Contract law Element of valid contract: genuine consideration→symbolic value unique supplier, can’t replace) (Termination of liability: 1) Employee(×independent
t replace) (Termination of liability: 1) Employee(×independent contractor). 2) in the
consent/free will to enter into contract
(×coercion/violence/duress), legality, capacity to
contract(1)personal&(2)corporate capacity, “subject
to contract” Breach of contract,→plaintiff can end
contract + $ compensation OR continue the contract
+ $ compensation OR specific performance,
injunction/ rescission
Offer a definite and clear promise, to be bound on
specific terms, if the terms are unclear and
ambiguous, even if accepted, no valid contract for an
offeree,
-cease to be effective when: offer properly
withdrawn/time expires/If no time stated/after a
reasonable time/a counter-offer is made/upon death
of offeree or offeror be4 acceptance
Objective evidence: independence eye witnesses;
video-record; expert witnesses. Subjective evidence:
plaintiffs & defendants
The new contract would have final effect replacing
the old one
Invitation to treat (cannot entertain limited
number of people): invite customers to make an offer
e.g. good on shelves of store
1. “I’ll sell you my bicycle for $2,000, please reply by
next Monday through telephone conversation, mobile
no.XXX”
Offeror: I, Offeree: you, Subject matter: bicycle
Consideration: $2,000, Acceptance method:
telephone
2. Advertisement ∵millions readers, owner has
ultimate power to decide which contract to make
3. Reward for lost property can be offer∵for particular
person.
4. Limit the number. e.g. limit to 1st 10 customers
accept deal
All-or-nothing principle: either accept all offer or nth.
Acceptance indicate offeree willingness to be
unconditionally bound to a contract with offeror, once
accept can’t be revoked.
must be unqualified: must be absolute, and
conform exactly with the terms of the offer, the
acceptance is only effective if an offeree agrees with
all the term of the offer
cannot be assumed：Silence cannot amount to
acceptance.
must be communicated to the offeror: must be
made in the manner of form prescribed in the terms
of offer. Acceptance may be given in writing, orally or
by conduct. If offer is made to a specified person, can
only be accepted by that person.
Postal Rule: effective at posting time Receipt Rule:
by fax or email, valid when the message is received
electronically
change the terms of the original offer = counter-offer
Question -offer& acceptance-1
- Advertisement is not an offer but invitation to treat
- in response to that, they offer $12,000 for the prints
- Ann counter-offers by saying she’ll accept $13,500
- According to postal rule, the acceptance may be on
Sunday
- postal method is not within the intention of the
contracting parties (stated face-to-face) - Even if we
allow postal method, the offer was no longer valid as
there was withdrawal on Sat.
Question 2If Ben can claim $100 from Adam
Acting for Ben:1. Adam is making an offer to the
whole world as large  “anyone” who can swim
across the harbor
2. intention to create legally binding contract a. put
$100 on table b. “withdrawal of offer”
Acting for Adam:1. “anyone” means anyone in the
group only
 one-to-one communication
2. original intention:  rescue  entertainment
purpose
Acceptance by conduct – by swimming to other side
of harbor
Consideration-bargain btw offeror&offeree.
Must:①mutually beneficial②legal③move fr. the
promisee(offeree supply consideration, if not can’t
sue on contract)④real but need not
adequate(consist $/ sth has econ.value/measurable
in $, can lower than market $) Promise of
gift❌contract❌enforceable∵lack mutual exchange of
consideration. use deed under seal if want to give sbd a car with
an effective contract. Else: simple contract with $1
Question Whether the agreement to accept the less amount is a
binding agreement or not? -It must be supported by fresh
consideration $1 -It’ s a binding agreement as the court would
not argue with you about the price-setting process
-Consideration can be less than the market value
Intention to enter legal relationship: agreement is contract
only if both parties intended it to have legal consequences.
Objective test: not subjective intention but reasonable man’s
view (whether he think is joking?)
Commercial agreement- presumption: always intention to
enter contract, parties intended legal consequences.
Social/Domestic Agreement- e.g. family presumption: no
intention, can be rebutted by contrary evidence e.g. seek legal
advice/sign contract/ask sbd to be witness.
