ACCT 3151 Question 1 Question 1(1)

Business Law

Assignment 1

The Court of Final Appeal uses the common law approach to interpret the Basic Law as the common law system lies in the core of Hong Kongs One Country, Two System. Moreover, all parties involved in the case agreed that the common law shall be applied unanimously. In common law system, only the Court has the right to interpret laws; and in China, the National Peoples Congress has the right to interpret or make supplemental provision (Article 67, Constitution of the Peoples Republic of China). Under common law, the Court is authorized to interpret the law in accordance with the common law principles. Also, the Court is under a duty to apply the common law approach in the absence of a binding interpretation by the Standing Committee, the statement in question, a non-legally binding Opinion, cannot affect the clear meaning of articles itself. The Courts in Common law system are to enforce the legislative intent as expressed in the language but not on the legislator true intention for the sake of certainty of law to the citizen. Though Court must avoid a purely literal and technical approach in interpretation, so extrinsic evidence might be sought upon ambiguity; however, the Court shall not impose any additional meanings or alternations on pre-existing and generally accepted wording (Minister of Home Affairs v. Fisher [1980] ). As it is ruled that article 24(2) (1) itself is completely free from any ambiguity, the stated meaning in the article that any Chinese citizens born in Hong Kong should be a permanent resident of Hong Kong, must be followed. This judgment is further reinforced by the repeated appearance of the word born of in other sub-sessions of same the article, the contrast is material in the sense that if article 24(2) (1) intended to impose such restriction on parents identity, it is absurd for it not to state the restriction out in the Basic Law explicitly. Question 1(2) It is written in the Basic law article 158 (3) that, if the case is concerned with responsibility of the Central People's Government, or concerning the relationship between the Central Authorities and the Region, and if such interpretation will affect the judgments on the cases, the Court of Final Appeal is under a duty to refer the related article to the Standing Committee of National Peoples Congress. Otherwise, the Court of Final Appeal need not refer the case, though the Court of Final Appeal could choose to refer it. According to the case Ng Ka Ling & others v Director of Immigration [1999] 2 HKCFAR 4 ("Ng Ka Ling"), The Court held that it has a duty to make a reference to the Standing Committee if two conditions are both satisfied. However, it is left for the Court to decide, in adjudicating a case, whether they are satisfied: (1) The classification condition, that is, that the provision is an excluded provision stated in article 158(3); and (2) the necessity condition, that is, that the Court in adjudicating the case needs to interpret the excluded provision, and such interpretation will affect
-------------------------Nicole Law Chung Hong Ho Man Lok Eric Lee Wai Mei Kwok So Yan Yeung Ka Yi 1155000283 1155000814 1155002536 1155004270 1155004293

ACCT 3151

Business Law

Assignment 1

the judgment on the case (at 30I-31B). Though it is showed earlier that article 22(4) and article 24(3) is involved with the excluded provision as a whole, but it remains unclear that whether article 24(3) is considered as related to the excluded provision itself, not to mention 24 (2) (1). The National Peoples Congress never explicitly stated that article 24(2) (1) is concerned with such responsibility or relationship, and if the a substantive effect upon implementation is sufficient to consider an article as excluded provision such that Court of Final Appeal could not interpret itself, then Court of Final Appeal might be unable to interpret most of the articles in the Basic Law, and it is likely to be absurd. The Court finally ruled that articles 24 (2) (1) is essentially a Hong Kong affair, and is not disallowed from interpreting the article by itself. True, the Court could still refer the case to the National Peoples Congress though there is not a duty, as the National Peoples Congress interpretation power over the Basic Law is not limited to those affair stated in article 158(3), but the whole Basic Law (stated in article 158 (1)). The referral is then optional, and the Court of Final Appeal final decision of not referring the case is based on the material fact that the articles (2) (1) is clear and free from any ambiguity (as proved in question 1) , so it would be pointless to, in legal sense, to refer the case to the National Peoples Congress. Question 1(3) The Court finally ruled in favor of the respondent, i.e. to confirm the respondents permanent resident identity, as the Court held that the language used is clear (as proved in question 1), and as Basic law, as a constitutional document, prevails over all other laws. The court interpreted articles 24 (2) (1) as clearly stated that Chinese citizens born in Hong Kong before or after 1 July 1997 have the status of permanent residents. Put it in the other way, parents lacking of Hong Kong citizen identity is irrelevant and their children, on the ground that the at least one of the parent is lawfully staying in Hong Kong at the time of giving birth. The Court ruled that the Preparatory Committees Opinions is not a binding interpretation which Hong Kong Court must abide by. Since it is not binding, such opinion is not to overthrow a crystal clear literal meaning stated in the Basic Law, which is supreme in nature, if such an opinion was allowed to overturn the clear meaning stated in the Basic Law itself, then the basis of Hong Kong legal system would be substantial harmed, if not destroyed. In conclusion, the Court of Final Appeal decision is based on the fact that the article 24(3) is a local affair, which is not related to the stated exclude provision, so the Court of Final Appeal could interpret the law itself. As the only authority who can interpret Basic Law, National Peoples Congress (and its Standing Committee), did not formally voice their opinion out in a legal binding
-------------------------Nicole Law Chung Hong Ho Man Lok Eric Lee Wai Mei Kwok So Yan Yeung Ka Yi 1155000283 1155000814 1155002536 1155004270 1155004293

