I am always curious about how contract law works in our legal system, and this seminar undoubtedly allowed me to have a deeper insight into how Hong Kong’s contract law operates. In this article, I will reflect on what I have learnt in the seminar and suggest how contract law relates to our everyday lives.
The professor provided us with different scenarios on how contract law relates to our daily lives. The examples given ranged from the “bubble tea” hypothetical case of a tenant trying to terminate his lease due to the economical impacts of anti-epidemic measures during the COVID-19 pandemic, to the “wedding dress” case which showed the importance of lawyers finding the best solution for its clients.
However, what inspired me the most is the case of United Eagle Ltd v Golden Achievement Ltd where the plaintiff agreed to buy a flat from the defendant and paid 10% of the purchase price by deposit, only to be 10 minutes late in completing it and the defendant forfeited the deposit. Although the majority will sympathise with the plaintiff’s situation, and the plaintiff claimed that the 10-minute delay should be overlooked and equity should intervene and grant specific performance, the Hong Kong courts and, on appeal, the Privy Council rejected the claim. The courts cited that it was clearly stated in the contract, that time was of the essence and the deposit would be forfeited for lateness.
This case taught me that the courts will always administer justice according to the law, and courts will also consider various legal principles when deciding the outcome of a case. In the common law, time is always of the essence unless stated otherwise, as we can see from cases similar to the aforementioned case such as Lombard North Central v Butterworth in the United Kingdom.
The frustration doctrine of the common law is used in the “bubble tea” case. I did some online research on this topic and found similar cases such as Taylor v Caldwell. In this case, the parties made a contract in which the defendants agreed to let the plaintiffs use the music hall for concerts on various specified dates. Before the concert could take place, the venue was destroyed by fire. After this, the plaintiffs sued for a breach but the defendants successfully pleaded frustration in their defence. Taylor v Caldwell had a very different outcome to the “bubble tea” case, as courts nowadays are reluctant to find frustration, and do so only in the most exceptional cases. As the courts cited that the “supervening event” must destroy a fundamental assumption on which the contract is based, the frustration doctrine should not be an escape route for a party to whom the contract has become a bad bargain.