Terms of contract: define rights& duties arising under
contract, 2 types: express term& implied term (←basic
understanding btw 勞資,❌included in express term)
Content of contract ①express term: e.g. salary / bonus 醫療津
貼/duty of confidentiality/ termination
②implied term(resting on the presumed intention, implied
according to the previous dealings: Delivery time: 1M→carry to
new contract as implied terms /custom and trade usage: 2M.):
e.g. fiduciary duty→acts for best interest of employer/ avoid
conflict btw duties& interests (insider dealing)
Term are implied according to the Sale of Goods Ordinance
(1) of merchantable (satisfactory) quality: quality includes:
appearance and finish, safety and durability. Goods must be free
from defects, even minor ones except where these defects have
been brought to your attention by seller(除非有折扣/二手)
(2) fit for their purposes, including any particular purpose
mentioned by you to the seller CD AND DVD but turns out no
DVD functions. (3) as described on the package or a display sign
or by seller a shirt is 100% cotton Vs cotton and
polyester(→misrepresent/misdescript) (4) correspond with
sample
Failing to meet any  breach of contract consumers can
reject goods & demand a full refund(rescission)
Kensland Realty Ltd (HKCFA)-For terms to be implied, all
conditions must be satisfied:(a)reasonable and equitable
(b)necessary to give business efficacy to the contract(c)so
obvious that it goes without saying(d)capable of clear
expression(e)not contradict any express term of the contract
Invalidity of a contract：4 conditions
Mistake (1) Mistake as to the subject matter of the contract
- if both parties are mistaken as to the subject matter of the
contract– e.g., the seller is offering to sell 1 thing and the buyer
accepts but is thinking of something else  the parties have no
meeting of their minds and their contract is void for mistake
(2) Mistake as to the identity of the person
- If one party makes a mistake about the identity of the person
he is contracting with and his identity is material to the
contract, the contract will be void.
- In Cundy v Lindsay, contract btw L&Co and Blenkarn was void
∵. L&Co intended to deal with Blenkiron & Co, not Blenkarn.
①Spelling(Name)of the contracting parties ②Check”articles
of the company”/Co.Registry→Check director or not? Check if
the person has the authority to sign contract ③company chop.
(3) Mistaken signing of a document
• Non Est Factum (=This is not my deed)
• The mistaken party must prove that:
1) his signature was induced by fraud. 2) the document was
fundamentally different from that thought to be signed
3) he did not act negligently(→need clarify content with mom)
(In Saunders v Anglia Building Society, G had not taken the
trouble to read the document and had been negligent.)
Son deceived mom to sign the document She was deceived to
sign a deed thinking that she was signing a lease
Duress（Duress；Compulsion / coercion）
1) actual violence 2) threatened violence (verbal violence)
3) unlawful restraint or threat
• Necessary element — fear
• Totally deprive any practical choice
Economic duress-Unreasonable commercial pressure
voidableE.g. Force to change from a permanent contract to a
performance management system one, if no accept→fire
To avoid the allegation of duress, if the change is necessary,
let’s do a better PR job by instructing an independent
consultancy Co. (e.g. acct firm) as consultant and activate the
“consultancy mechanism” in the Co.  in addition, longer term
of contract, higher salary, better employees’ benefit
Question 1.※①Issue: is contract between A&C void.②Prove
Econ. duress: ①threat,not necessarily of a crime, must be of
some action which is improper(a. threat to determinate contract
for no good reason b. force N to enter unfair contract) + ②there
must be no practical alternatives (i. taking legal proceedings
against A→unable to sue A ii. N can do business with other: A is
contract→improper, if Non-renewal of contract→would not be
improper)
Undue influence-Abuse of personal relationship-Consent
obtained by improper pressure& influence of personal relations
- Such pressure not amount to duress. - No element of violence.
Presumed undue influence: Doctor and patient/Solicitor and
client/Parent and child/Religious leader and follower
Actual undue influence: Where there is no presumed undue
influence, the plaintiff must prove that: (1) the defendant had
the capacity to influence the plaintiff&(2) influence exerted &
(3) resulted in the plaintiff entering into the contract
-How can one avoid committing undue influence?
