant include % Actions of the slaimant which are unreasonable, cr outside what the defendant could have Toveseen inthe ceumstances. ‘Actions ofa third party which become the real cause oft ass ox damage. The defendant is ‘only liable for damages up uni tie poin when the third pany intervened, ‘© _Unforescabl natural evens — natural events which he defendant could have reasonably foreseen “dono affect things Defences ence, One will exonerate hem compte ker revezs he evel of damages they are able fe. “© Vole non nurs: simply means he voluntary secopance ofthe rik of injury. fa defendant can prove the clean accepted the isk of Isso damage they wil not be liable, Acceptance can be expres (sully by consent rom being signed) or implies ough the caiman’ conduct. + Contbworyneligene: kes pan of the Blame avay fom the defendant ii ean be proved the laa contrite in some way to thi ss or damage, The defendant is stl ible, but wil fcea reduced damages pay = “Te “eg sel sl” © TheD must ake Paste fins “© Doctin hn a dfendn abe fo he pais rece. defendants negligent ov inna on. 1 the defendant commits ot asst the plain without complet defese te dfn becomes ier any ny ht is magni by the paints pela cores, “Cass: Smith Leech Brin & Co (1962) ~ 4 workman who was shy splashed by molten mt Avough is employer negligence: sulted bum on isp trigeed cancer, the Up was lead premalignant condition, e ded toe yeu ner fo cancer. 1 was bell that the ba fersesble consequence of D's (he employe) neglazoe and this rested in the dea. The deiendat was ible for his death, twas not nessa show that Git by eater wns Fresca tor that an orinay pesca woud ot kav id fom Beinuy. The esl stale applies and the defendant mus kes wt se find i, uncommon reactions to the ueACY2501 Legal Eavizonnen for Business /ACY2S01 Lega Envicnment for Business Example “Harry is involved in an aoc in which his car is hit by one driven By Alex. AS a consequence of the aocident Harry eaks & le and is unable 49 work for two months. Can Harry sue Alex for dunages? “Harry was injured asa result of Alex diving int his ear ao soit seems fir tat he should be able wo sue im, However thnk f the situation from Ales point of view. iit fir hat Harry shouldbe ble to sue in just ike ar” People have accidens everyday — should they all beable to ve each oer for every litle incident? IT tey are then the courts would be oversielmed with cases 4 The duty of care: Alex owes him a duty of care. There is sufficient prosimity (Le, es drove ino ary’ ea; i 18 teasonably focesseable that a callsion between the cars could cause Harry some injury, and seems ‘i, just and reasonable for Alex to owe @ duty of care 19 Hary (and indeed all other toad user) “Breach of duty of ca: in datermining wheter or not Alex broke is duty of care, court will consider wether o ot, gventhe circumstances, he drove as a reasonable person would have. For example, i it was foggy oF we at the time, he would be expected to show that he drove caously. In determining whether Aew's actions were reasonable, evidence may have (0 be taken fiom witnesses tnd expert analysis of the crash may’ be required, For now, le’ assume Alex was not driving reasonably Loss or damage as aresult ofthe Brecht i emily posible for Une acident 1 be caused by’ a thin pry driving ito Ae, forcing him into Harry himself was an intervening factor ~ maybe he was diving erratically, ther of these feiors could mean that Alex's breach of duty isnot the real eause of Harry's injures. For now, le’ assume tht no thied party i involved and that any actions Harry took are not enough o take the blame forthe cause ofthe accident away from Alex. The court wil therefore find Alex tbl For negligence to Harry. © Contbutory negligence: if his actions contributed in e by some way to his injuries, maybe by not ‘searing a seatbel, hen he may find the amount of damages he receives is reduce, oa =36~301 Legal Ervronnt fo Busnes Lecture 12 Social Responsibility and Managerial Eties Outine ‘Whats Social Responsibility? Social Responsibility and Eeonomie Performance The Greening of Management ‘Valucs-Based Management Managerial Eahies Social Responsibly and Ethies in Today's Works Sooner What is Social Responsibly? \/ 4 The Classical View (1) Managements enly soci responsibilty is to maximize prfis (reate a financial return) by ‘operating the busines inthe best interests of the stocsholdes (owners ofthe oeporation) (2) Friedman argues that anytime managers decide to spend the organization's resources for “Social ood! they're acing the costs of ding business. (2) These costs hae (0 be passed on (0 customers either Ukough higher pice or absorbed by stockboldersthreugh 2 smaller profit etumed as dividends & The Socioeconomic View (1) Managements social responsibility goes beyond making profits (© include protecting. and improving soiey’s welfare (2) Corporations arenct independent entiles responsible ony o stockholders (6) Firs have a meral responsibilty Target soviety to become involved in social, legal and polities (4) "To do the rig ing! “To Whom is Management Responsible? 