Civil Liability

Under Hong Kong law, a claimant seeking redress in respect of product liability may principally rely upon two distinct causes of action: (1) breach of contract and (2) the tort of negligence.

Breach of Contract

Where a contractual relationship subsists between the claimant — typically the purchaser — and the defendant — typically the seller — the claimant may bring proceedings in Hong Kong for breach of contract arising from an alleged product defect.

Notably, the Sale of Goods Ordinance (Cap. 26) (“SOGO”) implies terms and conditions into contracts for the sale of goods including:

• An implied condition on the part of the seller that in the case of the sale, he has a right to sell the goods, and in the case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass (section 14 of the SOGO)
• An implied condition that goods must correspond with their description (such as weight, size and details of ingredients of goods sold) (section 15 of the SOGO)
• An implied condition that the goods supplied under the contract are of merchantable quality (section 16 of the SOGO). Goods of any kind are of merchantable quality if they are (i) as fit for the purpose or purposes for which goods of that kind are commonly bought; (ii) of such standard of appearance and finish; (iii) as free from defects (including minor defects); (iv) as safe; and (v) as durable.
• An implied condition that the goods supplied under the contract are reasonably fit for that purpose (section 16 of the SOGO)
• An implied condition that the bulk shall correspond with the sample in quality where a contract of sale is a contract for sale by sample (section 17 of the SOGO).

A breach of an implied condition under the SOGO would constitute a breach of contract and entitle the buyer to seek damages and reject the goods and treat the contract as repudiated under the SOGO.

That said, even if a product is defective, the relevant manufacturer, supplier, distributor or retailer may not necessarily be in breach of contract or any implied terms incorporated by the SOGO. It would depend on the terms of the relevant contract and the nature of the product defect.

Negligence

In an action grounded in the tort of negligence, the claimant bears the burden of demonstrating the following constituent elements: (i) the defendant owed a duty of care to the claimant; (ii) the defendant’s conduct fell below the standard of care required, thereby constituting a breach of that duty; (iii) a causal relationship exist between the defendant’s breach and the loss sustained by the claimant; and (iv) the nature of the loss suffered was reasonably foreseeable.

In such proceedings, the defendant will usually be a manufacturer, importer, or distributor of the product. That said, even if a product is defective, the relevant manufacturer, supplier, distributor or retailer may not necessarily be negligent. Whether the relevant manufacturer, supplier, distributor or retailer would be found negligent for the defective product would depend on whether the aforesaid constituent elements could be established. Hence, tortious product liability is fault-based and is not a strict liability.

Other

It is common for claims in contract and tort to arise concurrently in Hong Kong. A claimant would need to establish a breach of contract on the part of the defendant for the former and fault on the part of the defendant for the latter.

It is noteworthy that, notwithstanding the publication by the Law Reform Commission of Hong Kong of its Report on Civil Liability for Unsafe Products in February 1998 — in which the Commission recommended the adoption of a strict liability regime governing product liability — no comprehensive statutory framework giving effect to such recommendations has been enacted to date.

Criminal Liability

Other than civil liability, criminal product liability may arise under various legislation:

• The Consumer Goods Safety Ordinance (Cap. 456) (“CGSO”) imposes obligations upon manufacturers, importers, and suppliers of prescribed categories of consumer goods to ensure that such products do not pose a risk to the safety of consumers.
• The Toys and Children’s Products Safety Ordinance (Cap. 424) (“TCPSO”) prescribes offences in connection with the manufacture, import or supply of a toy which fail to comply with the applicable safety requirements.
• The Public Health and Municipal Services Ordinance (Cap. 132) prescribes offences in connection with the sale, for human consumption, of any food the composition of which has been rendered injurious to health through the use of adulterants, as well as the sale of any drug whose quality, constitution, or potency has been injuriously affected by such adulteration.
• The Pharmacy and Poisons Ordinance (Cap. 138) imposes controls upon the sale and possession of specified poisons and pharmaceutical products, with criminal penalties attaching to non-compliance.
• The Antibiotics Ordinance (Cap. 137) regulates and restricts the sale and supply of certain designated antibiotic substances.
• Under the Electrical Products (Safety) Regulation (Cap. 406G), a person who supplies an electrical product that does not conform with the applicable safety requirements commits a criminal offence.
• The Dangerous Goods Ordinance (Cap. 295) establishes a comprehensive regulatory regime governing the possession, manufacture, shipment, storage, sale, and use of dangerous goods, which include explosives, compressed gases, petroleum, poisonous or corrosive substances, and materials that are readily or spontaneously combustible.
• The Gas Safety Ordinance (Cap. 51) regulates the import, manufacture, storage, transportation, supply, and use of gas, with the express objective of safeguarding public safety.
• The Nuclear Material (Liability for Carriage) Ordinance (Cap. 479) makes provision for liability arising from injury or damage occasioned by the carriage of nuclear material in Hong Kong.