E.g. Husband want to buy flat with bank mortgage, ask wife to
sign contract. 1)threat if not sign, divorce. 2) influence exerted
∵not sign affect relationship. Avoid by:① Ask the bank to
approach wife ②ask wife to seek independent legal advice(if
no $, bank need to warn her, if still insist, all her obligation)
Unfair contract terms under the ordinance
Factors under the Unconscionable Contract Ordinance:
●The relative strengths of the bargaining positions
●Whether the consumer was able to understand any
documents relating to the supply of the good or services
E.g. property Co.provide info with lots of jargon&specific
terms→no relative strengths/equal ability to understand
●any undue influence was exerted on & any unfair tactics were
used against consumer? e.g. turn on all air con & refuse to leave
●The amount for which and the circumstances under which, the
consumer could have acquired identical goods from a person
other than the other party→can I consider any other business
partner? Opportunity of negotiation
Unfair contract terms at the common law
●Result of abuse must be unfairness e.g charge extortionate
interest rate for a loan facility (cannot exceed its competitors
largely) ●Weak bargaining position: required to sign a standard
form provided by the defendant ●Insufficient time to review the
contract & no opportunity to seek independent legal advice
(cooling off period) ●Paying substantial fee like extortionate
membership fee. look at ①offer ②environment
Question 2:avoid transfer of house share to Tom +security
transaction with bank. Any duress? No specific threat imposed
by Tom, only possibility of violent reaction, Tom did nth so
fa→no duress. Presumed undue influence? ❌fall into 4
relationshi
Actual undue influence?①close relation→capacity to infl.
Harry ②Influence exerted? Fears Toms’ reaction/damage
relation. ③entered contract? transfer took place(1st
transactional event)
Stronger dominant party VS weaker: Tom, older(age&maturity)
Harry rely on him for major decisions(facts). 2nd transaction
(with bank)① no duress, ②if bank have knowledge of
possibility of undue influence, then bank may be liable(unless it
does sth to protect P) i)actual knowledge(“knows”) ii)
constructive knowledge(“ought to know”)→the transaction is
harmful for Harry→close relationship. “not fatal”→bank shd do
sth. E.g.: ask harry to seek legal advise, ask bank employee to
contact harry personally, explain all legal implication to harry,
get confirmation from harry lawyer, warn harry for the
potential liability
Tort Law Definition of tort: A civil wrong to be brought by a
victim against a tortfeasor. Intentional: battery, assort, force
enforcement. Unintentional: negligence: driving, mental illness
situation, negligence in relation to product liability. An award of
damages is the usual remedy with no criminal consequences
Intro: Tort is a fault-based liability. A person is liable for the
tort of negligence only if the accident was his fault. →no age
requirement. Ignore can be plaintiff,ignorance cannot be the
excuse. Anyone can be defendant except certain gov. official
Independence of the judiciary: There is no case to be brought
against a judge for negligence or defamation claims etc. A judge
should be provided with an independent and free environment
to adjudicate a case.
Can claim:①Med.exp.②pain&suffering③loss of income while
recorvery④loss of income because of disability.
Question1:Psychiatric harm, primary&2nd victim, proximity
A:nearly injured. B:dead. C:badly injured.←primary (cause of
action against the driver). Friend: depression+ present at scene.
Wife&stepmother: depression +direct r.+ go hospital,mental ill.
Grandma:no prood of mental illness, no rush to location, only
sorrow. Secondary can claim only if all 3 fulfil: a. identifiable
kind of mental illness (mere grief won’t give rise to a cause of
action) b. proximity in terms of relationship(i.e. direct
relationship with primary victim) c. proximity in terms of time
& location(scene of accid/ its immed. aff: hospital/morgue
Tort(1)- Joint/Vicarious liability: An employer is vicariously
responsible for torts committed by his employee.∵assume no
enough training. 3 ingredients for action grounded in vicarious
course of employment. 3) torts(mistake) committed by an
employee. →reasonably foreseeable, not too remote
Check Chor-ching v Wik Far East Ltd 員工放工后為追公司免
費接送巴士，衝出馬路被車撞. The employee claimed
compensation under S5 of the Employees’ Compensation
Ordinance that where an accident happens to an employee
while he is travelling as a passenger on transport provided by
his employer. The ordinance only applies where the applicant is
injured whilst being carried in the employer’s bus.
Held: The employee had NOT boarded the bus. And he was not
acting in the course of her employment after she left the factory
premises and was on the public road as a member of the public.
Tort (2)-Negligence: Careless mistakes committed by a
plaintiff who fails to discharge a reasonable standard of care
Manufacturers, doctors, accountants, owners of a restaurants
etc. all owe a plaintiff a duty of care in different circumstances
Primary victim→immediate victim& those who nearly suffered
from. Secondary victim (whose mental illness stems from their
reaction from physical harm caused to the pri. victim) can only
claim if there is close relationship(i.e. direct) with pri. victim.
Essential elements of a tort of negligence
1) Did the defendant owe a duty of care to the plaintiff?
