Business Law
Tutorial Questions
Week 5
1. Ms. Yeung buys a HK$3,000 laptop from "TechMart," a consumer electronics store. When she pays, the cashier hands her a receipt that says (in small print on the back): "TechMart shall not be liable for any damage to the laptop (including defects in materials) within 3 months of purchase, whether caused by negligence or otherwise." One week later, the laptop’s screen malfunctions due to a manufacturing defect. Ms. Yeung asks TechMart to repair it, but TechMart refuses, relying on the receipt’s exemption clause. Advise Ms. Yeung whether TechMart can enforce the exemption clause under Hong Kong law. In your answer, address the incorporation of the clause and any statutory restrictions that apply.
2. Mr. Chan agrees to buy “100kg of Japanese rice ex Ship X” from Ms. Lee. Both parties are unaware there are two ships named Ship X: one carrying Japanese rice (Mr. Chan’s intent) and one carrying Thai rice (Ms. Lee’s intent). When Ms. Lee delivers Thai rice, Mr. Chan refuses to pay. Advise whether the contract is void due to mutual mistake.
3. A fraudster pretends to be “ABC Electronics” (a reputable company) and orders 50 laptops from TechStore on credit. The fraudster resells the laptops to Mr. Wong (a bona fide buyer) and disappears. TechStore discovers the fraud and sues Mr. Wong to recover the laptops. Advise TechStore whether the contract with the fraudster is void for unilateral mistake.
4. Ms. Lee wants to buy a retail shop from Mr. Chan. Before signing the contract, Mr. Chan tells Ms. Lee, “This shop’s monthly turnover has never been less than HK$80,000 in the past 2 years.” After buying the shop, Ms. Lee finds out from the shop’s old accounting records that the monthly turnover was only HK$50,000 on average. Is Mr. Chan’s statement a misrepresentation under Hong Kong law? If yes, what type of misrepresentation is it?
5. Mr. Chan asks his wife, Ms. Wong, to sign a guarantee with "Best Bank" to secure a HK$1 million loan for his struggling business. Mr. Chan tells Ms. Wong: "It’s just a formality—my business is fine, and the bank will never need to use your name." Ms. Wong, who has no business experience and trusts her husband completely, signs the guarantee without reading it or asking the bank for details. Later, Mr. Chan defaults, and Best Bank sues Ms. Wong to enforce the guarantee. Can Ms. Wong argue the guarantee is voidable due to presumed undue influence?
6. A mobile phone seller charges Mr. Cheung (who has a learning disability) HK$15,000 for a phone worth HK$5,000. The seller knows Mr. Cheung cannot understand price comparisons and hides the phone’s market value. Mr. Cheung’s family discovers the transaction and wants to set it aside. Advise them whether the contract is unconscionable under the Unconscionable Contracts Ordinance (Cap 458).