The aforesaid legislations in Hong Kong may impose strict liability from a criminal law perspective in respect of product safety, reflecting the legislature’s overriding concern for public health and safety, to protect less sophisticated parties like consumers in general and also specific categories of products that require regulating in the public interests. “Strict liability” refers to a criminal offence that requires no mens rea (i.e., a mental element, for example intention and/or recklessness) for a conviction. The court only needs to finds that an act is in contravention with the applicable legislation to find a conviction. A number of enactments impose criminal strict liability in relation to the supply, manufacture, or handling of specific categories of products in the interests of the general public.

As set out in Question 1 above, strict liability is a creature of legislation and only applicable in the context of criminal law in Hong Kong.

The definition of the term “product” and/or “goods” would depend on the specific legislation concerned. For example, “consumer goods” is defined under the CGSO to mean “goods which are ordinarily supplied for private use or consumption”, while “goods” under the TCPSO refer to “toys or children’s products”.

Under the CGSO, there is a distinction between products sold to, or intended to be used by consumers and those sold for use by businesses to offer extra safety protection to consumers by prescribing criminal offences to regulate the general safety requirements of consumer goods.

As set out in Question 1 above, strict liability is a creature of legislation and only applicable in the context of criminal law in Hong Kong. In the context of criminal law in Hong Kong, victims of the defective products cannot directly claim damages by way of the criminal proceedings. Further, a breach of statutory duty generally does not, but itself, give rise to any private law cause of action unless as a matter of construction of the statute, that the statutory duty was imposed for the protection of a limited class of the public and that the parliament intended to confer on members of that class a private right of action for breach of the duty.

As set out in Question 1 above, strict liability is a creature of legislation and only applicable in the context of criminal law in Hong Kong. The claimant generally cannot claim damages against the defendant arising out of breach of statutory duty.

As set out in Question 3 above, strict liability only applies to criminal product liability prescribed by the various legislations in Hong Kong and the victims of the defective products cannot directly claim damages by way of the criminal proceedings.

As set out in Question 1 above, strict liability is a creature of legislation and only applicable in the context of criminal law in Hong Kong. Therefore, whether a product is defective would depend on the specific requirements laid down in the respective legislations. In general, reference would be made to the market/industry standards and/or any approved standards to evaluate whether the products concerned are defective. It is not uncommon that expert evidence is adduced to prove that the products concerned are defective.

By way of illustration, the CGSO prescribes a general safety requirement, failing which, the product would be considered “defective” and in contravention of the CGSO. Section 4 of the CGSO provides that the general safety requirement for consumer goods is that the consumer goods are reasonably safe having regard to all of the circumstances, including:

(a) the manner in which, and the purpose for which, the consumer goods are presented, promoted or marketed;

(b) the use of any mark in relation to the consumer goods and instructions or warnings given for the keeping, use or consumption of the consumer goods;

(c) reasonable safety standards published by a standards institute or similar body for consumer goods of the description which applies to the consumer goods or for matters relating to consumer goods of that description; and

(d) the existence of any reasonable means (taking into account the cost, likelihood and extent of any improvement) to make the consumer goods safer.

As set out in Question 1 above, strict liability is a creature of legislation and only applicable in the context of criminal law in Hong Kong. The prosecution would bear the burden of proof and has to prove “beyond reasonable doubt” that the defendant has committed the criminal conduct to find a conviction (as opposed to the standard of proof of “on the balance of probabilities” in civil proceedings).

Please see Question 5 above. Further, it is not uncommon for expert evidence to be adduced to determine whether defective.

As set out in Question 1 above, strict liability is a creature of legislation and only applicable in the context of criminal law in Hong Kong. As to who may be potentially liable for the criminal offence would depend on the specific statutory provisions laying down the criminal offences. In general, persons supplying, manufacturing and/or importing the defective products into Hong Kong may be potentially criminally liable under the CGSO.

