Consumer Protection and Contract Law
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Consumer Protection and Contract Law
- FAQs
In Hong Kong, a seller cannot exclude liability for defective goods in a consumer contract. Such clauses are void by statute, and consumers retain full rights under the Sale of Goods Ordinance.
1. Statutory Prohibition – Control of Exemption Clauses Ordinance (Cap. 71)
- Section 10 CECO:
A person cannot, by reference to any contract term, exclude or restrict liability for defective goods ordinarily supplied for private use or consumption, where loss or damage results from the defect.
- Section 11 CECO:
In consumer contracts for the sale of goods, the seller’s liability for certain implied terms (title, description, merchantable quality, fitness for purpose) cannot be excluded or restricted.
These provisions mean that in consumer sales, attempts to exclude liability for defective goods are ineffective.
2. Sale of Goods Ordinance (Cap. 26)
- Section 14 – Implied condition that the seller has the right to sell the goods.
- Section 15 – Goods must correspond with description.
- Section 16 – Goods must be of merchantable quality.
- Section 17 – Goods must be fit for purpose.
- In consumer contracts, these implied terms cannot be excluded (reinforced by CECO s.11).
3. Reasonableness Test for Non-Consumer Contracts
For non-consumer contracts (e.g. business-to-business), liability for defective goods may be excluded only if the clause satisfies the reasonableness test under CECO s.3 and Schedule 2.
An implied term is a contractual provision not expressly stated in the written or oral agreement, but which the law treats as forming part of the contract.
Implied terms can arise:
- By fact – inferred from the presumed intentions of the parties.
- By law – imposed due to legal rules or statutes.
- By custom – recognised trade usage.
Implied Terms in Law
Certain terms are implied into consumer contracts automatically, regardless of parties’ intentions, to protect consumers:
- Sale of Goods Ordinance (Cap. 26):
- s.14: Implied condition that the seller has the right to sell the goods.
- s.15–17: Goods must correspond with description, be of merchantable quality, and be fit for purpose.
- In consumer contracts, these implied terms cannot be excluded (CECO s.11).
- Supply of Services: Reasonable care and skill must be exercised in service provision.
- Control of Exemption Clauses Ordinance (Cap. 71): Prevents exclusion of certain statutory implied terms unless reasonable.
Implied Terms by Custom or Usage
If a particular trade or locality has a recognised custom, and both parties contract in that context, a term consistent with that custom may be implied — provided it is certain, reasonable, and not contrary to express terms.
The Consumer Council is a statutory body established under the Consumer Council Ordinance (Cap. 216), funded by the Hong Kong Government. Its functions in consumer protection include:
1. Providing Information and Education
Publishes research, reports, and guides to inform consumers about products, services, and their legal rights.
Promotes awareness of consumer rights and responsibilities.
2. Handling Consumer Complaints
Receives complaints from consumers against traders.
Uses mediation to resolve disputes between consumers and businesses.
Maintains a complaint hotline (2929 2222) and accepts written complaints.
3. Advising on Consumer Policy
Submits recommendations to the Government on consumer protection policies and legislation.
Encourages industries to adopt codes of practice for fair trade.
4. Publicising Malpractices
Has the power to name and shame traders engaging in unfair or unsafe practices, thereby warning the public.
5. Facilitating Legal Action
Operates the Consumer Legal Action Fund to assist consumers in pursuing court cases involving:
- Unmerchantable goods
- Unfair contract terms
- False advertising
- False trade descriptions
- Significant consumer interest or public interest cases
Covers legal costs if the case is unsuccessful; requires contribution to the Fund if successful.
6. Limitations
The Council is not a law enforcement body — it cannot prosecute or sue traders directly.
Relies on mediation, publicity, and policy advocacy to influence trader behaviour.
1. Direct Complaint to Trader
First step: Contact the seller/service provider directly.
Recommended: Submit complaint in writing, including:
- Date of advertisement/website
- Order date
- Goods/services ordered
- Amount paid and payment method
- References (invoice/order number)
- Reasons for complaint
- Desired resolution
Record keeping: Keep copies of letters and a diary of events (dates, times, names, summary of conversations).
2. Alternative Complaint Channels
3. Legal Proceedings
- Small Claims Tribunal – For claims up to HK$75,000; no lawyers allowed; covers consumer claims, debts, service charges, property damage.
- District Court – HK$75,000 to HK$3,000,000.
- High Court – Above HK$3,000,000.
- Consumer Legal Action Fund – May cover costs if mediation fails and case involves significant consumer interest; application fee HK$100 (Small Claims) / HK$1,000 (District Court or above).
Consumers have multiple avenues — starting with direct negotiation, moving to complaint bodies, and finally pursuing court remedies such as damages, specific performance, rescission, or restitution.
Under Hong Kong law, remedies for breach of a consumer contract can be pursued through alternative complaint channels or legal proceedings:
1. Negotiation with Seller
- First step: Contact the seller directly in writing, detailing the complaint (dates, goods/services, amount paid, reasons, desired resolution).
- Keep records of all communications.