ACCT 3151

Business Law

Assignment 1

way, in spite of some contradictory opinions and extrinsic evidence offered or given by some authority, the Court are obliged to follow the literal meaning of the Basic Law itself, as it is free from ambiguity. The certainty of language is further strengthened by other sub-sessions in the same article, in which the identity of parents are explicitly stated, rendering the absence of such definition in article 24 (2) (1) as an intended difference, but not an omission. Question Two A (I) One could be sued for breach of contract if he fails to perform all the contractual terms. However, in the first part, George cannot sue Eric for breach of contract because there was no contract formed between them. There are four elements needed for forming contracts, namely offer, acceptance, intention and consideration. For the first element, there is no offer made by Eric to George. An offer is the expression of a persons intention to others to have a legally binding agreement. An invitation to treat differs in that it invites the other party to make an offer. The original inviter can then decide if he wants to accept or reject the offer. Once an offer is validly accepted, a legally binding agreement would be formed. However, accepting the invitation by making an offer would not form a binding contract. Eric clearly stated the price ($10,000) and the property (a computer of stated model) in his email, which are the basic terms of a contract. However, there is no clear intention to form a legally binding contract. The use of the phrases do not miss this sale and tell me if you are interested portrays no clear intention of offer formation. Thus the email is merely a provision of information, and according to the court case, Harvey v Facey [1983] AC 552, provision of information should not be treated as an offer. Since only the price and the property have been given in the email, no offer has been made. In light of the wordings used by Eric to George, it is very good in quality, it should not be treated as an offer. In the email, Eric never mentioned any words or expressed any clear intention of selling the computer to George. Instead, it simply provided a statement of introduction of the computer. Therefore, there was not a valid offer via the conversation of Eric to George. On 4 Jan, when George emailed Eric saying that he would buy the computer, there was no contract made at that time. Eric was only making an invitation to George for the trading of the computer. By law, George is making an offer to buy the computer from Eric. Eric still has the right to either accept or reject the offer. He, however, rejected the offer. No acceptance has been made by Eric. This means that the offer has been effectively rejected and no contract has been formed. Since Eric neither
-------------------------Nicole Law Chung Hong Ho Man Lok Eric Lee Wai Mei Kwok So Yan Yeung Ka Yi 1155000283 1155000814 1155002536 1155004270 1155004293

ACCT 3151

Business Law

Assignment 1

made any offers to nor accepted any offers from George, there should be no breach of contract. George cannot sue Eric.