Certain statutory regimes may also prescribe liability of persons other than principal offender but do not prescribe how liability should be apportioned amongst different liable entities. For example, section 27 of the CGSO provides where the commission by any person of an offence under the CGSO is due to an act or default committed by some other person in the course of business of his, the other person will be guilty of the offence and may be proceeded against and punished whether or not proceedings are taken against the first-mentioned person. Moreover, where a company commits an offence under the CGSO, any director, manager, secretary or other similar officer of the company who consented to or connived with the offence committed will also be guilty.

Section 101E of the Criminal Procedure Ordinance (Cap. 221) also provides that where a person by whom an offence under any ordinance has been committed is a company and it is proved that the offence was committed with the consent or connivance of a director or other officer concerned in the management of the company, or any person purporting to act as such director or officer, the director or other officer shall be guilty of the like offence.

While certain legislations may prescribe strict liability, those legislations may also prescribe specific defences to those offences. Defences in general hinge upon whether the person supplying, manufacturing and/or importing the goods into Hong Kong has taken any reasonable steps and exercised all due diligence to ensure that the products concerned are in compliance with the relevant legislations.

By way of illustration, the CGSO provides the following defences to certain strict liability offences:

• A person took all reasonable steps and exercised all due diligence to avoid committing the offence;
• A person reasonably believed that the consumer goods would not be used or consumed in Hong Kong;
• A person supplied the consumer goods as a retailer who neither knew nor had reasonable grounds for believing the consumer goods failed to comply with the general safety requirement; and
• The consumer goods were not suppled as new goods.

As set out in Question 1 above, strict liability is a creature of legislation and only applicable in the context of criminal law in Hong Kong. The applicable limitation periods for the criminal prosecution are prescribed by the corresponding legislations.

For minor offences brought before the Magistrates Court (the lowest tier of criminal law court in Hong Kong), the prosecution has to prosecute within 6 months from the time when the matter of such offence arose.

As set out in Question 1 above, strict liability is a creature of legislation and only applicable in the context of criminal law in Hong Kong. There is no mechanism provided for exclusion of criminal liability in Hong Kong.

As set out in Question 1 above, strict liability is a creature of legislation and only applicable in the context of criminal law in Hong Kong. Generally speaking, Hong Kong courts only have jurisdiction over criminal offences committed within the territorial limits of Hong Kong.

In the ordinary course, a claimant who has sustained loss or injury as a consequence of a defective product may commence proceedings claiming negligence and seeking damages in respect of personal injury (including recognised psychiatric illness), death, or damage to property.

In order to establish a cause of action in negligence, the claimant bears the burden of proving each of the following constituent elements on the balance of probabilities:

(a) the defendant owed a duty of care to the claimant in the circumstances of the case;

(b) the defendant’s conduct fell below the standard of care required, thereby constituting a breach of that duty;

(c) a sufficient causal relationship exist between the defendant’s breach and the loss or injury sustained by the claimant; and

(d) the nature and extent of the loss occasioned by the defendant’s breach were reasonably foreseeable at the material time.

A claimant who succeeds in establishing negligence on the part of the defendant may avail himself of a range of remedies. The principal forms of relief available in such proceedings include monetary compensation by way of damages, injunctive relief, and declaratory relief.

With respect to the quantum and nature of damages, it should be noted that, whilst the courts possess both the jurisdiction and the discretion to award punitive (or exemplary) damages, such awards are confined to exceptional circumstances and are granted only sparingly. The courts have recognised that punitive damages may be appropriate where, for instance, the defendant’s tortious conduct was deliberately calculated to yield a profit exceeding any compensatory damages payable, or where the defendant’s behaviour was of such an egregious and outrageous character that an award of purely compensatory damages would be manifestly inadequate to demonstrate the court’s disapproval thereof.

Where two or more tortfeasors are found to have caused distinct and severable damage to a claimant, the claimant is entitled to recover from each tortfeasor that portion of the damage for which the respective tortfeasor bears responsibility. The assessment and apportionment of liability among concurrent tortfeasors is ultimately a matter falling within the discretion of the court; however, in exercising such discretion, the court will frequently have regard to case law in determining the precise percentage allocation of liability attributable to each party.

In circumstances where the available evidence is insufficient to permit a differentiated apportionment of liability, the court will ordinarily apportion damages equally among the tortfeasors in question. It is common for expert evidence to be adduced in such proceedings by the parties in order to assist the court in resolving the question of apportionment.

