Tutorial - Topic 2: Contract

1.

Briefly describe the essential elements of a valid contract.

2.

Briefly explain void, voidable and unenforceable contract.

3.

Briefly explain specific performance.

Case 1
IO was the incorporated owners of a building estate. IO contracted out all the
renovation works to P and P sub-contracted the same to D.
1.

D agreed to carry out variation works VO1 for IO and IO agreed to pay D the
sum of HK$1M. IO did not pay D for any/all of the said sum. There was a
variation clause in the sub-contract between P and D. D asked P for payment
of the said sum. Can D claim against P? Discuss.

2.

In April 2005, D completed VO2 for a sum of HK$0.8M. P paid D HK$0.8M

in June 2005 for VO2. In July 2005, P asked D to carry out VO3 and VO4 and
told D that VO3 was settled in the last payment (HK$0.8M) and in this case
only VO4 would be paid. D agreed. D completed VO3 and VO4, and was paid
by P for VO4. Later their relationship turned ugly and D now sought for the
payment of VO3. Can D succeed and why? If P is liable to pay, on what basis
are you going to assess the payment of VO3?

Case 2
On 10th January 2007, James gave Bond a written offer to sell his car for HK$0.4M
and added If I do not hear from you by 20th January 2007, I shall regard that you
have accepted my offer. On 21st January 2007, James sold his car to Mary for
HK$0.5M. In the same evening, Bond was told of the sale of James car by James
wife, who met him by chance. On 22nd January 2007, Bond handed James a formal
letter of acceptance and asked for the car. Can Bond succeed? Was there a revocation
of the offer? Could Bond argue that acceptance was completed on 20th January 2007?
Case 3 [2007-08 (15 marks)]

Chan verbally agreed with Tom to pay Tom $100,000 for Tom to decorate his flat and
to complete the work within 2 weeks. Was there a contract between Chan and Tom?
Explain in detail. On the next day, Chan promised to pay Tom an extra $10,000 as
bonus if Tom completed on time. The work was completed within time, but Chan said
he could only pay Tom $80,000. Tom accepted the $80,000 and gave Chan a receipt
accepting full settlement of all debts. Later, Tom demanded payment for outstanding
amount of $20,000 and the bonus of $10,000. Chan seeks your advice as to whether
he needs to pay Tom.
Case 4
James agreed to carry out the renovation works for Bond and to be commenced in
August 2007. On 2nd May 2007, Bond paid HK$300,000 to James as the deposit. On
3rd July 2007, James informed Bond that he was unable to carry out the renovation
works and James did not carry out any or all of the renovation works. The
HK$300,000 deposit was returned on 5th December 2007 upon repeated demand from
Bond. Could Bond ask for interest of the deposit and since when?
Case 5
James hired a crew to navigate his boat to Macau and to return back on the same day.
When docked at Macau, the crew decided to stay in Macau. James promised the crew
that if they worked the boat back to Hong Kong, he would pay them additional wages.
The crew agreed and completed the task, but James did not pay for any or all of the
additional wages. The crew now sued James for the unpaid additional wages. Advise
James. As an alternative case, James made the request when the crew were taking
their break or were having lunch. Would it make any difference to the additional
wages?
Case 6 [2012-2013 (15 marks)]
What are the differences between an offer and an invitation to treat? G posted a notice
on a notice board stating Unique antique watch for sale at HK$68,000 or nearest
offer. Is the notice an offer or an invitation to treat? P saw the notice and told G that
my best offer is HK$50,000. G later cancelled the notice by advertising the
renovation through the newspaper. Now, P would like to accept HK$68,000 as the
selling price. Discuss.

Case 7 [2012-13 in part]

James was in a taxi with Mo as the taxi driver. James promised to pay Mo an extra
$500 if Mo drove him back home as fast as possible. Indeed, Mo drove very fast and
as fast as he could. When the taxi approached James home, he was unable to stop the
taxi. As a result, James was injured. James would like to claim against Mo in the sum
of HK$1,500 as the medical expense arising from the incident. Could Mo demand the
extra HK$500?
Case 8
By building contract entered between the employer and the contractor, the contractor
agreed to complete the works on 27th March 2007 absolutely (i.e. with no extension of
time) for a consideration of HK$12,000,000.00 (a lump-sum contract). Liquidated
damages would be at HK$10,000.00 per day after the date of completion and for a
maximum of 28 days. The architect certified that the date of completion was on 28th
August 2007. In August 2007, the employer released 60% of the contract sum and
retained 5% of the contract sum as all the retention money. The retention money
would be released in full 12 months after the date of completion and upon
rectification of all defects. The employers case was that the works was of
sub-standard quality and incomplete, and that the architect had wrongly certified the
works. The contractor relied on the certification of completion but admitted only a
small fraction of the works was of poor quality. Advise the contractor on what can be
done in respect of the payment. Estimate the amount claimable and deduction.
Case 9
The Incorporated Owners employed the Main Contractor to carry out the works. The
contract sum was HK$60M. Terms and conditions of the agreement for the works in
relation to this question are as follows:1.
Payment to be made upon certification of the works by the Property Manager.
2.
3.
4.
5.

Date of completion on 30th June 2010.

Extension of time at the discretion of the Property Manager.
No clause on Liquidated damages.
No retention money.

In December 2010, the Property Manager certified 60% completion of the works and
granted 7 days on extension of time. The Incorporated Owners released a total of
HK$33M to the Main Contractor. The Main Contractor alleged that (a) the works was
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completed in December 2010; (b) the delay was due to the Property Manager
unreasonable withholding approval of materials for 3 months; (c) about HK$3.0M of
the works was of substandard quality; and (d) about HK$3.0M of the works was
defective. Advise the parties on the amount of payment.
Case 10
You bought a massage chair from OHSIM. You paid in full on 4th June 2012 and
provided OHSIM with an address for delivery. The massage chair arrived on 20th
August 2012, about one and a half month late in delivery together with a guarantee
requiring you to sign and to return to OHSIM by post. What are the purposes of
signing the guarantee and returning by post? Will the guarantee be voided if you do
not sign the guarantee?