2) Did the defendant breach the duty of care?
3) Did the breach cause the damage?
4) Was the damage too remote or not ?
1)Duty of care-Donoghue v Stevenson- P drank beer→A foreign
body flowed out, ill→食物中毒/sick by the sight of what saw.
Held: Tho no contract between plaintiff and manufacturer(M).
As a M, it was reasonably foreseeable that his defective
products were going to affect the ultimate users of the products
when put to public consumption and circulation. According to
neighbour principle, it is incumbent on M to take care of the
interest of his neighbours, persons who are so closely and
directly affected by his act that he ought reasonably to have
them in contemplation. The rule that you are to love your
neighbour becomes law, you must not injure your neighbour.
1)Duty of care-proximity issue-Yuen Kunyeu v Attorney General
-plaintiff lost $ deposited(機構破產)→claimed damages in
negligence, arguing the Commissioner(C) owed and breached
the duty of care∵he knew or ought to have known that Co.
conducted fraudulently and to the detriment of depositors.
Held: There was NOT a sufficiently close and direct relationship
between the C and the depositors. They were not neighbors as
there was no contact at all between them regarding the
investment exercises. The C did not have any power to control
the day-to-day management of the deposit-taking company.
There was also an underlying policy reason which was to
prevent a flood of actions. If the C are to owe such a duty of care
to the public, the duty should be contained in legislation.
2) Breach of duty of care--If duty of care exists, burden of proof
lies in the plaintiff(P) to prove that defendant(D) has breached
that duty i.e. to find the fault of the D as tort is a fault-based
liability. --The onus lies in the P to prove the D fails to discharge
a standard of reasonable care on a balance of probabilities
Reasonable man test: will a reasonable person with similar
background and qualifications would behave in a similar way?
If D has professional qualifications→judged by standard of a
reasonable man with such qualification.
The D is judged not by what he did but by a reasonable man
would have done in the same situation.
Court will consider factors like: 1) whether such a loss has
been suffered before. 2) whether reasonable and practical
precautions had been taken. 3) whether the practices of the
relevant industry or profession had been followed
2) Breach of duty—safe if follows common practice? Floodgate
argument - Edward Wong Finance’s Case: EWF agree to lend
loan to enable a Co. to purchase ground floor of a factory
building. Loan was secured by a mortgage, EWF instructed JSM
to act for them in respect of the mortgage. The solicitor acting
for the owner of the factory undertook to forward all the
relevant documents within 10 days of receiving the mortgage
proceeds. JSM sent a cheque to solicitor, but left HK with the $.
- Held: the risk of loss to EWF was a foreseeable risk and the
risk could have been avoided. By following the general practice
without taking precautions, JSM failed to exercise the standard
of care which they owed to EWF and so were negligent.
- gd starting pt. to follow common practice but it cannot act as a
shelter for a claim of negligence. There are incidents where a
professional member shd exercise his professional judgment to
decide whether or not to embark on a transaction. He must use
common sense & independent judgment to make a rt. decision.
2) Breach of duty-Res Ipsa Loquitur--In circumstances where
the only reasonable explanation for the defect is that someone
acted negligently, there is a presumption that the defendant
was negligent. --The facts speak for themselves (res ipsa
loquitur) - and negligence on the part of the D must be
presumed. --It operates as follows: if the P relies on the
doctrine of res ipsa loquitur, and the D produces no evidence to
rebut the presumption that he was negligent, the P will still
have to prove his case. The onus still lies in the hands of the P.
3) Causation of damages --The plaintiff must prove that he has
suffered loss of damage because of the defendant’s breach of
duty. --In other words, there is a causal link between the
damage and the breach of duty. --But for test can be adopted to
establish the causation or correlation. --e.g A car manufacturer
cannot be held responsible for an accident if he produced a car
with a defective fuel gauge BUT the driver was injured as a
result of driving too fast and NOT because he ran out of the fuel.
there is no causal link between the driver’s injuries and the
manufacturer’s breach. Need to prove: D’s act caused P’s injury
4) Remoteness and foreseeability --It is reasonably foreseeable
that because of the defendant’s negligence, the injury or
damage is likely to be suffered. Damage shd not be too remote
and should be reasonably foreseeable in the first place. –e.g.,
employee suffers fr. personal injury in course of employment,
what kinds of compensation can ask for? Are they reasonably
foreseeable or too remote? Remote:①Promotion
opport.→depends on variable factors→if get
confirmation/indication fr. employer→more foreseeable
--In some circumstances, there may be another cause which
intervenes and causes the injuries i.e. novus actus interveniens.