In the event that two tortfeasors are jointly liable for a tort and one of them has paid all of the damages to the plaintiff, such tortfeasor may seek contribution from the other under the Civil Liability (Contribution) Ordinance (Cap. 377).

A defendant facing a negligence claim may seek to rely upon a number of established defences.

Contributory Negligence

A defendant may raise the defence of contributory negligence, which is the claimant failed to exercise reasonable care for his own safety and, by reason of such failure, contributed to the injuries or damage sustained. It is important to note, however, that contributory negligence does not operate as a complete defence absolving the defendant of all liability. Rather, where contributory negligence on the part of the claimant is established, the court retains a discretion to apportion liability between the parties, reducing the claimant’s recoverable damages by such percentage as the court considers just, having regard to the relative blameworthiness of the parties and the causative potency of their respective conduct. As with the apportionment of liability among multiple tortfeasors, the court will frequently have regard to case law in determining the appropriate percentage allocation.

The application of these principles is well illustrated by the decision in Lam Mo Bun v Hong Kong Aerosol Co Ltd [2001] 1 HKLRD 540. In that case, the defendants, being the manufacturers of an aerosol insecticide product, contended that the claimant had made improper use of the insecticide within his kitchen, thereby precipitating the explosion that gave rise to his injuries. The court rejected the defence of contributory negligence, holding that, even assuming the claimant had discharged a substantial quantity of the insecticide in an enclosed kitchen environment, there was nothing contained upon the product label that would have rendered it reasonably foreseeable to the claimant that such use might give rise to a risk of explosion. The case thereby underscores the significance of adequate product labelling and warnings in the assessment of contributory negligence.

Novus Actus Interveniens

A defendant may further contend that the chain of causation between the defendant’s breach of duty and the claimant’s loss or damage was broken by a novus actus interveniens, which refers to a new and intervening act of a third party or of the claimant himself, sufficient in law to sever the requisite causal connection.

Voluntary Assumption of Risk

The defence of volenti non fit injuria may be invoked where it can be demonstrated that the claimant voluntarily assumed or accepted the risks associated with the product in question, with full knowledge and appreciation of the nature and extent of those risks.

Exclusion Clauses and Disclaimers

A defendant may seek to rely upon an exclusion clause or disclaimer that purports to exclude or limit the scope of the defendant’s liability. However, the efficacy of such clauses is subject to statutory constraint. In particular, pursuant to the Control of Exemption Clauses Ordinance (Cap. 71) (“CECO”), any contractual term or notice purporting to exclude or restrict liability for death or personal injury resulting from negligence is rendered wholly unenforceable.

Limitation of Actions

A defendant may raise the defence that the claimant’s cause of action is time-barred by operation of the applicable limitation period (see Question 17 below).

Remoteness of Damage

The defendant may contend that the loss or damage allegedly sustained by the claimant is too remote a consequence of the defendant’s breach to be recoverable in law, which is the damage falls outside the scope of losses that were reasonably foreseeable at the material time.

The commencement of proceedings arising from product liability is subject to the statutory limitation periods prescribed under the Limitation Ordinance (Cap. 347). As a general rule, claims founded upon breach of contract or the tort of negligence must be commenced within a period of six years from the date on which the cause of action accrued.

However, a more circumscribed limitation period applies for claims for damages arising from negligence, nuisance, or breach of duty where the relief sought is in respect of personal injuries. Such claims must be brought within three years of the date on which the cause of action accrued, or — where later — within three years of the date of the claimant’s knowledge of the material facts giving rise to the claim. This latter provision operates as a safeguard for claimants who, through no fault of their own, may not have been immediately aware of the facts necessary to ground an actionable claim.

The “date of knowledge” is defined as the date upon which the claimant first acquired knowledge of each of the following matters:

• the injury sustained was of sufficient severity to be regarded as significant;
• the injury was attributable, in whole or in part, to the act or omission alleged to constitute negligence, nuisance, or breach of duty;
• the identity of the defendant against whom the claim is to be brought; and
• where it is alleged that the act or omission in question was that of a person other than the defendant, the identity of that person together with such additional facts as are necessary to support the institution of proceedings against the defendant.

Whilst it is generally open to a party to seek to exclude or limit liability by including an exclusion clause or a disclaimer in the relevant contract, such mechanisms are not without legislative restriction. Under the CECO, any exclusion or restriction of liability for death or personal injury arising from negligence is rendered void and unenforceable, regardless of whether such exclusion is incorporated by way contract or by notice given to the persons affected. Such statutory prohibition operates as an absolute and non-derogable safeguard, ensuring that no party may contractually divest itself of liability where its negligence has resulted in the most serious categories of harm to the person.

