The Hong Kong Market Entry Playbook: Consumer protection

Hong Kong has a long history of being a business-friendly location to set up both as a regional business hub and to access the sophisticated local market. In the next of a series of articles exploring the attraction of Hong Kong as a regional and international business centre, Pádraig Walsh of Tanner De Witt explains key points of consumer protection laws in Hong Kong.

Contract terms

Sale of Goods Ordinance: The Sale of Goods Ordinance contains many helpful provisions that apply in respect of consumer sale of goods. However, for practical purposes, most businesses need to be aware that that goods sold in the course of business have an implied condition that the goods supplied:

(a) with good title and the seller has the right to sell the goods free from undisclosed encumbrances;

(b) are of merchantable quality;

(c) fit for purposes made known by to the seller; and

(d) correspond with any sample or description given to the buyer.

Under the Control of Exemption Clauses Ordinance, these implied conditions cannot be excluded or restricted in sale of goods to persons dealing as a consumer, but can be excluded or restricted in sale of goods to a person acting in the course of business so long as the exclusion or restriction is reasonable.

Supply of Services (Implied Terms) Ordinance: This Ordinance provides for implied terms in contracts for the delivery of services, including implied terms that:

(a) services will be carried out with reasonable care and skill;

(b) if the contract is silent on timing for delivery of services, the services will be performed within a reasonable time; and

(c) if the contract is silent on charges, the service recipient will pay a reasonable charge.

It is not permitted for the service supplier to seek to exclude these implied terms if the service recipient deals as a consumer.

Control of Exemption Clauses Ordinance: Exemption clauses seek to limit or exclude liability of a party. Some key provisions are that it is not permitted to exclude or restrict liability for death or personal injury resulting from negligence, and any exclusion or restriction of liability must be reasonable if it relates to other loss or damage arising from negligence, or breach of contract. There are other protective provisions for persons dealing as consumer.

Unconscionable Contracts Ordinance: This legislation empowers the Court to refuse to enforce any part a contract (in whole or in part) in which one of the parties is dealing as a consumer that the Court has found to be unconscionable. The Court will consider a range of factors in determining whether a contract is unconscionable, including the bargaining positions of the consumer and seller, the legitimate interests of the parties, the ability of the consumer to understand the contract, and any circumstances of undue influence or unfair tactics.

Promotion and marketing

The Trade Descriptions Ordinance prohibits manufacturers, retailers and service providers from misleading consumers in respect of goods and services provided in the course of trade, and prohibits other unfair trade practices.

A person commits an offence under the Trade Descriptions Ordinance if he:

(a) supplies a false trade description to any goods/services;

(b) offers to supply any goods/services to which a false trade description is applied; or

(c) has in his possession for sale or for any purpose of trade or manufacture any goods to which a false trade description is applied.

A seller who adopts unfair trade practices also commits an offence, being:

• misleading omission occurs if the seller hides or omits material information, or provides material information in a manner that is unclear;

(b) aggressive commercial practice arises when the seller causes the consumer to enter into the transaction through harassment, coercion or undue influence;

(c) bait advertising occurs when the seller advertises the goods at a specified price if there are no reasonable grounds for believing that the seller will be able to offer for supply those goods at that price in a reasonable quantity and period of time;

(d) bait and switch refers to a practice in which the seller invites the consumer to purchase goods at a specified price with intention to promote a different product; and

(e) wrongly accepting payment means the seller accepts pre-payment with the intention that he is not going to supply the goods or service in question but will supply something that is materially different.

Enforcement: The Customs and Excise Department is the main enforcement agency handling the complaints and prosecution under the Trade Descriptions Ordinance. The Office of the Communications Authority handles matters involving telecommunication and broadcasting under the Trade Descriptions Ordinance.

Other legislation

Hong Kong law also contains consumer protection legislation in respect of specific industries or circumstances. These include legislation dealing with product safety, consumer credit, medicine and health, dangerous, controlled and prohibited goods, and specific provisions in legislation regulating estate agents, money changers and travel agents.

The Consumer Council

The Consumer Council is an independent statutory body in Hong Kong. The Council serves as a watchdog for protecting the rights and interests of consumers and promoting a fair and just delivery of goods and services. The Council only handles complaints on goods and services purchased from the seller by individual consumers for private use or consumption only. It does not handle complaints involving goods and services purchased for business and investment.

The Consumer Council is not a law enforcement agency, and has no power to conduct investigations or to prosecute. It handles complaints by way of conciliation. If settlement cannot be reached after conciliation, the consumer may consider pursuing the matter via the Courts of Hong Kong. The Consumer Council has established a Consumer Legal Action Fund for providing legal assistance to consumers.

The Consumer Council regularly issues alerts for products and services that are unfit for use, and publishes articles on the comparison of different products and services in respect their quality and price.

Pádraig Walsh

* This article is an expanded version of our contribution to the iTech Law global publication “Startup Legal Playbook”, which can be accessed on this link.

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Pádraig Walsh

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Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication. This article was last updated on 11 March 2024.