Hong Kong Ordinances

CONTROL OF EXEMPTION CLAUSES ORDINANCE - SECT 3

The "reasonableness" test

(1) In relation to a contract term, the requirement of reasonableness for the
purposes of this Ordinance and section 4 of the Misrepresentation Ordinance (
Cap 284) is satisfied only if the court or arbitrator determines that the term
was a fair and reasonable one to be included having regard to the
circumstances which were, or ought reasonably to have been, known to or in the
contemplation of the parties when the contract was made.

(2) In determining for the purposes of section 11 or 12 whether a contract
term satisfies the requirement of reasonableness, the court or arbitrator
shall have regard in particular to the matters specified in Schedule 2; but
this subsection does not prevent the court or arbitrator from holding, in
accordance with any rule of law, that a term which purports to exclude or
restrict any relevant liability is not a term of the contract.

(3) In relation to a notice (not being a notice having contractual effect),
the requirement of reasonableness under this Ordinance is satisfied only if
the court or arbitrator determines that it would be fair and reasonable to
allow reliance on it, having regard to all the circumstances obtaining when
the liability arose or (but for the notice) would have arisen.

(4) In determining (under this Ordinance or the Misrepresentation  Ordinance (
Cap 284)) whether a contract term or notice satisfies the requirement of
reasonableness, the court or arbitrator shall have regard in particular (but
without prejudice to subsection (2) to whether (and, if so, to what extent)
the language in which the term or notice is expressed is a language understood
by the person as against whom another person seeks to rely upon the term or
notice.

(5) Where by reference to a contract term or notice a person seeks to restrict
liability to a specified sum of money, and the question arises

(under this Ordinance or the Misrepresentation Ordinance ( Cap 284)) whether
the term or notice satisfies the requirement of reasonableness, the court or
arbitrator shall have regard in particular (but without prejudice to
subsection (2) or (4)) to-

   (a)  the resources which he could expect to be available to him for the
        purpose of meeting the liability should it arise; and

   (b)  how far it was open to him to cover himself by insurance.

(6) It is for the person claiming that a contract term or notice satisfies the
requirement of reasonableness to prove that it does. (Enacted 1989) [cf. 1977
c. 50 s. 11 U.K.]