The intervening act is said to break the chain of causation.
e.g. negligent doctor VS broken left leg, doctor wrongly cut the
right leg. D1：sue driver for 左腳 D2: sue doctor for 右腳. They
Apportion the liabilities according to cause of accident.
Question2: Joint tortfeasors. Issue1 : whether A can sue B&C as
the joint tortfeasors for negligent driving
a. a driver owes a duty of care to all the road users
b. no reasonable driver would behave in the same way as the D
c. but for the careless driving, he would not have suffered from
head wound || d. compensation: ① ③ ④ (refer above)
Criminal offense of reckless driving→conviction→evidence to
prove civil liability
Issue 2: whether A’s employer can sue B&C for loss of money?
→A careless driver does not own a duty of care to employers of
a pedestrian →no proximity
Negligence→Headwound, A is kicked by D who steal $(loss of
income)→NOVAS. ACTION: sue B&C→head injury. Arrest D→$
Professional Negligence—negligent misstatement
① D advise P ② P relies D ③The D shd realise that his advice
would be relied upon by D for a particular purpose/transaction.
--Professionals owe a duty of care to their clients in the course
of advising them. --If the advice is negligent, then their clients
may sue them for professional negligence
--main differences: professional negligence& misrepresentatio?
--Although it is not difficult to prove professional negligence,
there must be a special relationship between the advisor and
the advisee --How to prove a special or proximate relationship?
Professional negligence--Hedley Byrne v Heller
FACTS: HB: advertising firm. EL:clients. HB asked their own
bank to obtain info. from EL’s bank, H & P. Bank stated that EL:
good for ordinary business engagements. Relying on the reply,
HB executed advertising contracts for EL but lost many money
when EL sent into liquidation. sued the bank for the loss as a
result of the negligent advice.
-- a close proximity between the advertising agents and the
bank in that the agents specifically requested for the financial
information about its clients and the bank knew this would be
crucial for the agents to determine whether or not to have a
business relationship with its clients.
-- the first case that the court recognized that a P could claim
damages for financial loss as a result of negligent misstatement.
Professional negligence—Caparo Industries v Dickman
Facts: CI bought shares in reliance on auditor’s accounts,
believe will earn a profit. then discovered that the accounts did
not reflect the company’s financial position, suffered loss. Issue:
Whether CI shareholders can sue the auditor for breaching duty
of care or professional negligence. *Auditors own duty of care
to company, client, shareholders as a whole ❌individual
Two very different situations: (1) 1:1 situation e.g. Hedley
Byrne→1:1 commun. btw agents and bank that bank provided
advice to agents for an important commercial decision.
2) one-to-many situation as in Caparo’s case→auditor: not
liable to Caparo ∵was insufficient proximity btw them. The
auditor owed a duty of care to the company whose accounts he
was auditing, not owe a duty of care to shareholder or potential
investors. +his report was not for personal investment purpose.
Question 3: - 1:1 communication: giving advice to a client V.S.
passing info. to a stranger. A duty of care would not be imposed
regarding statements made on social occasion. || Hedley→bank
did assume a high degree of responsibility in advising agents
V.S. Martin jokingly recommend publishing shares with no
business bg. Suicide: not reasonably foreseeable consequence
Question 4: whether a writer own a duty of care to the reader
①the class size to which the advice belongs(size too large)
②whether the advisor knows that the advice would be relied
upon by the advisee for a particular purpose/transaction.
③whether there is a close relationship btw the advisor and the
advisee (no close relationship, stranger with each other)
④the purpose for which the statement was made.
(A writer does not own a duty of care to the general public.
There’s insufficient proximity. The court would not impose
unlimited liability on the writer as the class size is too large.)
Neil purpose: - to impress Rachel, no knowledge of type of
transaction undertaken by Rachel. Terence: reasonable for him
to rely on book as Neil has told him to do so. Suff. proximity.
Niel knows his book would be used by him for invest purpose.
Employment Law Efficiency will increase according to the
level of specialization/ departmentalization at the beginning,
but then the efficiency will drop because employees will feel
bored after some time. Solution: Job rotation, Group employees
into different team (if there is limited departments)→ team
bonus instead of individual bonus, In-house training, External
training → continuing education fund for further study
Distinction btw employee & independent contractor:
Contract of service (employment contract).Contract for services
(service fees only). Employment Ordinance (benefits)
Rationale behind:
1) Only employees are entitled to claim benefit of the various
employment rights contained in Employment Ordinance.
