Dealing with consumers (Hong Kong law)

This guide is based on Hong Kong law. There is an equivalent UK guide.

Overview

There is no comprehensive legislation in Hong Kong regulating the rights of consumers. However, regulations for the protection of consumer interests are contained in various pieces of legislation. There is no law in Hong Kong which grants rights to consumers in relation to internet sales.

The term "consumer" may include private individuals and businesses insofar as they are not dealing in the course their business.

The various laws relating to consumers can lead to:

• Terms in contracts being unenforceable by suppliers
• Implied terms being introduced into contracts
• Contracts being voidable at the consumer's option
• Suppliers incurring criminal liability.

Who is responsible?

The Consumer Council, established under the Consumer Council Ordinance, is an independent body that acts as a watchdog for consumers by protecting and promoting their interests in relation to goods and services, and transactions concerning land.

The functions of the Council, as set out in the Ordinance, include:

• collecting, receiving and disseminating information concerning goods and services and land;
• receiving and examining consumers' complaints and taking appropriate action (including reporting to the Government); and
• encouraging business and professional associations to establish codes of practice to regulate the activities of their members.

The principal activities and objectives of the Council include:

• identifying and investigating consumer complaints and concerns;
• conducting tests, surveys and research for the evaluation of goods and services to users;
• undertaking research studies on trade practices affecting competition in the marketplace;
• promoting public awareness of consumer rights and responsibilities through publicity and media campaigns and consumer educational activities and projects;
• providing legal assistance to worthy cases through its Consumer Legal Action Fund; and
• advising on all consumer issues and policies.

Product liability

There is no comprehensive legislation in Hong Kong governing product liability. Regulations pertaining to the safety of goods and liabilities of suppliers or manufacturers are found in the specific legislation governing each type of product. Generally, product liability law is governed by the common law of contract and tort.

Legislation

The following does not set out an exhaustive list of local legislation dealing with consumer matters, but is intended only to give a brief overview of some of the more notables Ordinances.

Toys and Children's Products Safety Ordinance

This Ordinance provides for safety standards of children's toys and childcare equipment. A breach of the provisions of this Ordinance is an offence which can lead to a fine of up to HK$100,000 and up to one year's imprisonment for a first offence.

Consumer Goods Safety Ordinance

The Ordinance imposes a duty on manufacturers, importers and suppliers of certain consumer goods to ensure safety. A breach of the provisions of this Ordinance is an offence, which carries a range of penalties. For example, failing to ensure the safety of consumer goods can lead to a fine of up to HK$100,000 and up to one year's imprisonment for a first offence.

Sale of Goods Ordinance ("SOGO") and Supply of Services Ordinance ("SSO")

Under SOGO and SSO a person is a consumer if:

• he neither makes the purchase in the course of a business nor holds himself out as doing so;
• the other party makes the sale in the course of a business; and
• the relevant goods are of a type ordinarily sold or supplied for private consumption.

A sale by auction or by competitive tender is not considered a consumer sale under SOGO.

Under SOGO, there is an implied term that the goods sold will be of merchantable quality and will be fit for their intended purpose.

Likewise, under SSO, there is an implied term that the supplier will carry out the service with reasonable skill and care and within a reasonable time. Suppliers are expressly prohibited under SOGO and SSO from excluding these implied terms as against a person dealing as a consumer.

Electrical Products (Safety) Regulation

This Regulation imposes further safety requirements that electrical applicance manufacturers are required to observe.In brief, compliance is demonstrated by production of a Certificate of Safety Compliance which may be in the form of a declaration issued by the manufacturer or test report or certification issued by a testing organisation.

Certification will not be considered valid unless it is accepted by the relevant government-body. A breach of safety requirements stipulated by this Regulation would attract criminal liability.

The above does not set out exhaustively all the regulations governing the rights of consumers.

Terms and Conditions

If a clause, which attempts to limit a party's liability, is unclear or ambiguous, the courts will favour an interpretation of the clause that works against the limitation.

