The likelihood of an ‘open contract’ in Hong Kong

It is open to the parties to a contract for the sale and purchase of land to intend to enter into legal relations on the basis of oral agreement as to parties, property and price. The courts in modern Hong Kong will be hesitant about finding that they had an intention to contract when they have not agreed on the completion date. A document that contains significant terms in addition to those agreed on in an oral contract is not a memorandum for the purposes of CPO s.3(1).

In Kwan Sin Man Joshua v Yaacov Ozer ([1999] 1 HKLRD 216, CFA) the plaintiff was tenant of the defendant’s apartment. One day they met casually and agreed the price for the sale of the property by the defendant to the plaintiff. The plaintiff sought specific performance of the agreement. The CFA held that the failure to agree on a completion date was a strong indicator that they were still negotiating and had not yet formed an intention to enter into a contractual relationship on the terms discussed. In modern Hong Kong the completion date was a matter of importance and parties rarely failed to reach agreement on it if they truly intended to enter into a contract.

The plaintiff sought to rely on correspondence between solicitors to provide the memorandum for the purposes of  CPO s.3(1). The relevant correspondence, however, referred to additional (fresh) terms beyond those covered by the alleged oral contract. It could not, therefore, be a memorandum.

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