2) An employer is liable for the negligence of his employees but
not for those committed by an independent contractor
3) Only employees are entitled to compensation under the
Employees’ Compensation Ordinance. Employee who injured in
course of employment may claim compensation from employer.
4) Tax issue. 5) Copyright issue. 6) Priority in winding up
- fixed charge(employees as preferential creditors)
- floating charge(unsecured creditor→independent contractor)
Employee → fixed monthly income
Independent contractor → service fees only → task-based
Create any works in the course of employment, the copyright
goes to the employer Solution: sign a contract agreement to
retain the copyright [co-own works better]
e.g. Housing Authority 外判公屋清潔 to Cleaning Company
=Client & Independent contractor. Co.&cleaner=勞資關係
Tests: determine if there is an employer & employee relationshi
1)Control test—the employer is regarded as the master and
the employee as the servant and the test is of control. If the
employer can direct the employee to work in a particular
location, under a regulated office hour and the means to carry
out the service, then a contract of employment is said to exist.
However, in many circumstances, an employer does not have
the expertise that his employees have, and the test of contract is
not determinative.
2) Integration test—The test is concerned with the extent to
which a person is part and parcel of the organization.
--looking at the issue from the perspective of the organization’s
structure i.e. whether an employee is integrated with the
company’s hierarchy.
--if conflict btw control test& integration test, the latter prevail.
3) Multi-factor test—Is the person who has engaged himself to
perform the services performing them as a person in business
on his own account. Factors to be considered:
--whether an employer can appoint, develop, dismiss a worker
--the ingredients of a remuneration package -- whether an
employer provides the tools, the equipment, the office premises
etc. --whether he hires his own helpers --what degree of
financial risk he takes --whether he assumes a high degree of
responsibility --whether he earns profit as a result of his good
management --whether he is engaged generally as opposed to a
particular task --The label uses in a contract
Continuous Contract –employment period: at least 4 weeks
--Working at least 18 hours a week →Every contract which
satisfies this definition is deemed to be an ongoing contract
renewable on a month-to-month basis. --Any term of an
employment contract which purports to reduce any right or
benefit of an employee under the Employment Ordinance shall
be void. e.g. Contrat 三星期產假, EO 十星期產假. EO always prevail.
-- whether or not an employee has a continuous contract, it is
for the employer to prove that an employee has not been
continuously employed. burden of proof rests with employer.
Duties of an employer
1)To provide remuneration paid in full and on time(7 days)
2) To indemnify the employee for any loss or expense incurred
by the employee while carrying his duties.
3) If an employee is on piece-work or commission, there is also
an implied term that the employer will provide a reasonable
amount of work in order for the employee to receive wages
expected. E.g. sales sell A($10K)→unfav B($5K)→transitional
period, shd allow to sell A&B to maintain reasonable salary
4) To take reasonable care of employee’s safety (duty of safety)
especially important to industrial safety →Factories and
Industrial Undertakings Ordinance gives the Commissioner for
Labor authority to make detailed industrial safety rules and to
inspect industrial undertake→correspond. duty for employees
to help employers to discharge this E.g. Employer: provide safe
working envir, (e.g. SARS employee need to do health check
ensure other safety) Employee: help employer to provide safe
work. Env. + don't put yourself at risk (e.g. dun bring weapon)
Duties of an employee
1) To be obedient—bound to carry out any lawful and
reasonable instructions given by the employer
2) To use reasonable care and skill—bound to carry our his
work using a reasonable amount of care and skill.
Reasonable men test: what the reasonable man with that
particular employee’s qualifications would have done
 vicarious liability is for external purpose while “reasonable
care and skill” test is for internal e.g. Bus Co: pay compensation
to victims (ex.) & sue driver for “breach of care and skills”(in.)
3) To work faithfully and honestly  act in the best interests of
the employer’s trade or business may not set up his own
business in competition with the employer  not provide
assistance to a competitor of his employer e.g. Fiduciary Duty
4) To keep information confidential →Can’t sell any IP asset of
the company ∵not personal assets but Co. asset. E.g. Coca Cola
employee know but cannot sell formula even leave the company
Breach of confidence:employer entrust the info. to employee
in confidence, thinking that they will not misuse/disclose it.
