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Hong Kong


CONTROL OF EXEMPTION CLAUSES ORDINANCE
　(CHAPTER 71)
　CONTENTS
　　
　　ion
　　I　　　　PRELIMINARY
　　hort title
　　nterpretation and application
　　he "reasonableness" test
　　Dealing as consumer"
　　arieties of exemption clause
　　ower to amend Schedules 1 and 2
　　II　　　　CONTROL OF EXEMPTION CLAUSES
　　dance of liability for negligence, breach of contract, etc.
　　egligence liability
　　iability arising in contract
　　nreasonable indemnity clauses Liability arising from sale or
supply of
　　s
　　"Guarantee" of consumer goods
　　Seller's liability
　　Miscellaneous contracts under which goods pass Other provisions
about
　　racts
　　Effect of breach on "reasonableness" test
　　Evasion by means of secondary contract
　　Arbitration agreements
　　III　　　CIRCUMSTANCES WHERE CONTROL DOES NOT APPLY
　　International supply contracts
　　Choice of law clauses
　　Saving for other relevant legislation
　　Application
　　IV　　　 CONSEQUENTIAL AND OTHER AMENDMENTS
　　(Omitted)
　　dule 1. Scope of sections 7, 8, 9 and 12
　　dule 2. "Guidelines" for application of reasonableness test
　　dule 3. (Omitted)
　Whole document
　　
　　imit the extent to which civil liability for breach　of　contract,　
or
　　negligence or other breach　of　duty,　can　be　avoided　by　
means　of
　　ract terms and　otherwise;　and　to　restrict　the　
enforceability　of
　　tration agreements.　[1 December 1990] L. N. 38 of 1990
　PART I PRELIMINARY
　　
　　hort title
　　Ordinance may be cited as the Control of Exemption Clauses
Ordinance.
　　nterpretation and application
　　In this Ordinance--
　　iness" includes a profession and the activities of a　public　
body,　a
　　ic　authority,　or　a　board,　commission,　committee　or　
other　body
　　inted by the Governor or Government;
　　ds" has the same meaning as in the Sale of Goods Ordinance (Cap.
26);
　　ligence" means the breach--
　　of any obligation, arising from the express　or　implied　terms　
of　a
　　ract, to take reasonable care or　exercise　reasonable　skill　
in　the
　　ormance of the contract;
　　of any common law duty to take reasonable care or exercise　
reasonable
　　l (but not any stricter duty);
　　of the　common　duty　of　care　imposed　by　the　Occupiers　
Liability
　　nance (Cap. 314); "notice" includes an announcement, whether or
not in
　　hing, and any other communication or pretended communication;
　　sonal injury" includes any disease and any impairment of　
physical　or
　　al condition.
　　In the case of both contract and tort, sections 7 to 12 apply　
(except
　　e the　contrary　is　stated　in　section　11　(4))　only　to　
business
　　ility, that is liability for breach of obligations or duties
arising--
　　from things done or omitted to be done by a person in the course
of　a
　　ness (whether his own business or another's); or
　　from the occupation of premises used　for　business　purposes　
of　the
　　pier, and references to liability are　to　be　read　
accordingly;　but
　　ility of an occupier of premises for breach of an obligation　or　
duty
　　rds a person obtaining access to　the　premises　for　
recreational　or
　　ational purposes, being liability　for　loss　or　damage　
suffered　by
　　on of the dangerous state of the premises, is not a business
liability
　　he occupier unless granting that person such access for　the　
purposes
　　erned falls within the business purposes of the occupier.
　　In relation to any breach of duty　or　obligation,　it　is　
immaterial
　　her the breach was inadvertent or intentional,　or　whether　
liability
　　it arises directly or vicariously.
　　1977 c. 50 ss. 1&14 U. K.]
　　he "reasonableness" test
　　In relation to a contract term, the requirement of reasonableness　
for
　　purposes of this Ordinance and　section　4　of　the　
Misrepresentation
　　nance (Cap.　284)　is　satisfied　only　if　the　court　or　
arbitrator
　　rmines that the term was a fair and　reasonable　one　to　be　
included
　　ng regard to the circumstances which were, or ought reasonably
to have
　　, known to or in the contemplation of the parties　when　the　
contract
　　made.