Question 2 Part A (II) In the second part of question two, however, James can sue Eric for breach of contract. An offer is the expression of a persons intention to others to have a legally binding agreement. Though there were clear price and property of sale stated in the email, there was no clear intention to sell the computer. Same as part one, Eric was making an invitation to treat rather than an offer to James. On 4 January, James sent an email to Eric saying that he would buy the computer. Similar to the situation in Georges case, this email represents an offer. No contract was formed at this point and no legally binding effect exists. This time, Eric accepted the offer made by James though fax message. Eric immediately sent a fax message to James saying that the sale is confirmed. This is a clear conduct demonstrating the intention to accept the offer. In addition, the acceptance is valid, since George did not insist on any communication method to be used. This is a similar situation to that in the court case, Manchester Diocesan Council for Education v Commercial and General Investments Ltd. [1970] 1 WLR 241. The fact that James did not read the fax thoroughly is irrelevant in determining the validity of the contract. According to the receipt rule of communication, acceptance is effective when the offeror or his authorized agent receives it. This rule applies to fax message in this case. As maintained by the court in the Brinkibon case [1982] 1 A11 ER 293, instantaneous methods of communications such as faxed messages are assumed to be received shortly after transmission if they are sent out during normal business hours. Once the fax is noticed, it is not required that the contents are read or understood for the message to be considered received. In this case, James was assumed to have received the message. The acceptance of the offer to buy by Eric is effective. Furthermore, it finalizes all the principal terms required in the composition of a contract by agreeing to previously stated terms. Therefore, a contract has been established between James and George. Any violation of the contract terms thereafter would make either party liable for legal action. Shortly after, Eric changed his mind and refused to sell the computer to James. Since James did not acknowledge the receipt of Erics fax, Eric decided to cancel the contract. However, James inability to acknowledge the receipt of Erics fax does not qualify the contract for cancellation. Thus, change of mind and cancellation of the deal on such grounds would be a breach of contract. James
-------------------------Nicole Law Chung Hong Ho Man Lok Eric Lee Wai Mei Kwok So Yan Yeung Ka Yi 1155000283 1155000814 1155002536 1155004270 1155004293

ACCT 3151

Business Law

Assignment 1

could sue Eric for breach of contract if he does not sell the computer to him after confirming the sale. Throughout the cases, there has been neither revocation of offer nor lapse of offer. Revocation is when the offeror decides to take back his offer before the offeree accepts it. For example, the court case Dickinson v Dodds [1876] 2 Ch D 463 illustrates that no contract formation would take place if communication of revocation is made known, either to a reliable source or directly to the offeree. In James and Erics case, if James was the one to suggest cancelling the offer before Eric accepted it, then the offer would have been revoked and terminated. The same goes for lapse of offer if the offeror specifies a time period for the offeree to reply within and the offeree fails to do so, lapse of offer would terminate the offer and acceptance after the period would yield no effect. Conclusion In conclusion, George cannot sue Eric for breach of contract, as George initiated the offer and Eric was merely rejecting it. No contract has been formed throughout the process and Eric has not been entered into any legally binding agreement. He has not promised Eric anything, thus he did not fail to carry out a promise. On the other hand, James can sue Eric for breach of contract, because he refused to sell the computer to James after accepting his offer to buy. Erics reason was that his fax has not been acknowledged, however, the receipt rule of communication states that any faxed message is considered received once the offeror noticed it, regardless of whether it has be thoroughly read. Therefore, Erics cancellation of the established agreement would be a breach of contract, and James could sue him for his inability to carry out his contractual promise. Question Two (Part B) The issue here is whether Tommy can claim the $100 coupon from Kenny. The $100 coupon was promised to Tommy from Kenny. Past consideration is where a promise to pay is made in return for a service which has been done before the promise is made. In this case, Kenny made the promise of $100 coupons after Tommy did the housework. Kennys promise would be based on past consideration, and Tommys work is past service. Hence, we would need to ask whether Tommy can claim the coupon despite the promise is based on past consideration. Generally speaking, past consideration is not effective. (Roscorla v Thomas (1842) 3 QB 234). Tommy cannot claim the coupon from Kenny. However, by the court case: Pau v Lau [1980] AC 614, there can be exceptional situations to the past consideration rule, when ALL three conditions below are fulfilled: (a) the past service is done because of the other partys request (not,
-------------------------Nicole Law Chung Hong Ho Man Lok Eric Lee Wai Mei Kwok So Yan Yeung Ka Yi 1155000283 1155000814 1155002536 1155004270 1155004293