This duty in effect after termination. “familiarized themselves”
highly ambiguous wording.→need more evidence before sue for
breaching this duty: 1) How did they obtain the trade secret
before departure? 2. Did they misuse it? 3) Did they disclose it?
Question 1: Breach of emplo. contract- Restraint of trade clause
Mary was not allowed to work as an accountant in central after
termination of the employment→against basic right to work/
right to change occupation (freedom of movement of work)
→this clause shd be void generally. Exception: if the clause is
reasonable, the court would give effect to it. Reasonable
test→factors: duration of the restriction, geographic
restriction /location, auditory(types of
restraint).”Accounting”:ambuiguous ∵have many areas, draft
not specific enough→can’t pass
前提∵Mary already sign the contract=agree to it→Exception
E.g. saleslady not allow to work in another street→reasonable
Not work in Central→can’t pass test as all leading acct firm stay
in central→location restriction is too broad
Question2: Will Spare time job break employment contract?
Ask Carol to check the employment contract→any express
restriction?(usually won’t include in restriction as discourage
your working incentive, but by asking you to share income)
→any implied duty(“common law”)→①fiduciary
duty②faithful service to the employer →the work she has been
invited to perform is similar to that undertaken by her
employer→she shd try her best to transfer this business oppo.
To her employer∵George may be one of the potential customer.
May argue that this oppo. Is remote, not mature, George may
not approach her company as there is many acct firm. No
breach of duty as George are in completely different line of
service. Disclose Duty: as a junior clerk, carol may not have
access to important info. + bookkeeping is basic acct work, not
likely to disclose trade secret. [if the wage earned cannot
sustain living→court will consider reasonable for part-time job
provided that it will not affect her full-time commitment ]
Question 4: Staff compete with former employer after quitting
Staff: Against motivation theory→if employees perform well,
the employer should reward them accordingly. At common law,
a duty to maintain employee’s salary at a reasonable level(× cut
commission which will cause dramatic drop of their wage)
-ex-exployee can compete with ex. employer (“not set up own
business in compet. with …”is not applicable to ex-employer)
∴they would not be able to compete with their ex employer if
there is an express restraint of trade clause.→even so the court
will also need to decide whether this clause is reasonable or not
∴fiduciary duty cease to hv effect upon termin. of employment
Employer: (copy everythi in the part of breach of confidence)
Important implied terms in the Employment Ordinance
1. min. wage protection | 2. deducting wages total amount
in any one case shall not exceed the equivalent in value of the
damage or loss suffered by the employer or $300(less one). The
total of such deductions in any one wage period shall not
exceed 1/4 of the wages payable to the employee. The employer
can deduct the wages proportionate to the period of absence.
3. no late payment of wages ①7 days grey
period②interest③not paid in 1M→terminate contract w/o
notice ④
becomes creditors, can ask liquidation proceeding(min.debt
requirement =$10K, can join hand take collection action) Need
to send demand letter to the registered employer office and
wait for 21days, after 21days, can ask for winding up.
Wind up doesn't mean get back wage∵go to liquidator/gov.
⑤fraudulent trading “defraud the employees/creditors”
e.g. Old Co.(6M be4 wind up): employer know Co is in financial
difficulty and not able to pay wage but still recruit lots workers
(3M be4) employer transfer asset to a new formed Co. Purpose:
avoid asset to be used in settling debts/creditors when wind up
Effect: personal liability to be imposed to employer even after
wind up(still need to pay wage) = empower employee to sue
4. rest days not less than 1 rest day in every period of seven
days. Pay or without pay depending on mutual agreement.
5. statutory holidays 12 days in each calendar year which
are subjected to change (e.g. discussion on Confucius’ birthday)
An employer may ask employee to work on statutory holidays
but notice and alternative holiday must be provided. ❌allowed
to make payment to employee in lieu of a statutory holiday.
6. paid annual leave  Min. 7 days after serving annual period
7. 10 weeks’ PAID maternity leave: continuous contract of not
less than 40 weeks + given notice of pregnancy with a medical
certificate --if less than 40 weeks, 10 week but WITHOUT PAID.
-- prohibited from dismissing a pregnant employee except for
summary dismissal. Male: 5 paternity days
8. end of year payment NO legal requirement to pay end of
year payment e.g. bonus, double pay. Bonus (past year perform)
is at discretion of employer but exercise in reasonable manner.
