Lloyd's Maritime and Commercial Law Quarterly
COMMON MISTAKE AND FRUSTRATION IN HONG KONG
Jan Albert (HK) Ltd. v. Shu Kong Garment Factory Ltd.
1. Introduction and facts
It is relatively rare to find cases where both the doctrines of common mistake and frustration are considered and, in particular, where the link between these two doctrines can be raised as a major issue. It is even rarer to find a Commonwealth decision on such issues emanating from a country other than either England or Australia. The recent Hong Kong Court of Appeal decision of Jan Albert (HK) Ltd. v. Shu Kong Garment Factory Ltd.1 is, however, precisely one such case. It is important because it affords us the opportunity to consider many unresolved issues with regard, in particular, to the law relating to common mistake (here, at common law)2 and, as already mentioned, it allows us to canvass more fully the relationship between common mistake on the one hand and frustration on the other. That the case is an appellate decision from Hong Kong is of added significance, if nothing else because of the central role that the country plays from the vantage point of world trade generally.
The facts of the Jan Albert case itself were relatively simple. The plaintiff purchasers entered into a contract with the defendant sellers for the supply of goods which were described thus:
Unisex ski turtle-neck pullover, long sleeves, 1 x 1 rib in 32/s 100% cotton fully combed, with lycra on cuffs, and with “OPTI” zipper of about 23 cm long at front.
Of more importance, perhaps, was the fact that the said goods were to be shipped from the People’s Republic of China (hereafter PRC) to the plaintiffs’ German connections at Hamburg, Germany, and were described as “category 4” merchandise. The specific category of merchandise was crucial because of quota restrictions existing between the PRC and both the European Economic Community in general and Germany in particular (all of which were supposed to be governed by the relevant treaty arrangements). The contract further provided that the export licence and certificate of origin were to be supplied by the defendants. The plaintiffs caused a letter of credit to be opened in the defendants’ favour by a Belgian bank,
1. [1990] 1 H.K.L.R. 317.
2. Although I have argued elsewhere that the doctrines of common mistake at common law and in equity are so similar as to warrant a merger into one coherent doctrine: see, generally, Phang, “Common mistake in English law: the proposed merger of common law and equity” (1989) 9 L.S. 291, Even if this argument is not accepted, it is submitted that the close similarity between the two doctrines renders the points made in the instant comment with regard to common mistake at common law equally applicable to common mistake in equity.
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