ACCT 3151

Business Law

Assignment 1

permission), (b)there has been an understanding amongst the parties that there will be a fixed or reasonable payment(or other kinds of reward) for this, and, (c) the service has been performed in a satisfactory manner. If Tommy could establish all three grounds above, he would be able to claim the coupon. For condition (a), it is not fulfilled. Kenny did not request Tommy to do housework. Tommy did the housework voluntarilyeven before he knew Kenny would offer him the coupon, so even if there were no coupon promised, Tommy would do the housework for Kenny. For condition (b), it is not fulfilled. Since Tommy and Kenny are good friends, itcould be assumed from the facts that Tommy would not expect payment fothe voluntary work done. Since they are friends, it could also be assumed that they have no interntion to form legal relations. In other words, there was no reasonable understanding between the two parties that there would be a reasonable payment/reward. For condition (c), it is probably fulfilled as after knowing the voluntary work, Kenny happily promised a coupon to him. To conclude, Tommy cannot fulfill all of the three conditions. According to the past consideration rule, Tommy cannot make a claim for the $100 coupons. As the promise is given after the completion of housework, it could also be considered as a gift; however, the promise is not in the form of a deed, so only if Kenny made the promise to pay before service done or made a deed can Tommy claim the coupon. Joanne The here is whether Joanne can claim an additional $1,000 from Company A. Consideration The issue concerns about consideration. Referring to the definition, consideration is the price given for the promise in the agreement by its parties. However, performance of a contractual duty should not be regarded as consideration, according to the court case Stilk v Myrick [1809] 2 Camp 317. In this question, the contractual duty is Joannes modeling performance work. Doing only the contractual is not enough for claiming extra payment. However, there is something more than a contractual duty stated in this case. Extra consideration To discuss whether an extra payment should be given, we need to further investigate whether extra consideration has been given. The company informed Joanne that she could get an extra payment of $1,000 if her performance can help the sale of the same kind of clothing. It means that if the company has obtained extra benefit, she can get $1,000. Apart from the basic consideration of salary
-------------------------Nicole Law Chung Hong Ho Man Lok Eric Lee Wai Mei Kwok So Yan Yeung Ka Yi 1155000283 1155000814 1155002536 1155004270 1155004293

ACCT 3151

Business Law

Assignment 1

$5,000, there is an extra consideration provided by the company. Referring to the court case Hartley v Ponsonby (1857) 7 E & B 872, extra consideration has been provided in the sense that there is agreement to do something not originally required to be done. Wearing the white blouse is the original work stated in her original contract, while helping the sale of the same kind of clothing is regarded as extra consideration. If the company did not intend to give her extra consideration, it would have asked to boost its sales without promising to give her extra payment. Requirements of extra payment and extra consideration According to the court case Williams v Roffey Brothers & Nicholls [1991] 1 All ER 523, for this contractual duty to be considered, there are two requirements: (a) it was willingly made, and (b) there is a practical benefit provided. In this issue, the company willingly asked for Joanne to boost their sales. The extra payment was willingly made as it was proposed by the company, but not asked for by Joanne. It clearly indicated that the intention was given out willingly by the company. For requirement (b), as stated in the question, the sale of white blouses after Joannes performance jumped by 200% compared to the previous month, it shows that the revenue of the company has increased because of increased sales, which is a form of practical benefit to the company. Therefore, the two requirements of this contractual extra consideration are fulfilled. Moreover, both the company and Joanne had agreed to provide extra consideration to each other (the company provides extra pay while Joanne provides better modeling performance to attract customers). Joanne should be able to claim that $1,000 extra payment. Exception 1 A smooth handover and no practical benefits? One of the exception for not being able to claim the extra payment is mentioned in the court case Cheung v birkart-East West Freight Limited [2001] HKCU 425. It states that the employee who agreed to ensure a smooth handover and did not provide any practical benefits cannot demand for the extra payment. But in this question, the situation is different. Joanne has provided the company with increased sales, so she is not restricted to this exception. Exception 2 -- Past consideration? Another exception concerns about the issue of past consideration. Past consideration is where a promise to pay is made in return for a service which has been done before the promise is made. According to the court case Roscorla v Thomas (1842) 3 QB 234, having past consideration is not eligible to claim the extra payment. In the question, the company had informed Joanne about the extra payment before she was about to do the performance. The promise to pay was clearly and willingly made before Joanne has done her service. Therefore, it is not restricted to this exception. Past consideration cannot be applied on Joannes case. Conclusion By considering the two major requirements for extra consideration and
-------------------------Nicole Law Chung Hong Ho Man Lok Eric Lee Wai Mei Kwok So Yan Yeung Ka Yi 1155000283 1155000814 1155002536 1155004270 1155004293

ACCT 3151

Business Law

Assignment 1

eliminating those exceptions, it is concluded that Joanne should be able to claim an additional $1,000 from Company A.

-------------------------Nicole Law Chung Hong Ho Man Lok Eric Lee Wai Mei Kwok So Yan Yeung Ka Yi

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