4 At sage 1, dhe mingers are following the classical view of socal responsibilty and pursues stocker" nteres while following all laws and regulations. “$f stage 2, the manegers expand thei esponsbilites to employees because they want 1 att, Keep and motivate good employees % Improve workirg conditions % Expand employe righ % Increase job secarity AL stage 3, the mmagers expand their responsiblties to other stakeholders (e.g. customers and suppliers) Higher quality products and services © Good supplier lations |ACY2301 Lega Envioamen for Business “4 At sage 4, they vow their business as @ public enity and fel responsibility to advance the pubic 008 % Promote soca justice Preserve the envionment © Suppor social and cultural activities Arguments For and Again Social Responsibitiy Fox (a) Pale expsctatons: pubic opnion now spo busestes pursuing economic an soa goals (2) Longo profi: sosily responsible companies eto have mote er Tongan profs. (6) Ste obliatin:busineses sould be soily reponse beease responsible actions ae the Cit hing to do, (§) Puli mage: businesses can ene a avert pabicinageby pursing socal gols (6) Beter environment: business involvement can help salve different social problems, (6 Discouragement offre goverment regulation: by becoming soil responsible, businesses cn expect es gvermentegton (7) Bains of esponsiiy and power: business he lot of power nan equal lag moun of responsi snd to alan against he power (8) Stocker interes: social responsTble wl improves busines’ sock rice in he long ran ve the sours to suppor public and charitable oj that (6) Possession of resources: businesses need assistance. (10) Superioriy of prevention over cures: businesses should adress social problems before they become serious and costly to caret Agi: (4) Violation of profit maximization: business is being socially responsible only when i pursues its (2) Dilution oF purpose: pursuing social goals ities business's primary purpose economie ote (0) Cans mary socily responsible actos donot cove hr ests and smo mist pay tose costs. (4) Tomo pone businesses havea of poner eady and if thy puso scl goals thy wl hove ever moe ¢e tack of ls business eer ack te nessa his toads soi ss, (6 ook ot canbe are no die Tine o cura sl actos From Obligation 1 Responsiveness to Responsibility Social Obligation: the obligation of a business to mee! its economic and legal responsibilities and nothing more Social Responsiveness: the capacity of a fim to adapt to changing societal conditions through the practical decisions ofits managers in responding to impontant social needs a3/ACY2301 Legal Boironen fr Business “© Social Responsbiiy: a firm's obligations as a moral agen extends beyond is legal and economic ligation, to the prsut of long-term goals tha are good foe Soca. (eg. Prentice Hall and MeGraw ll ar involved in effort inerease terse). Does Socal Responsibility Pay? Studies appesr to show a positive relationship enseen social involvement and the economic performance of fim "%Difficlies in defining and measuring “socal responsibility” and "economic performance raise jssues of vii and causation inthe studies, + A gencrlconclisionis tht a firm's social aetions do not hat is longterm performance “The Greening of Managenent ‘The recognition of te clase ink between an organization's decision and activites and its impact on the satura environment Global environment problems facing managers {Air wate, and sil polltion from roxie wastes Global warming from greeshouse gas emissions % Nats resouree depletion How Organizations Go Green © Legal (of Light Gresn) Approach (Social Obligations) firms simply do what i legally required by obeying las, rules, an regulation wilingly and without legal challenge “Market Approach: firms respond tothe preferences of their customers for envisonmentaly findly products € Siakeholder Approssh: fis work to meet the environmental demands of multiple stakeholders — employees, suppliers, and the community Activist (Dark Green) Approach: Fim look for ways to respect and preserve environment and be axtivelysoealy responsible, Vanes Based Managemen -& An approach to manging in which manages establish and uphold an organization's shared values, & The Bottom Line on Shared Corporate Values: an orgmization’s value are reflected in she decisions and actions ofis employees. Managerial this 4 Ethie Defined: the roles an principles that deine right and weong conduct. 