As set out in Question 1, the SOGO implies terms and conditions into contracts for the sale of goods including:

• An implied condition on the part of the seller that in the case of the sale, he has a right to sell the goods, and in the case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass (section 14 of the SOGO)
• An implied condition that goods must correspond with their description (such as weight, size and details of ingredients of goods sold) (section 15 of the SOGO)
• An implied condition that the goods supplied under the contract are of merchantable quality (section 16 of the SOGO). Goods of any kind are of merchantable quality if they are (i) as fit for the purpose or purposes for which goods of that kind are commonly bought; (ii) of such standard of appearance and finish; (iii) as free from defects (including minor defects); (iv) as safe; and (v) as durable.
• An implied condition that the goods supplied under the contract are reasonably fit for that purpose (section 16 of the SOGO)
• An implied condition that the bulk shall correspond with the sample in quality where a contract of sale is a contract for sale by sample (section 17 of the SOGO).

The following are recent cases illustrating the application of the implied conditions under the SOGO:

(1) Smith & Associates Far East Limited v EZ Ram Technology Limited [2023] HKDC 435

The plaintiff had procured LPDDR4 memory components, manufactured by Samsung Semiconductors, from the defendant pursuant to a purchase order. It subsequently transpired that the semiconductor products delivered to the plaintiff were counterfeit in nature.

Upon consideration of the evidence, the court found that the defendant was in breach of the contract on two grounds: first, a breach of the express contractual term stipulating that all components supplied were to be genuine and sourced from the original equipment manufacturer; and second, a breach of an implied term that the goods supplied should correspond with the description set forth in the purchase order under section 15 of the SOGO.

(2) MJH International BV v Rome International Handbag Company Limited [2023] HKCFI 2441

The plaintiff commenced proceedings against the defendant, a supplier of KN95 face masks, claiming damages for breach of contract arising from the defendant’s failure to fulfil orders placed on behalf of the Dutch Government (“Contract”).

The plaintiff claimed that the defendant had breached the Contract by supplying face masks which were materially different from the contractual description and further failed to correspond with the sample provided implied under sections 15 and 17 of the SOGO. In particular, the plaintiff alleged that the face masks supplied did not meet the requisite particle filtering efficiency standard prescribed under the KN95 (GB2626-2006) specification.

The court accepted that the test reports upon which the plaintiff relied demonstrated that certain shipments delivered under the Contract failed to achieve compliance with the KN95 particle filtering efficiency standard as stipulated therein. Accordingly, the court held that the defendant was in breach of the Contract and ordered that the defendant to pay damages to the plaintiff.

(3) Echelles Riffaud SA v The Secretary for Justice [2024] HKCFI 1994

The plaintiff had manufactured and supplied hydraulic platforms (the “HPs”) to the Government of Hong Kong under a contract. Following delivery, defects in the HPs were identified and continued to manifest notwithstanding the plaintiff’s rectification attempts. In light of the persistent deficiencies, the Government rejected the HPs and exercised its right to terminate the contract.

The court held that the HIPs which could not be regarded as reasonably safe would, by necessary implication, be in breach of the implied conditions that the same should be merchantable quality and fit for purpose, which are incorporated under the SOGO. Even if, at the point of delivery, the HPs could be said to have been merchantable or fit for purpose, they ceased to be so within a reasonable period (which the court determined to be three months following delivery).

(4) Tobrix BV v. Hongkong Tripod Ltd [2024] HKDC 2124

The plaintiff had entered into an agreement with the defendant for the supply of Personal Protective Equipment (“PPE”). The plaintiff subsequently brought a claim alleging that a portion of the masks delivered by the defendant were in breach of the implied conditions that the goods would be of merchantable quality and reasonably fit for their intended purpose.

The court then found that an implied term that the masks be of merchantable quality was incorporated by operation of section 16(2) of the SOGO. The defendant was in breach of the said implied term where the masks failed to conform with the applicable FFP2/N95/KN95 standard with respect to particle filtration efficiency. Consequentially, the court held that, in light of the foregoing deficiencies, the masks were also not reasonably fit for the purpose for which they were supplied, thereby constituting a further breach of the implied term implied under section 16(3) of the SOGO. In the premises, the court ordered the defendant to pay damages to the plaintiff. Civil product liability arising out of breach of contract is not a strict liability.

