Formation of Contract

Essential Requirements of a Contract

 Offer and Acceptance

 Consideration
 Contractual Capacity
 Genuineness of Consent
 Legality of Object
Offer and Acceptance
-End of Offer
 Lapse of Time
 Death of Offeror or Offeree
 Rejection
 Revocation (Withdrawal)
Offer and Acceptance
Invitation to Treat - NOT OFFER
 Display of Goods at Show Windows or Shop Shelves
 Advertisements, Price Lists or Catalogues
 Auctions
Offer and Acceptance
-Tender
 Single Tender
 Standing Tender
Offer and Acceptance
-Acceptance
 Acceptance by Post / Telegram / Telephone / Telex / Fax
 Acceptance by Email
Time Line

B
A A A Received
Received
Posted Posted Confirmation
Offer
Offer New from B
and
to B Offer
Confirm
to B
the Offer
by Post

1/8 3/8 4/8 6/8

Consideration and Contracts Under Seal
-Consideration
 Must not be past
 Consideration need not be adequate (fair) but it must be sufficient (valuable)
 To carry out a public duty does not provide consideration
 To carry out an existing contractual obligation does not provide consideration
 Only a person who has himself given consideration will be able to enforce a
contract
Consideration and Contracts Under Seal
-Simple Contract / Deed
Simple Contract Deed
-Entered into Orally -Must be in writing
-N/A -Must be clearly stated that intended to
be a deed
-With consideration -Can be without consideration
-Signed by both offeror and offeree -Must be signed with common seal /
with two company directors authorized
to be signed
-Statutory limitation period of six years -Statutory limitation period of twelve
years
Common Seal
Contractual Capacity

 Minors (under 18 years old in Hong Kong)

 Persons mentally disordered or influenced by drugs
 Companies – Memorandum of Association
Genuineness of Consent

 Mistake
Mistake as to the nature of the obligation
Mistake as to the identity of the subject matter
Mistake as to the identity of the other party
Mistake as to the basis of the agreement
 Misrepresentation
 Duress and Undue Influence
Terms of a Contract
Express Terms vs Implied Terms

Express Terms Implied Terms

Agreed by both parties in the Contract Implied by the Courts
All terms written in the Contract Legislation, common laws
Documents
Express Terms in Contract

 Conditions
 Warranties
 Intermediate Terms
Implied Terms in Contract

 Customary Implied Terms – Terms that are commonly used in the same
market
 Statutory Implied Terms – Legislation / Common Laws
 Terms Implied by the Courts – Reasonable in the circumstances
Terms Implied into Building Contracts

 Employer:
Procession of the Site
Necessary details within a reasonable time
Not obstruct the contractor to perform the Works
Pay for the Works
 Contractor
Complete the Works within a reasonable time
The Works must be of quality
Exclusion and Limitation of Liability

 Must be communicated
 Must be communicated at the time or before the contract is made
 Only a party to the contract can enforce an exclusion
 Any ambiguities will go against the party inserting the clause
 The doctrine of fundamental breach
Variation of Contract Terms – In SCC

 Must have AI
 Must not fundamentally change the scope or nature of the Works
 Valuation Rules
1) same as or similar in character
2) same as or similar in character but in different conditions
3) not in same or similar in character