Navigating Contract Disputes: Views From Practice

Herbert Smith Freehills is pleased to present Navigating Contract Disputes: Views from Practice, a series of seminars with accompanying guides, which will be rolled out over the coming months. This series aims to provide clear and practical guidance on Hong Kong law issues that commonly feature in commercial contract disputes.

The following topics will be covered: formation of and interpretation of contracts, pre-contractual statements (misrepresentation and other possible causes of action such as negligent statements), good faith and endeavours obligations, termination of contract, remedies for breach of contract, liquidated damages, limitation and exclusion clauses, and dispute resolution and governing law clauses.

Part 1: Contract formation – When do you have a binding contract?

We have seen contractual disputes where the court found that there was, in fact, no contract between the parties – sometimes to the parties' surprise. This could be because the "contract" was incomplete, or its terms were uncertain, or perhaps because the necessary contractual intention was lacking. Conversely, sometimes a binding contract might be concluded despite all appearances to the contrary.

Rachael Shek, Peter Ng and Maisie Ko  discuss the first and foremost question in contractual claims: do you have a binding contract? We also share some practical tips to bear in mind when drafting and negotiating contracts, in order to avoid common pitfalls.
 

Part 2: Interpretation of contracts – What does your contract mean?

A term might seem perfectly clear when the contract is being agreed, but a dispute may arise later as to how the words are meant to apply in the circumstances that have come about. When the Court is called on to interpret the contract, its overarching aim is to consider the natural meaning of the words, the context in which the words are used, and perceptions of commercial common sense. 

Jojo Fan, Jody Luk and Jaime Fong discuss the latest Hong Kong and English cases on contractual interpretation. We also share some practical tips that can be taken when drafting your contract, in order to minimise the risks.
 

Part 3: Pre-contractual statements – When can they come back to bite you?

Pre-contractual statements are statements made by parties during negotiations or correspondence, before entering into a contract. If those statements turn out to be false or misleading, the implications can be serious, regardless of whether those statements form part of the contract itself.

Jojo Fan, Grace Lee and Eric Yeung discuss when parties might be liable for pre-contractual statements, the possible remedies for the other party, and practical steps to reduce risks.
 

Part 4: Good faith and endeavours obligations – How hard do you have to try? 

Parties may agree terms requiring them to act in "good faith" or similar obligations, and the courts may sometimes imply such obligations even if not explicitly stated in the contract. More common are promises to endeavour to achieve certain objectives without committing to absolute obligations. Clauses such as "best endeavours", "reasonable endeavours", or "all reasonable endeavours" are typical, but their practical implications are often unclear.

Paul Quinn, Troy Song and Christie Wu explore the differences between various "endeavours" clauses and provide practice tips to navigate good faith and endeavours obligations.

Part 5: Liquidated damages and exclusion clauses - Defining your liability in advance

Parties to commercial contracts commonly seek to define the consequences of a breach, such as fixed payments, liability caps, or exclusions. However, these provisions may not always have the effect the parties expect, either because of how they are interpreted by the courts or because they are held to be unenforceable as a result of statute or common law principles.

Truman Mak, Natasha Shum and Aaron Li explore key clause types, assess their enforceability in light of recent Hong Kong and English case law, and offer practical drafting guidance.

This article was originally published on 17 October 2024 and updated on 5 January 2026.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.