A breach of an implied condition under the SOGO would constitute a breach of contract and entitle the buyer to seek damages and reject the goods and treat the contract as repudiated under the SOGO.

That said, even if a product is defective, the relevant manufacturer, supplier, distributor or retailer may not necessarily be in breach of contract or any implied terms incorporated by the SOGO. It would depend on the terms of the relevant contract and the nature of the product defect.

A claimant who successfully establishes a breach of contract in the context of product liability may be compensated by way of damages, which is calculated to restore the claimant, so far as is possible, to the position he would have occupied had the contract been duly performed. The claimant may also seek injunctive relief and declaratory relief, each of which may be granted at the court’s discretion having regard to the circumstances of the case.

The remedial entitlements available to a claimant in respect of a breach of contract are contingent upon the classification of the contractual term which had been breached. The distinction is of considerable practical significance:

• Where the term breached is classified as a condition —a term of fundamental importance going to the root of the contract — the claimant is entitled to elect to treat the contract as having been repudiated and discharged, in addition to pursuing a claim for damages in respect of the loss sustained.
• Where the term breached is classified as a warranty —a term of subsidiary or ancillary character — the claimant’s remedy is confined to a claim for damages; the claimant is not entitled to treat the contract as discharged by reason of the breach.
• Where the breach relates to an implied term implied under the SOGO, the claimant is afforded the right to treat the contract as discharged, to reject the goods in question, and to claim damages for any consequential loss arising from the breach.

Punitive Damages

As with tortious claims, the court retains the jurisdiction and discretion to award punitive damages in proceedings for breach of contract. However, such awards remain exceptional and are reserved for cases involving conduct of a particularly egregious nature. The court will generally confine punitive damages to circumstances where the defendant’s breach was deliberately calculated to generate a profit exceeding the anticipated compensatory liability, or where the defendant’s conduct was of so outrageous a character that an award of compensatory damages alone would be manifestly insufficient to reflect the court’s censure of such behaviour.

In commercial practice, contracting parties frequently seek to allocate risk by incorporating exclusion clauses or disclaimers within their contractual arrangements, with the effect of excluding or limiting the liability of one or both parties in the event of breach. However, the extent to which such clauses may be relied upon is subject to significant statutory restriction under the CECO. The principal restrictions under the CECO include:

• Liability arising from a breach of the seller’s implied undertakings as to title , which is the obligation implied by section 14 of the SOGO, cannot be excluded or restricted by reference to any contractual term.
• Where the purchaser deals as a consumer, liability for breach of the seller’s implied undertakings as to conformity of the goods with their description or sample, or as to their merchantable quality or fitness for a particular purpose, being the obligations arising under sections 15, 16, and 17 of the SOGO, cannot be excluded or restricted by reference to any contractual term whatsoever.
• In transactions where the purchaser does not deal as a consumer, liability for breach of the same implied undertakings as to conformity with description or sample, quality, or fitness for purpose may be excluded or restricted by reference to a contractual term, but only insofar as the term in question satisfies the statutory requirement of reasonableness.
• Where one contracting party deals as a consumer, or contracts upon the other party’s written standard terms of business, the other party may not, by reference to any contractual term:

(a) exclude or restrict its liability in respect of its own breach of contract; or

(b) claim an entitlement to either (i) render a contractual performance substantially different from that which was reasonably expected of it; or (ii) render no performance at all in respect of the whole or any part of its contractual obligations,

unless the contractual term relied upon satisfies the requirement of reasonableness.

A defendant facing a breach of contract claim may avail itself of a number of established defences, including:

Limitation of Actions (Time Bar)

A defendant may raise the defence that the claimant’s cause of action is time-barred. Claims founded upon breach of contract must be commenced within six years of the date on which the cause of action accrued. A failure to commence proceedings within the prescribed period will, in the absence of exceptional circumstances warranting an extension of time, operate as a bar to the claim.

Waiver

The defence of waiver may be invoked where it can be demonstrated that the claimant has voluntarily and intentionally relinquished a known right to pursue a claim against the defendant, whether by express words, by conduct, or by a combination of both. As an example, a claimant may be held to have waived his rights against the defendant where he has accepted a refund or replacement product in full and final settlement of the matter, thereby evincing an unequivocal intention to forgo any further claim arising from the breach.