2. Alternative Complaint Channels
- Consumer Council – Can mediate disputes and, in significant cases, assist via the Consumer Legal Action Fund.
- Customs and Excise Department – For false trade descriptions, unsafe goods, or short weights/measures.
- Communications Authority – For telecommunications or broadcasting trade practices.
- Travel Industry Authority (TIA) – For travel-related contracts.
- Insurance Complaints Bureau (ICB) – For personal insurance disputes.
3. Legal Proceedings
- Small Claims Tribunal – For claims up to HK$75,000; no legal representation allowed; covers consumer claims, debts, service charges, and property damage.
- District Court – For claims over HK$75,000 up to HK$3,000,000.
- High Court – For claims exceeding HK$3,000,000.
Remedies include:
- Damages – Monetary compensation for loss (e.g., difference between market value and contract price, consequential losses).
- Specific Performance – Court order requiring the seller to perform contractual obligations (more common in property transactions).
- Rescission – Cancelling the contract and restoring parties to their pre-contract position (particularly where misrepresentation or fraud is involved).
- Restitution – Return of money or property transferred under the contract.
Minors in Hong Kong can only be bound by contracts for necessaries or certain beneficial contracts. Most other contracts are unenforceable unless ratified after reaching majority.
Under Hong Kong common law principles:
- General rule: Minors (under 18 years old) have limited capacity to contract.
- Contracts for “necessaries”: A minor can enter into a contract for goods or services suitable to their condition in life and actual requirements at the time of sale (e.g., food, clothing, educational materials). Such contracts are enforceable against the minor, and the seller can sue for payment.
- Other contracts: For non‑necessaries, the contract is generally void against the minor. The seller cannot sue for the price but may demand return of the goods.
- Prohibited contracts: Minors cannot validly enter into certain contracts such as loans, mortgages, or property purchases.
- Special cases: Contracts entered during minority may be ratified upon reaching 18, making them binding.
Under Hong Kong law, a valid contract generally requires the following essential elements:
- Parties – Two or more separate and definite legal persons with capacity to contract.
- Agreement – A clear offer and acceptance on specific terms (consensus ad idem – meeting of the minds).
- Intention to create legal relations – Presumed in commercial agreements; not presumed in domestic or social arrangements unless proven otherwise.
- Consideration – Something of value exchanged between the parties; need not be adequate but must be sufficient in law.
- Capacity – Parties must have legal capacity (e.g., generally 18 years or older, not of unsound mind, not disqualified by law).
- Legality – The contract must not be illegal or contrary to public policy.
- Certainty of terms – The terms must be clear enough to be enforceable.
- Compliance with formalities – Certain contracts (e.g., land sales) must comply with statutory writing requirements such as section 3(1) of the Conveyancing and Property Ordinance (Cap. 219).
An offer is a firm commitment to contract upon acceptance, whereas an invitation to treat is merely an invitation for others to make offers. The distinction is critical in determining when a contract is legally formed.
- Offer: A definite promise to be bound by certain terms, made with the intention that it will become binding upon acceptance by the other party.
- Invitation to treat: An indication that a person is willing to receive offers, but is not yet making a binding promise. It is essentially an invitation for the other party to make an offer.
If a shop displays a product with a price tag, this is generally an invitation to treat. The customer’s act of presenting the item to the cashier is the offer. The contract is formed when the cashier accepts payment (acceptance by conduct). This distinction protects sellers from being automatically bound by every displayed item — for example, if a pricing error occurs.
Under Hong Kong law, most consumer contracts do not need to be in writing to be enforceable. Contracts can be oral, written, or partly oral and partly written. However, certain categories of contracts must be evidenced in writing or made by deed, for example:
- Sale and purchase of land or property – Section 3(1) of the Conveyancing and Property Ordinance (Cap. 219) requires a memorandum or note in writing containing essential terms (parties, price, property, and other particulars).
- Contracts required by statute – Some transactions (e.g., certain guarantees) must be in writing under specific ordinances.
For everyday consumer transactions such as buying goods in a shop, ordering food, or hiring a taxi, no written document is required. The contract is formed when there is an offer, acceptance, consideration, and intention to create legal relations. However, for high-value transactions involving land, property rights, or other statutory categories, failure to comply with the writing requirement may render the contract unenforceable unless saved by doctrines such as part performance.
A legally binding contract under Hong Kong law is an agreement between competent parties, supported by consideration, with mutual intention to create legal obligations, and not prohibited by law. In consumer contexts, most everyday transactions meet these criteria without requiring a written document.
Under Hong Kong law, a contract is an agreement creating legally binding obligations. It is governed by common law principles and relevant ordinances. A valid contract generally requires:
- Parties – Two or more separate and definite legal persons.
- Agreement – A clear offer and acceptance on specific terms (consensus ad idem).
- Intention to create legal relations – Presumed in commercial agreements; not presumed in domestic/social arrangements.
- Consideration – Something of value exchanged between the parties; need not be adequate but must be sufficient in law.
- Capacity – Parties must have legal capacity (e.g., generally 18 years or older, not of unsound mind).
- Legality – The contract must not be illegal or contrary to public policy.