Law of agency, contract and negligence

The sources of Hong Kong law, how an agency is created, what an agent owes the principal and how the agency ends, how contracts for land are formed and enforced, the remedies for breach and misrepresentation, and liability in negligence and for negligent statements. Syllabus 3.1 to 3.6 is at Level 2: questions test concepts, but almost always through an estate agency scenario.

Part I · Stand-alone questions9 min read9 sections

Checked against the Basic Law, Articles 8, 81 and 84; Conveyancing and Property Ordinance (Cap. 219), ss.3–6; Misrepresentation Ordinance (Cap. 284), ss.3 and 4; Control of Exemption Clauses Ordinance (Cap. 71), ss.3 and 7; Estate Agents Ordinance (Cap. 511), s.36; Prevention of Bribery Ordinance (Cap. 201), s.9; Shum Kong v Chui Ting Lin [2001]; Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465; EAA, A Study Guide to Estate Agency Law and Practice, Part 3, paras 1–34 and 58–59; EAA Estate Agents Qualifying Examination Syllabus, 3.1–3.6; checked 11 Oct 2026.

Must-know for the exam

Basic Law Art. 8 keeps the common law, rules of equity, ordinances, subordinate legislation and customary law, unless they contravene the Basic Law or are amended.
Agency is created expressly, by implication, by estoppel (apparent authority) or by ratification, which relates back to the date of the unauthorised act.
An agent's eight duties (syllabus 3.4): obey, due care, disclose, avoid conflict, confidentiality, no delegation, no secret profit, no misrepresentation.
Secret profit: the principal may recover it, refuse commission, dismiss the agent and claim damages; it can also be an offence under s.9 of the Prevention of Bribery Ordinance.
Agency ends by the parties (agreement, revocation, renunciation, performance, expiry) or by law (death, incapacity, bankruptcy, illegality, destruction, enemy status).
A contract needs offer, acceptance, consideration and intention to create legal relations. A counter-offer ends the original offer; adverts are usually invitations to treat.
Cap. 219, s.3: no action on a land contract unless it, or a note of it, is in writing and signed by the party to be charged; part performance is preserved.
A deposit of up to 10% is generally forfeitable on the purchaser's default; a larger one is likely a penalty, and the vendor must prove actual loss.
Misrepresentation Ordinance s.3(1): damages unless the maker proves reasonable grounds for belief; s.4: exclusion clauses must pass the Cap. 71 reasonableness test.
Negligent misstatement needs special skill, knowledge the listener will rely on it, reasonable reliance and loss. No contract is needed.

On this page · 9 sections

Traps that cost marks

Leaving customary law out of the Article 8 list, or thinking national laws apply in Hong Kong generally.
Treating everything a senior judge says in a judgment as binding.
Treating specific performance or rectification as automatic once a breach or mistake is shown.
Dating the contract from the ratification instead of from the agent's act.
Thinking a private revocation protects the principal against a third party who knew nothing of it.
Thinking a payment from the other side is not the principal's business.
Treating every task done by someone else as a breach, or treating a licence as permission to sub-list.
Listing revocation as termination by operation of law.

Why this matters in the exam

Part 3 of the syllabus is at Level 2, but the questions are rarely abstract. They give you an estate agent who signs without authority, takes a payment from the other side, quotes a wrong saleable area, or advises on a deposit, and ask which rule applies or what remedy follows. Learn each rule with its estate agency example.

This law sits under the Estate Agents Ordinance (Cap. 511). Many EAO duties restate common law agency duties, and s.36 adds a statutory cause of action on top of contract and tort. When a question asks about the client's rights, consider all three.

Sources of Hong Kong law

•Basic Law Art. 8: the laws previously in force (common law, rules of equity, ordinances, subordinate legislation and customary law) are maintained, except any that contravene the Basic Law or are amended by the legislature.
•Common law and precedent: the ratio decidendi (the reason for the decision) of a higher court binds lower courts on similar facts; obiter dicta (remarks in passing) only persuade. The Court of Final Appeal sits at the top. Under Art. 84 the courts may refer to precedents of other common law jurisdictions, and Art. 81 keeps the previous judicial system apart from the changes the Court of Final Appeal brought.
•Equity: remedies such as specific performance, injunction, rescission and rectification are discretionary; a court can refuse them for delay or unfair conduct. Where equity and the common law conflict, equity prevails.
•Statute: ordinances and subsidiary legislation (for example Cap. 511 and the Practice Regulation, Cap. 511C) override the common law where they apply.

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Estate Agents Qualifying Examination