　　In determining for the purposes of section 11 or 12 whether a
contract
　　satisfies the requirement of reasonableness, the court or　
arbitrator
　　l have regard in particular to the matters specified　in　
Schedule　2;
　　this subsection does not prevent the court or arbitrator from
holding,
　　ccordance with any rule of law, that a term which purports to　
exclude
　　estrict any relevant liability is not a term of the contract.
　　
　　In relation to　a　notice　(not　being　a　notice　having　
contractual
　　ct),　the　requirement　of　reasonableness　under　this　
Ordinance　is
　　sfied only if the court or arbitrator determines that it would
be fair
　　reasonable　to　allow　reliance　on　it,　having　regard　to　
all　the
　　umstances obtaining when the liability arose or (but for　the　
notice)
　　d have arisen.
　　In　determining　(under　this　Ordinance　or　the　
Misrepresentation
　　nance (Cap. 284)) whether a contract　term　or　notice　
satisfies　the
　　irement of reasonableness, the court or arbitrator shall　have　
regard
　　articular (but without prejudice to subsection (2) to whether
(and, if
　　to what extent) the language in which the term or notice is　
expressed
　　language understood by the person　as　against　whom　another　
person
　　s to rely upon the term or notice.
　　Where by reference to a contract term or　notice　a　person　
seeks　to
　　rict liability to a specified sum of money, and the question
arises
　　er this Ordinance　or　the　Misrepresentation　Ordinance　(Cap.　
284))
　　her the term or notice satisfies the　requirement　of　
reasonableness,
　　court or arbitrator shall　have　regard　in　particular　(but　
without
　　udice to subsection (2) or (4)) to--
　　the resources which he could expect to be available　to　him　for　
the
　　ose of meeting the liability should it arise; and
　　how far it was open to him to cover himself by insurance.
　　It is for the person claiming that a contract term or notice
satisfies
　　requirement of reasonableness to prove that it does.
　　1977 c. 50 s. 11 U. K.]
　　Dealing as consumer"
　　A party to a contract "deals as consumer" in relation to another
party
　　
　　he neither makes the contract in the course of a　business　nor　
holds
　　elf out as doing so;
　　the other party does make the contract in the course　of　a　
business;
　　
　　in the case of a contract governed by the law of sale of goods　
or　by
　　ion 12, the goods passing under or in pursuance of the contract
are of
　　pe ordinarily supplied for private use or consumption.
　　Notwithstanding subsection (1), on a sale by auction or by
competitive
　　er the buyer is not in any circumstances to be regarded as dealing　
as
　　umer.
　　It is for the person claiming that a party does not deal　as　
consumer
　　rove that he does not.
　　1977 c. 50 s. 12 U. K.]
　　
　　arieties of exemption clause
　　To　the　extent　that　this　Ordinance　prevents　the　
exclusion　 or
　　riction of any liability it also prevents--
　　making the liability or its　enforcement　subject　to　
restrictive　or
　　ous conditions;
　　excluding or restricting　any　right　or　remedy　in　respect　
of　the
　　ility, or subjecting a person to any prejudice in consequence　of　
his
　　uing any such right or remedy;
　　excluding or restricting rules of evidence or procedure, and (to　
that
　　nt) sections 7, 10, 11 and 12 also prevent　excluding　or　
restricting
　　ility by reference to terms and notices which　 exclude　 or　
restrict
　　relevant obligation or duty.
　　An agreement in writing to submit present　or　future　
differences　to
　　tration is not to be treated under　this　Ordinance　as　
excluding　or
　　ricting any liability.　[cf. 1977 c. 50 s. 13 U. K.]
　　ower to amend Schedules 1 and 2
　　Legislative Council may by resolution amend Schedules 1 and 2.
　PART II CONTROL OF EXEMPTION CLAUSES
　　
　　dance of liability for negligence, breach of contract, etc.
　　egligence liability
　　A person cannot by reference to any contract term or to a notice
given
　　ersons generally or to particular　persons　exclude　or　
restrict　his
　　ility for death or personal injury resulting from negligence.
　　In the case of other loss or damage, a person　cannot　so　
exclude　or
　　rict his liability for negligence except in so　far　as　the　
term　or
　　ce satisfies the requirement of reasonableness.
　　Where a contract term　or　notice　purports　to　exclude　or　
restrict
　　ility for negligence a person's agreement to or awareness of it
is not
　　tself to be taken as indicating his voluntary acceptance of any
risk.