4 Four Views of Ethics (1) The ulitarian view, (2) The right view, (3) The theory of justice view, (4) ‘The integrative social contacts theory <3 ACY2300 Lega Enutcament or Busnes () Uslitarian View % Ethical decisions are made solely on the basis of tei outcomes or consequences such thet the retest good is provided forthe greatest, % Encourages efficiency and productivity and is consistent with the goal of profit maximization % Eg lay off 20% of workforce ima factory in order to mprove job security forthe remaining 80% (2) Righs View Concerned with respecting and protecting individual Hoerties and privacy % Seeks to protect individual ights of conscience, fee speech, ite and safey, and due process % Ea. protecting the fice speech rights of employees who report legal violations by their employers (3) The teary of justice view "Organizational mules ace enforced funy and impatally and follow all egal rues and regulations '% _ Proecs the interests oF underrepresented stakeholders andthe righ of employee. 4) Integrative socal contacts theory % Ethical doisions shouldbe based on existing ethical norms in industries and communities in order to determine wht conse right and wrong, Based on integration ofthe general social contract (tht allows businesses o operate and defines the acceptance ground rles) and the specific contact benween community members (that addresses acceptable ways of behaving) Factors That Affect Employee Ethics (Moral Development) Ameasue of independence from outside influences % Three levels of Inividuat Moral Development (1) Pre-osaventona evel (2) Conventional level (3) Principal level, © Stage of moral development interats wih: © Moderating variables: (1) Individual characteristics (2) The organization's structural design (8) The organization's culture (4) The imensity of the ethical issue Individual Characteristics ATeting Ethical Behaviors © Values Basie convictions about whats ight or wrong ona road range of sues 4 Moral Development % Research Conclusions (1) People proceed trough the stages of moral development sequentially. (2) There is no guarantee of continued moral develosment {) Most adults ar in Stage 4 (“good corporate citizen") =40-ACY2301 Legal Envicoames for Business ‘Two Personality Variables % Ego strength (4) A personality measure ofthe strength of a person’s convictions (2) Individual high im ego strength ave mace likely to do what they think is rghable to resist, impulse to at unethiclly % Locus of Conte (1) A personaitystibute that measures the degre 1 which people believe dey conto her ow tie (2) totem oct: you contol your own destiny (6) Extemal ces: what happens o yoo i de to Tuck (4) Employees wih an internal locus of conta ae likely to be more consistent in their moral jjndgments ad avons ‘Structural Variables © Organizational characterises and mechanisms tht guide and in ence individual ethies 1. Performance appraisal systems 2. Reward allocation systems 4, Ethic! Behaviors of managers ~ most important influence 4. An organeaton’sealture 5. Intensiyof the ehical issue © Good sructral design minimizes ambiguity and uncertainty and fosters ebical behavior. Ethie in an Sera ‘© ical standards arenot univers Social and cultural ferences determine acceptable behaviors al Context, Code of Ethics + A formal statement ofan organization's primary values andthe ebical rules it expects its employees to fallow 1, Bea dependableorganizationaleitizen 2, Don't do anything unlawful or proper that will ham the organization 3, Be good o customers Eifeetive Use of a Code of Ethies 4 Develop a cade of ethics 2 guide in handling ethical lemmas indecision making. © Communieate the cade regulary to all employes. 4 Have all levels of management continually reaffirm the importance of the ethies code and the organization's commitment to the code, © Publicly reprimand znd consistently discipline those who break the code ACY2301 Legal Environment for Gases How Managers Can Improve Ethical Behavior in An Organization |. Hine inividals with high etica standards. 2, Establish codes of ethics and decision rules 3. Lesdby example 4, Deseribe job goal and performance appraisal mechanisms 5. Provide ethics raining, {6 Condue independent social audits. 1. Prove support for individuals facing ethical dilemmas. “The Value of Ethies Training “Training in ethical problem solving ean make difference in ethical behaviors. “© Training in ethics increase employee awareness of ethical issues in business decisions “© Ethie taining clarifies and enforces the organization's standards of conduct, & Employees bevome more confident tht they will hove the organization's support when ‘aking unpopular but ethically coret stances Eihial Lesdership + Managers must provide a good role mode! by: (1) Being ethical and honest at al times. (2) Telling theta; dow hide or manipulate information (2) Adiiting fire and no trying to caver twp, (4) Communicating shred ethical values to employees rough symbols, tries, and slogans. (6) Rewarding employees who behave ethically and punish those who do not, (6) Protecting employees (whisdcblowers) who bring to light usthical behaviors or raise ethical issues. (@g, Envon, Worldcom) a.REC nieeammaneien Work Them Out| 1. Which of the following is stated in the Basic Law of the Hong Kong Special Administrative Region? A ‘The HKSAR will adopt the socialist system from 2012. 