Category: commercial litigation


Implication of Contract from Conduct: the New Case

Appeal – appeal against findings of fact – dismissed
Inspiring Investments Ltd v Chun Hu Hing, CACV 208/2018, 22 April 2020, CA (Cheung and Au JJA and Godfrey Lam J)
[2020] 2 HKLRD 959, [2020] HKCA 209

The court have clarified the different concepts of “implication of a contract from conduct” and “a contract formed partially oral and partially in writing”

“38. In our view, the plaintiff’s submission evinces a confusion of two different concepts.  The question dealt with in Shanghai Tongji is the finding of a contract, not formed orally or in writing, but implied by conduct.  The law accepts that in certain cases, which are unusual, a contract may be inferred from conduct, where the conduct of one party may properly be understood objectively to constitute the offer to enter into a contract and the conduct of the other party may likewise be understood to constitute an acceptance of that offer: see The Aramis [1989] 1 Lloyd’s Rep 213, 224 and Allied Marine Transport Ltd v Vale Do Rio Doce Navegacao SA (“The Leonidas D”) [1985] 1 WLR 925, 936, both cited in Shanghai Tongji, at §§37 & 40 respectively.  But the court will not imply a contract on that basis lightly.  In order to do so it must be satisfied that the conduct is unequivocally referable to the contract contended for.  It is not enough if the conduct relied upon is capable of constituting an offer or acceptance as the case may be (Shanghai Tongji, §§38, 48).

39.  This, as it seems to us, is not what the plaintiff is contending or can contend for, as it has not advanced below any case of contract implied by conduct, nor has it pleaded the conduct that unambiguously constituted the offer and acceptance respectively.  The pleaded case and the case run below is that the Sale of Shares Agreement was made partly orally and partly in writing, not one to be implied from conduct.

40.  Implying a contract from conduct is quite different from a case where a disputed contract is said to have been formed orally, or partly orally and partly in writing, and the party contending for the contract seeks to rely on the parties’ conduct as the basis for inferring, as a fact, that the parties have orally said what they are alleged to have said based on which the contract is to be found.  This would simply be an exercise of fact‑finding by inference.  It is on this basis that we approach the plaintiff’s submissions.”

For full text of the judgment, click here.