Supply of Services in Hong Kong: FAQs for SMEs and Entrepreneurs
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What are the key legal obligations for suppliers under Hong Kong's Supply of Services (Implied Terms) Ordinance?
Where a service contract is silent on certain matters, service contract law Hong Kong implies the following terms as against a customer dealing as a consumer:
- Reasonable Care and Skill – Services must be carried out with the degree of care and skill expected of a reasonable service provider in that field (section 5).
- Reasonable Time for Performance – If no time is specified, services must be completed within a reasonable time (section 6).
- Reasonable Charge – If no price is agreed, the customer must only pay a reasonable charge (section 7).
A supplier cannot exclude or restrict liability for breach of these implied terms (section 8).
What rights do consumers have if services provided in Hong Kong are defective or not as described?
Under Hong Kong's Supply of Services (Implied Terms) Ordinance (Cap. 457), there is an implied term that the supplier will carry out the service with reasonable care and skill. The supplier may be in breach of the implied term if services are defective or not as described. The consumer may pursue a defective services claim Hong Kong and seek the following common law remedies:
- Sue for Damages – Claim compensation for losses caused by the breach (e.g., cost of rectification, consequential losses if foreseeable).
- Refuse Payment or Withhold Part Payment – If services are incomplete or defective.
- Terminate the Contract – If the breach is serious enough to amount to repudiation (e.g., service fundamentally different from what was agreed).
In addition, the Trade Descriptions Ordinance (Cap. 362) combats unfair trade practices such as false trade descriptions and misleading omissions. Further, the Consumer Council advocates for consumer rights services Hong Kong and offers conciliation services to resolve disputes between consumers and traders.
What are the penalties for breaching implied terms in service contracts for Hong Kong businesses?
Service provider liability Hong Kong include:
- Contractual Remedies – Breach of contractual obligations may result in remedies (damages, specific performance, rescission).
- No Direct Criminal Penalty – Breach is not a criminal offence under Cap. 457.
- Other Statutes May Apply – If the breach involves misrepresentation or unfair trade practices, criminal liability can arise under the Trade Descriptions Ordinance (Cap. 362), with fines and imprisonment.
How do dispute resolution clauses work in Hong Kong service agreements for SMEs?
Generally, SMEs have the freedom of contract to agree on dispute resolution clauses in their contracts, such as:
- Arbitration Clauses – Governed by the Arbitration Ordinance (Cap. 609). An arbitration clause will generally be upheld by Hong Kong courts, staying court proceedings in favour of arbitration.
- Jurisdiction Clauses – Parties may agree to submit disputes to Hong Kong courts or foreign courts. Hong Kong courts will usually respect an exclusive jurisdiction clause unless strong reasons exist otherwise.
- Mediation Clauses – Common in SME contracts; can be voluntary or required before litigation/arbitration.
Read our post on Ask.Legal for Small Business in Hong Kong on how to use Ask.Legal to get practical guidance for SMEs in relation to dispute resolution and other matters.
How can individuals protect their interests when hiring freelance services in Hong Kong?
When engaging with freelancers, it is crucial to have a freelance service agreement Hong Kong that sets out scope of work, deliverables, deadlines, payment terms and covers:
- Detailed Specifications to avoid disputes over quality or scope.
- Milestone Payments that link payment to completion of agreed stages.
- Intellectual Property Clauses to clarify ownership of work products.
- Termination Clause which sets out rights if work is late, defective, or not delivered.
- Governing Law & Dispute Resolution Clause to ensure disputes are handled under Hong Kong law and in a preferred forum.
- Reference Checks / Portfolio Review which reduces risk of poor performance.
Need help navigating this issue? Check out Ask.Legal — our AI-powered legal assistant is ready to help 24/7.