8B The HKSAR enjoys an independent jurisdiction c The HKSAR will apply laws of the PRC in preference to local law. D ‘The Basic Law ensures that Chinese customary law is the primary source of legislation. 2. Who may introduce a Bill fo the Legislative Council? 0 ‘The Government of the HKSAR wi) Members of the Legislative Council (i) HKSAR residents A (i) and (ii) only B (ii) and (i) only c {i)and (i) only D 4, (i anc (i) 3. Which of the following most correctly reflects the role of the Secretary for Justice? 0 Head of the Department of Justice (i) Head of the Law Reform Commission ai) Defendant in actions against the state A (and (ii) only B (i) ang (il) only c ( ana (iil only D (0, i) and Gi) Paper 6: Fundamentals of Business Law 1344. Which statement is true? In the HKSAR: A The Court of Appeal is the ultimate appellate court. 8 ‘The Court of Final Appeal is the ultimate appellate court. c ‘The Court of Final Appeal is the ultimate appellate court subject to the agreement of the Privy Council D ‘The Court of Final Appeal is the ultimate appellate court subject to the agreement of the Chief Executive. 5. Which statement is true? The rule of law: A ensures that everyone, except the Chief Executive and the Queen of Great Britain, is subject to the law of the HKSAR. 8 ensures that everyone, except the Permanent Judges of the Court of Final Appeal, is subject to the law of the HKSAR, c ensures that everyone is subject to the law of the HKSAR. D ensures that everyone, except members of the police force, is subject to the laws of the HKSAR. 6. Which statement is not true? The separation of powers: A ensures that no organ of government can be too powerful. 8 ensures that judges must only create law when they are also members of the Legisiative Council, c 's not perfectly followed in the HKSAR. . ensures that members of the executive can only direct judges to decide cases in the interests of the state. 7 Which statement is true? Regulations created under delegated authority can be challenged by judicial review. can never be challenged in the courts. can only be challenged by the Chief Executive, Satisfy the doctrine of the separation of powers. com> 8. Which statement is true? A Barristers and solicitors automatically have equal rights of audience in all courts. 8 Barristers are the first contact for litigants, c Solicitors prepare cases and instruct barristers to appear in court D Solicitors and barristers join together in partnershios. 8. Which statement is not true? A The ratio decidendi of a judgement represents a judge's speculation on the law. 8 The ratio decidendi of a judgement is the legal principle. c The ratio decidendi of a judgement may be binding on a lower court. D The obiter dicta in a judgement may be persuasive in later decisions. Paper 6: Fundamentals of Susinass Law! 3510. Which statement is true? A ‘Stare decisis is the principle which underpins the doctrine of the rule of law. B Stare decisis is a Latin phrase meaning "comments made alongside the judgement’ c Stare decisis is @ legal principle which allows judges to ignore earlier judgements. ° ‘Stare decisis is the principle which underpins the doctrine of precedent. SHORT QUESTIONS 1. Describe the process of creating an ordinance. 2. Describe the adversarial process in civil courts. 3. How do judges in the HKSAR decide what law to apply to a case? 4, Why are some precedents binding and others persuasive? 5. Why should businesses consider alternatives to starting proceedings in court to settle disputes? LONG QUESTION 4. What sources of law are important for the Hong Kong Special Administrative Region? (a) What laws are now in force in the HKSAR? (b) What external iaws may directly affect the law in the HKSAR? {c) What external sources may influence the law in the HKSAR? Paper 6: Fundamentals of Business Law 1 36(ee a eirneomecmennce: [=f Work Them Out 1. Which of the following most closely summarises the elements of a contract? A There must be valid acceptance of consideration supported by an intention to be legally bound. B There must be valid acceptance of a valid offer supported by consideration. c The offeror must accept al the terms of the offer. D ‘The seller must offer his goods to the buyer with a price attached, 2. Which of the following is true of consideration? w It need not be adequate. (ii) It must be sufficient. 