　　1977 c. 50 s. 2 U. K.]
　　iability arising in contract
　　This section applies as between contracting parties where one of　
them
　　s as consumer or on the other's written standard terms of
business.
　　As against that party, the other cannot by reference to　any　
contract
　　--
　　When himself in breach of contract, exclude or restrict any　
liability
　　is in respect of the breach; or
　　claim to be entitled--
　　to render a contractual performance substantially different from　
that
　　h was reasonably expected of him; or
　　in respect of the whole or any part of his contractual obligation,
to
　　er no performance at all,
　　pt in so far　as　(in　any　of　the　cases　mentioned　above　
in　this
　　ection) the contract term satisfies the requirement of
reasonableness.
　　1977 c. 50 s. 3 U. K.]
　　nreasonable indemnity clauses
　　A person dealing as consumer cannot by reference to any contract　
term
　　ade to indemnify another person (whether a party to　the　
contract　or
　　in respect of liability　that　may　be　incurred　by　the　
other　for
　　igence or breach of contract, except in so far as　the　contract　
term
　　sfies the requirement of reasonableness.
　　This section applies whether the liability in question--
　　is directly that of the person to be indemnified or is incurred
by him
　　riously;
　　is to the person dealing as consumer or to someone else. [cf. 1977　
c.
　　. 4 U. K.]
　　ility arising from sale or supply of goods
　　
　　"Guarantee" of consumer goods
　　In the case of goods of a type ordinarily supplied for private
use　or
　　umption, where loss or damage--
　　arises from the goods proving defective while in consumer use;
and
　　results from the negligence of a person concerned in　the　
manufacture
　　istribution of the goods, liability for the loss or damage　
cannot　be
　　uded or restricted　by　reference　to　any　contract　term　or　
notice
　　ained in or operating by reference to a guarantee of the goods.
　　For these purposes--
　　goods are to be regarded as "in consumer use" when a person　is　
using
　　, or has them in his possession for use,　otherwise　than　
exclusively
　　the purposes of a business; and
　　anything in writing is a guarantee　if　it　contains　or　
purports　to
　　ain some promise or　assurance　(however　worded　or　
presented)　that
　　cts will be made good　by　complete　or　partial　replacement,　
or　by
　　ir, monetary compensation or otherwise.
　　This section does not apply as between the parties to a contract
under
　　n pursuance of which possession or ownership of the goods passed.
　　1977 c. 50 s. 5 U. K.]
　　Seller's liability
　　Liability for breach of the obligations arising from section 14
of the
　　of Goods Ordinance (Cap. 26) (seller's　implied　undertakings　
as　to
　　e, etc.) cannot be excluded or restricted by reference to any
contract
　　.
　　As against a person dealing as consumer, liability for breach　of　
the
　　gations arising from section 15,　16　or　17　of　the　Sale　of　
Goods
　　nance (Cap. 26) (seller's implied undertakings　as　to　
conformity　of
　　s with description or sample, or as to their quality or fitness
for　a
　　icular purpose) cannot be excluded or restricted by reference　to　
any
　　ract term.
　　As against a person dealing otherwise than as consumer, the　
liability
　　ified in subsection (2) can be excluded or restricted by reference　
to
　　ntract term, but only in so far as the term satisfies the　
requirement
　　easonableness.
　　The liabilities referred to in this section are not only the　
business
　　ilities defined by section 2 (2), but include those arising under　
any
　　ract of sale of goods.　[cf. 1977 c. 50 s. 6 U. K.]
　　Miscellaneous contracts under which goods pass
　　Where the　possession　or　ownership　of　goods　passes　
under　or　in
　　uance of a contract　not　governed　by　the　law　of　sale　of　
goods,
　　ection (2) to (4) apply in relation to the effect (if　any)　that　
the
　　t or arbitrator is to give to contract terms excluding or　
restricting
　　ility for breach of obligation arising by implication of law from　
the
　　re of the contract.
　　As against a person dealing as consumer, liability in respect　of　
the
　　's correspondence with description or　sample,　or　their　
quality　or
　　ess for any particular purpose, cannot be excluded　or　
restricted　by
　　rence to any such term.
　　As against a person dealing otherwise than as consumer, that
liability
　　be excluded or restricted by reference to such a term, but only
in　so
　　as the term satisfies the requirement of reasonableness.