Acquiescence

The defence of acquiescence arises where a party is precluded from enforcing its contractual rights or asserting a claim for breach on the ground that its silence, inaction, or course of conduct reasonably led the other party to believe that the breach had been consented to or condoned. By way of example, where a claimant, notwithstanding actual knowledge of a defect in the product, continues to use the defective product over a sustained period without raising any complaint or objection with the defendant, the court may find that the claimant’s conduct amounted to acquiescence, thereby estopping the claimant from subsequently pursuing a claim in respect of the said defect.

Pursuant to the applicable rules of court, parties to legal proceedings are subject to an obligation of disclosure, requiring them to make available all documents which are relevant to the matters in dispute and that are within their possession, custody, or power. Such duty of disclosure constitutes a fundamental procedural safeguard, designed to ensure that each party has access to the documentary evidence necessary for the fair and just determination of the issues between them.

Where a party considers that the discovery provided by an opposing party is deficient or incomplete, it may apply to the court for an order for specific discovery, compelling the production of identified documents or categories of documents by the non-compliant party.

Pre-Action Discovery

The procedural framework also contemplates the possibility of obtaining discovery prior to the formal commencement of proceedings. However, the court will exercise its discretion to grant pre-action discovery only where the applicant is able to satisfy the following conditions: first, that the person against whom the order is sought is likely to be a party to subsequent legal proceedings; and second, that the documents sought are directly relevant to the anticipated dispute and are within the possession, custody, or power of that person.

Discovery against Non-Parties

In addition, a party to existing proceedings may seek an order for discovery against a person who is a non-party to the action. The court’s jurisdiction to grant such relief is, however, circumscribed and will only be exercised where it is demonstrated that the discovery sought is necessary either for the purpose of fairly disposing of the dispute between the parties or for the purpose of achieving a saving of costs.

The availability of third-party funding for the pursuit of product liability claims in Hong Kong remains subject to significant restrictions. Such funding arrangements are only permitted in respect of arbitration proceedings, mediation, and any related proceedings arising in connection with an arbitration. including, arbitral proceedings that are resumed following the setting aside of an award, but not litigation.

It is of particular significance that the common law offences of maintenance and champerty, which traditionally operated to prohibit the support of litigation by persons having no legitimate interest in the proceedings, have been expressly disapplied in relation to the third-party funding of arbitration. This statutory carve-out reflects a deliberate policy decision to facilitate access to justice in the arbitral context, whilst preserving the general prohibition against third-party funding in conventional litigation.

As a general principle, the successful party in product liability proceedings is entitled to recover its costs from the unsuccessful party. Such recoverable costs include legal costs and disbursements incurred in the course of the proceedings, including, inter alia, court fees, expert witness fees, and other expenses reasonably and necessarily incurred in the prosecution or defence of the claim. This general rule is, however, subject to the court’s overriding discretion to make such alternative order as to costs, whether in respect of the whole or any part thereof, as it considers just and appropriate in the circumstances. The court may depart from the general rule where the successful party has unreasonably refused or failed to engage in mediation or other forms of alternative dispute resolution, thereby incurring unnecessary expenditure of judicial and party resources.

The award of costs remains at all times a matter within the discretion of the court. In exercising such discretion, the court will have regard to a range of considerations, including the conduct of the respective parties throughout the proceedings and the degree to which the successful party has prevailed on the issues in dispute. In particular, the court may make an appropriately adjusted costs order where the successful party has succeeded on only part of its case, reflecting the principle that the incidence of costs should, so far as practicable, correspond with the overall outcome and the reasonableness of the positions adopted by each party.

Hong Kong does not recognise class actions as a distinct procedural mechanism for the collective adjudication of claims. Whilst the rules of court do permit one or more persons to be appointed to represent all other claimants who share “the same interest” in the proceedings, a procedure commonly referred to as representative proceedings. the practical utility of this mechanism has been severely circumscribed by the stringent nature of the “same interest” requirement. The courts have interpreted this threshold narrowly, with the consequence that representative proceedings have been utilised in only a very limited number of cases in Hong Kong to date.

In light of these procedural constraints, it remains the prevailing practice for claimants in product liability matters, even where their claims arise from substantially similar facts or raise common issues of law, to commence separate and individual proceedings.