9. Gratuity: subjected to the mutual agreement. automatic as
long as the employee completes the length of service under the
contract. Irrespective to performance but length of work
10. severance payment work at least 2 yrs(continu.contrac)
11. long service payment at least 5 yrs under cont. contract
Termination by choice ( by choice/voluntary & 3 below)
--Either employer or employee may at any time terminate the
contract of employment by giving notice orally or in writing.
--The statutory minimum period of notice to terminate a cont.
contract is 7 days but largely depends on the terms of
agreement. contract with professionals, length is usually longer.
●If a person is expressly employed on a period of probation, the
contract may be terminated without notice.
●Either party to a contact may terminate the contract at any
time without notice by agreeing to pay the other the amount of
wages that would have been paid to the employee during the
required period of notice –i.e. wages in lieu of notice 代通知金
e.g. contract:6M notice, give 4M notice: 2M salary compensation
●If wages owing to an employee remain unpaid for 1M from the
day on which they were due, an employee may terminate the
contact without giving notice or wages in lieu of notice.
Unfair dismissal (e.g pregnant, paid sick leave,工會活動, any
proceedings or inquiry in connection with the enforcement of the
Employment Ordinance, work accidents, entered into an
agreement with the employee for employee’s compensation.
Difference= previous: court/trial proceeding, latter: no court
proceeding, still in negotiation process)
Results: A. get compensation B. can be reinstated→get job back
Termination in the event of breach of contract
Employer may terminate contract without notice or payment in
lieu of notice i.e. summary dismissal in following circumstance:
1) An employee willfully disobeys a lawful and reasonable
order Lawful: Check employee contract carefully to see
whether it is within your scope of duty to do this or not.
Reasonable: no definition, only determined by fact & evidence
2) An employee conducts himself in a manner which is
inconsistent with the due and faithful discharge of his duties →
you do sth. That hurt employer’s interest e.g. be asked but fail
to bk room for AGM, can fire as you hurt business contract
3) guilty of fraud or dishonesty →fire immediately e.g. stealing
4) An employee is habitually neglectful of his duties
Question: If employee fails to work on time(e.g. late everyday),
can employer dismiss him without paying any compensation?
A. if employer never raise objection =implied approval,
acquiescence to be late, cannot dismiss (this year). If gave
warning or continue to be late, can fire
●Garlitz Investment v Hui Lai Ping:employee: refused to sign
a letter transferring working location(liable for 1)disobey a
lawful order), late for work 3 times and found shirking
twice(liable for 4)neglect her duty) Held: summary dismissal
was justified. employer may either rely on a single incident or
the cumulative effect of a series of incidents. need to clear the
basic wage before the incidents. If dismissal justified, employee
loses his right to a long service or severance payment under EO
Constructive dismissal (employee is forced to resign?)
- The conduct of an employer may present an employee with no
option but to terminate his contract of employment -employee:
right to terminate without notice or payment in lieu of notice if:
he reasonably fears physical danger by violence or disease…
 He is subjected to ill-treatment by the employer
E.g. 家傭 subject to oppressive & exploitative work regime
- right to terminate his contract without giving notice or
payment in lieu of notice to his employer if he has been
employed under a contract for at least 5 years to do a certain
type of work and he is certified by a doctor as being unfit for
that particular type of work
Question1①Check Emp.contract to see if marking is listed as
the main duty of the teacher.→is implied duty to mark the
paper even its not listed as main duty. ②whether the
requirement to work evening&weakends is a lawful, reasonable
order(subject to debate)(possible debate:employee: not their
work time,OT. Employer: under flexible working hour, stime
teacher can leave earlier, hv right to ask employee work
additionally during peak season)→the employer would argue
that every employee need to do some OT during peak season of
Co. ③Duty to serve employer faithfully(teacher: not intend to
hurt school, only care family)(Sch: action refuse to mark really
cause delay and harm is irrevocable.) Deduct wage? can only
deduct wage due to damage caused on property. Not pay wage
at all?Employee can sue sch(7days,terminat,windup,fraudulent)
①try to negotiate with teacher(delay schedule,give
time)②last resort: fire teacher by summary dismissal. If
teacher still refuse to work, after try to negotiate, employee will
lose all wages.
Question2: punishment is subject to proportionality principle
The sanction shd not be out of proportion to employee conduct
Rita: general reason to leave+find ppl replace❌disturbance to
business+good working record. Mavis: ABC is in breach of the
duty of safety+ there is no duty to obey the unlawful order of
not using the fence. Procedure fairness: 1.carry
investigation→meetings→warning, 2. Disciplinary proceedings,
3. Allow them to have chance to appeal.