　　
　　Liability in respect of--
　　the right to transfer ownership of the goods, or give possession;
or
　　the assurance　of　quiet　possession　to　a　person　taking　
goods　in
　　uance of the contract, cannot be excluded or restricted　by　
reference
　　ny such term except in so far as the term satisfies the requirement
of
　　onableness.　[cf. 1977 c. 50 s. 7 U. K.]
　　r provisions about contracts
　　Effect of breach on "reasonableness" test
　　Where for reliance　upon　it　a　contract　term　has　to　
satisfy　the
　　irement of reasonableness, it may be found　to　do　so　and　be　
given
　　ct accordingly notwithstanding that the contract has　been　
terminated
　　er by breach or by a party electing to treat it as repudiated.
　　Where on a breach the contract is nevertheless　affirmed　by　a　
party
　　tled to treat as repudiated, this　does　not　of　itself　
exclude　the
　　irement of reasonableness in relation to any contract term.
　　1977 c. 50 s. 9 U. K.]
　　Evasion by means of secondary contract
　　rson is not bound by any contract　term　prejudicing　or　taking　
away
　　ts of his which arise under, or in connection with the performance
of,
　　her contract, so far as those rights　extend　to　the　
enforcement　of
　　her's　liability　which　this　Ordinance　prevents　that　
other　 from
　　uding or restricting.
　　1977 c. 50 s. 10 U. K.]
　　Arbitration agreements
　　As against a person dealing as consumer, an agreement to submit
future
　　erences to arbitration cannot be enforced except--
　　with his written consent signified after the differences　in　
question
　　arisen; or
　　where he has himself had recourse to arbitration in pursuance　of　
the
　　ement in respect of any differences.
　　Subsection (1) does not affect--
　　the enforcement of an international arbitration agreement　
within　the
　　ing of section 2 (1) of the Arbitration Ordinance (Cap. 341);
　　laced 76 of 1990 s. 2)
　　the resolution of differences arising under any contract so far
as　it
　　by virtue of Schedule 1, excluded from the operation of section
7,　8,
　　12.
　PART III CIRCUMSTANCES WHERE CONTROL DOES NOT APPLY
　　
　　International supply contracts
　　The limits imposed by this Ordinance on the extent to which　a　
person
　　exclude or restrict liability by reference to a contract term　do　
not
　　y to liability arising under an international supply contract.
　　The terms of an international supply contract are not subject　to　
any
　　irement of reasonableness under section 8 or 9.
　　For the purposes of this section,　an　international　supply　
contract
　　s a contract--
　　that is either a contract of sale of goods or a contract under　
or　in
　　uance of which the possession or ownership of goods passes;
　　that is made by parties whose places of business　(or,　if　they　
have
　　, habitual residences) are in the territories of different　
States　or
　　in and outside Hong Kong; and
　　in the case of which--
　　the goods in question are, at　the　time　of　the　conclusion　
of　the
　　ract, in the　course　of　carriage,　or　will　be　carried,　
from　the
　　itory of one State to the territory of another, or　to　or　from　
Hong
　　from or to a place outside Hong Kong; or
　　the acts constituting the offer and acceptance have been done in　
the
　　itories of different States or in and outside Hong Kong; or
　　) the contract provides for the goods to be delivered to the
territory
　　State other than that within whose territory　the　acts　
constituting
　　offer and acceptance were done; or
　　the acts constituting the offer and acceptance were done in Hong
Kong
　　the contract provides for the goods to be delivered outside Hong
Kong;
　　
　　the acts constituting the offer and acceptance were done outside　
Hong
　　and the contract provides for the goods to be delivered to Hong
Kong.
　　1977 c. 50 s. 26 U. K.]
　　Choice of law clauses
　　Where the proper law of a contract is the law of　Hong　Kong　only　
by
　　ce of the parties (and apart from that choice would be the law
of some
　　r country) sections 7 to 12 do not operate as part of the proper
law.
　　This Ordinance has effect　notwithstanding　any　contract　
term　which
　　ies or purports to apply the law of some other country, where　
(either
　　oth)--
　　the term appears to the court　or　arbitrator　to　have　been　
imposed
　　ly or mainly for the purpose of enabling　the　party　imposing　
it　to
　　e the operation of this Ordinance; or
　　in the making of the contract one of the parties　dealt　as　
consumer,
　　he was then habitually resident in Hong Kong, and the essential　

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