Business Law
Tutorial Questions
Week 6
1. A construction company, BuildRight Ltd, enters into a contract with a landowner, Mr. Chan. The contract stipulates that BuildRight will construct a custom-designed house on Mr. Chan's property for HK$8 million, with the completion date set for 1st October 2025. The contract includes a provision for interim payments, whereby Mr. Chan is to pay BuildRight HK$1 million on the first day of each month, starting from 1st April 2025, with the final HK$2 million due upon completion.
The construction begins on schedule, and the first few interim payments are made without issue. However, by 1st August 2025, Mr. Chan is experiencing financial difficulties and fails to make the scheduled HK$1 million payment. BuildRight informs Mr. Chan that they will suspend work until the payment is received. Mr. Chan replies, "I'll pay you when I can, just get on with the job." BuildRight, taking him at his word, continues with the project.
On 1st September 2025, Mr. Chan again fails to make the HK$1 million payment. BuildRight immediately ceases work on the site.
Questions: (a) Has Mr. Chan breached the contract? If so, is this a mere breach or a repudiatory breach? (b) What are the rights and obligations of BuildRight following Mr. Chan's actions on 1st August and 1st September? (c) Assuming BuildRight terminates the contract, what remedies are available to them?
2. Mr. Wong, a consumer, purchases a "SmartChef 5000" smart fridge for HK$15,000 from a retailer, Tech Solutions. The fridge is marketed with a built-in, internet-connected computer and automated food management features.
The contract includes two clauses:
• Clause 10: "The company accepts no liability for any loss, damage, or malfunction arising from the internet connectivity features or software."
• Clause 12: "All conditions and warranties, whether express or implied by statute, are hereby excluded."
A week after delivery, the built-in computer fails, and the fridge's temperature control malfunctions, causing all the food inside to freeze. Mr. Wong demands a full refund and compensation for the spoiled food. Tech Solutions refuses, citing the exemption clauses, and offers to repair the fridge at Mr. Wong's expense.
Advise Mr. Wong on his legal position regarding the implied terms under the Sale of Goods Ordinance (Cap. 26) and the validity of the exemption clauses under the Control of Exemption Clauses Ordinance (Cap. 71).