0) Itcan be past. A (i) and i) only 8 (i) and (i only c (i) and (ii) only D (i, (i and (i) 3. An invitation to treat can be distinguished from an offer because: When an offer is accepted, an invitation to discuss terms is then made, When an invitation to treat is accepted, a contract is formed, When an offer is accepted, a contract is formed. When an invitation to treat is made, the contract is vitiated goor 4. Which of the following are invitations to treat? @ Display of goods in shop windows di) Priced goods on shelves in shops (ii) Advertisements for sale in newspapers A (and (i only 8 (ii) and (il) only Paper 6: Fundamentais of Business Law 70c (and (ii) only D (i, (i) and (ii) When is contract made at auction? A When a bidder raises his hand or in any way indicates he wishes to accept the auctioneer's offer for sale B When the owner indicates to the auctioneer what price he is willing to sell at and this is reached by the bidders. c When the auctioneer accepts the bidder's bid by bringing down his hammer or other indication D When the auctioneer brings down his hammer and asks if the bidder will accept the item at that price. ‘An offer may be revoked at any time before acceptance, only after the offeree has had time to reject the offer. at any time after acceptance but before the contract is formed, only by written notice to the offeree. gown Select the wrong answer. An offer may come to an end by: acceptance by the offeror. counter-offer from the offeree. death of either party. revocation by the offeror, com> To be valid, acceptance: must mirror all the elements of the offer. must not contain an attempt to vary terms. must be communicated by the offeree to the offeror. all of the above. cowry Which is the wrong answer? The medium of communication of acceptance can be: in any form reasonably within the contemplation of the parties. in the same form as the offer. in electronic form if this is not proscribed only by instantaneous communication, ooo The postal rule states: A that a properly posted acceptance using the mail service is valid as soon as posted B that a properly sent email acceptance is valid as soon as received by the offeror's service provider. c that a properly hand-delivered note of acceptance is valid as soon as handed to the messenger. D that a properly hand-delivered note of acceptance is valid as soon as Posted into the offeror’s mail box. ~ Paper 6: Fundamentals of Business Law! 71‘SHORT QUESTIONS 1. Explain what is meant by the following terms: (a) offer (b) acceptance (©) capacity {d) _ intention to form legal contract 2. Explain, using decided cases, the limited stock theory. 3. (a) Distinguish between a specialty contract and a simple contract. (b) What is meant by “consideration must move from promise” (©) Anthea promises to give Colin a 60 GB iPod if Colin pays her $200. She also promises Colin that she will give Ben a similar iPod if Colin further pays her $100. After Colin has paid Anthea $300, Anthea refuses to give Colin and Ben the iPods, arguing that the market price of the iPod is $3,000, Based on the rules governing consideration, explain whether Colin and Ben could sue Anthea if she does not give the iPods to each of them after receiving the payment. [Modified from HKIAAT's Accounting Technician Examination Paper 6, December 2006, Question C2] LONG QUESTION 4. During the course of Monday, 5 December, Mary, an antiques collector, exchanged the following fax messages with Brian, an antiques dealer. Mary's first fax said: "I am interested in the vases numbered 23 to 25 in your catalogue. What is the lowest price you will accept for these?” Brian replied: “t am willing to sell them to you for $12,500 each.” Mary's second fax said: “I will purchase vases 23 and 24 from you, Will you consider a discount of 5% for this pair?” Brian replied: "I would consider a discount of 2 per cent. Alternatively, | will reduce the price for all three vases to $33,500." Mary's third fax said: until Friday?" ' would like time to consider. Will you hold the three vases for me Brian replied: “They are going to auction this Friday. Let me know your decision by 3.pm this Thursday, at the latest.” Mary's next communication with Brian was on Wednesday, 7 May, in a letter which she posted at 5 pm that day, saying: “I agree to your offer of all three vases for a total price of $33,500.” She also sent this letter by fax to Brian on Thursday morning. Paper 6: Fundamentals of Business Law! 72Brian sent a fax to Mary on Friday morning, saying: “As | was away on business yesterday, | received your fax and your letter this morning. | regret that | have now ‘agreed to the sale of all three vases to another party.” (a) Advise Mary as to whether her agreement to purchase the vases at $33,500 was a valid acceptance made before 3 pm on Thursday. {b) Explain whether your advice would be different if George, another antiques dealer, had told Mary on Wednesday morning that Freddie had agreed to buy all three vases from Brian. Paper 6: Fundamentals of Business Law! 7