Rickeed Industries Limited & Anor v Hong Kong Tohkoh Company Limited [2026] HKCA 105

This Court of Appeal decision concerned an appeal against a judgment awarding the plaintiffs approximately RMB 5 million in damages for breach of contract relating to the sale of acrylic sheets. The plaintiffs had purchased the sheets from the defendant for on-sale to sub-buyers who used them in manufacturing mobile phone display covers. Following quality complaints from sub-buyers, the plaintiffs alleged that the majority of the sheets delivered were not of merchantable quality and not fit for purpose, in breach of the implied terms incorporated by way of sections 16(2) and 16(3) of the SOGO. The Court of Appeal allowed the appeal and dismissed the plaintiffs’ claim.

Of particular significance are the court’s observations, though in obiter, on the assessment of damages under section 55 of the SOGO. Section 55(3) of the SOGO provides that, for breach of warranty of quality, the prima facie measure of damages is the difference between the value of the goods at delivery and the value they would have had if they had answered to the warranty.

The plaintiffs adduced no expert evidence on the actual value of the sheets as delivered, instead claiming the difference between the purchase price and subsequent resale prices achieved over 2013 to 2016. The court acknowledged this approach is “not necessarily contrary to principle,” but held that its validity depends upon demonstrating that the resale price was actually depressed by the defects. The sheets were enclosed in protective coverings that could not be removed without rendering them unsaleable as new, which meant that neither party could assess quality at the time of resale. The sub-sale price was therefore the price of goods presumed satisfactory. The court thus observed that lower resale prices could equally reflect market decline or other extraneous factors, and there was no evidence the sheets were sold as defective goods.

The Court of Appeal’s analysis carries important implications. First, the judgment affirms that section 55(3) of the SOGO does not relieve a claimant of its obligation to adduce sufficient evidence, including expert evidence as to the actual value of defective goods at delivery. Second, the decision underscores the necessity of proving a causal nexus between the defects and the loss claimed; a diminution in resale price must be shown to result from the defects rather than extraneous factors. Third, the judgment highlights the particular evidentiary challenges arising in cases involving latent defects not discoverable until after the point of sale. Establishing breach of an implied term under the SOGO does not in itself guarantee recovery; a claimant must independently demonstrate that damages are properly measured and causally connected to the breach.

Artificial intelligence technology has become increasingly pervasive across a wide spectrum of commercial and consumer applications in Hong Kong. At present, however, Hong Kong has not enacted any legislation specifically directed at the regulation of artificial intelligence or the allocation of liability arising from its use. In the absence of a bespoke statutory regime, any disputes concerning products incorporating or powered by artificial intelligence would fall to be determined under the existing legal framework, including, the SOGO and the CECO by analogy with the principles applicable to conventional products.

Whether the existing product liability regime, which was conceived and developed in the context of traditional manufactured goods, is adequately equipped to address the novel and complex issues arising from artificial intelligence technology, such as questions of algorithmic opacity, autonomous decision-making, and the attribution of fault in respect of self-learning systems, remains an open and evolving question. It is widely anticipated that future cases will increasingly require the courts to grapple with the intersection of product liability and artificial intelligence, and it may in due course become necessary for the legislature to consider whether statutory intervention is warranted to ensure that the legal framework remains commensurate with the pace and trajectory of technological advancement.

As at the date of this article, there are no reported decisions in which the courts of Hong Kong have been called upon to adjudicate product liability claims arising from or in connection with artificial intelligence or machine learning technology. The jurisprudential landscape in this regard remains, therefore, entirely undeveloped.

It is anticipated, however, that when such claims do come before the courts, the established analytical framework, namely, breach of contract, the tort of negligence, would be applied, adapted as necessary to accommodate the distinctive characteristics of AI-driven products. In determining the existence and scope of liability, the court would in all likelihood consider expert evidence on artificial intelligence and machine learning adduced by the respective parties, given the highly technical nature of the subject matter.

Among the novel issues which are likely to require judicial consideration, the following may be anticipated as being of particular significance:

• The threshold question of whether artificial intelligence and machine learning technology — particularly in its intangible or software-based manifestations — is properly to be characterised as a “good” within the meaning of the SOGO, or whether it falls more appropriately to be classified as a “service” under the Supply of Services (Implied Terms) Ordinance (Cap 457) with implications for the applicable statutory regime and the nature of the obligations owed to the end user.
• Whether it was reasonably foreseeable, at the time the technology was supplied or deployed, that the artificial intelligence or machine learning system in question would cause or contribute to the loss or damage alleged by the claimant — a question which, in the context of autonomous and adaptive systems, may present considerable analytical complexity.