When a consumer buys something on the internet, he or she generally does not need to sign anything and might skip over the supplier's terms and conditions. If the supplier then wants to rely on an exclusion clause in these terms and conditions, he must be able to show that he has done enough to draw the consumer's attention to the particular term.

Control of Exemption Clauses Ordinance

Terms and conditions are subject to the Control of Exemption Clauses Ordinance which provides that:

• certain exclusion clauses are rendered totally invalid; and
• other exclusion clauses are valid only if they are considered reasonable.

Suppliers cannot exclude liability to anyone for death or bodily injury caused by negligence nor can they exclude certain other duties to a consumer. Other exclusion clauses will be permitted, provided they are reasonable. The burden of proving that they are reasonable rests on the supplier.

The court has a wide discretion in deciding whether a clause is reasonable. It will consider the circumstances that were or ought reasonably to have been known to the parties at the time the contract was entered into.

Factors relevant to reasonableness include:

• the strength of the bargaining positions of the parties;
• whether the consumer received an inducement to agree to the terms;
• whether the consumer knew or ought reasonably to have known of the existence and extent of the term;
• whether the term excludes or restricts any relevant liability if some condition is not complied with; and
• whether the goods were manufactured, processed or adapted to the special order of the customer.

An unfair term will not be binding on a customer. It should be noted, however, that CECO does not apply to international supply contracts.

See also our guide on Using Exemption Clauses in Web Sales.

Trades Description Ordinance ("TDO")

The TDO creates two offences:

• apply false trade description to goods in the course of a trade or business.
• supplying or offering to supply in the course of a trade or business any goods to which a false description is applied

Either offence may be committed even if no goods have actually been supplied. It is sufficient to apply the false description or offer to supply goods to which a false description has been applied, possibly by another party. An on-line retailer merely applying a false trade description to goods that appear on his web site or supplying via his web site any goods to which another party has applied a false trade description could therefore commit the offence.

Advertisers who publish advertisements containing false trade descriptions may also be caught by the Ordinance.

Where someone is charged with the commission of an offence, he may escape liability if he has taken all reasonable precautions and has acted with care.

It may be possible for a supplier or retailer to rely on a disclaimer. These must be bold, precise and reasonable. They must also be brought to the consumer's attention at or before the time of committing the offence.

Spamming

Spamming is the sending of unsolicited emails, usually for the purposes of advertising.

There is no specific law in Hong Kong to prohibit spamming. However, the Hong Kong Government is now considering enacting anti-spam legislation. Currently, the sending of unsolicited emails will fall within the ambit of the Personal Data (Privacy) Ordinance that regulates the collection and use of personal data. Despite the lack of anti-spam specific legislation, industry trade bodies have been trying to regulate spamming activities amongst themselves, for example, the Anti-Spam Code of Practice issued by the Hong Kong Internet Service Providers Association and Guidelines for Responsible Email Marketing issued by the Asia Digital Marketing Association.

An email service will in any event want to avoid the bad publicity that goes with widespread spamming from their systems. However, the increased use of anti-spamming email software is proving to be reasonably effective.

Summary

Sellers of products over the internet are liable to consumers for the quality and safety of those products and for ensuring they are accurately described. They are also under a duty to ensure that consumers receive specific information relating to those products and the terms of any contract.

If any of the terms of the relevant contract is not clearly drafted then it may not be enforceable against a consumer, even if those terms and conditions are brought to the attention of the consumer before the agreement is entered into.

It can be seen that the law gives special treatment to consumers. If internet retailers are not aware of the effect of this special treatment and do not tailor their agreements and operations accordingly, then they risk exposing themselves to financial penalties, and in some cases, criminal liability.

Other useful information on these topics can be found on the web sites of the Hong Kong Consumer Council.

Any questions? Please contact mailto:peter.bullock@pinsentmasons.com / +852 2521 5621 or one of our other contacts.