Hong Kong: Hong Kong - Repudiation and Acceptance

Last Updated: 15 October 2002

It is common in construction contracts for the parties to bluff and posture. In Driltech Ground Engineering Limited v. Group Plan Contractors Limited, the Hong Kong Court of Appeal considered the effect of a threat by a sub-contractor to re-tender an element of the sub-sub-contract works. Did the threat allow the sub-sub-contractor to bring the contract to an end and sue for damages?

The facts

Group Plan was a sub-contractor carrying out work at the junction of Hiram’s Highway and Clearwater Bay Road. By a sub-sub-contract, Group Plan engaged Driltech to carry out piling works for retaining walls at two locations. The first element of the works was carried out between September 1997 and January 1998. The second element (retaining wall no.1) was originally due to commence in September 1998, though by mid August it was known to both parties that commencement would be delayed to October or November.

On 5 June 1998, Group Plan wrote to Driltech asking for a breakdown of their pre-drilling rates. The letter also stated:

"Besides we have heard a rumour that you would wind up your Company soon. Please clarify the situation."

Having received no reply, on 14 August 1998, Group Plan wrote:

"Our letter […] of 5 June 1998 inquiring the status of your Company refers. As discussed earlier, you informed us you had difficulties to carry out the remaining bored pile works at retaining Wall No. 1. We notify you that we are inviting tenders for the above mentioned work. We also confirm that the additional costs incurred will be deducted from your account."

On 28 August 1998, Driltech responded:

"We do not understand why you have to invite tenders for the ‘remaining bored pile works at Retaining Wall No. 1’. Were you suggesting that you had terminated or would terminate the Sub-Contract? Should your answer be affirmative, we must state that your said statement amounted to a breach or anticipatory breach, as the case may be, and that the same in itself was a repudiation of the Sub-Contract which we would have no hesitation to accept. We demand that you clarify the same within seven days hereof, failing which we would take that you have repudiated the Sub-Contract and would accept the same."

On 5 September, Driltech wrote again saying that in the absence of a reply, Group Plan was taken to have repudiated the sub-sub- contract (that is, that Group Plan had shown that it did not intend to honour its obligations under the sub-sub-contract) and that Driltech accepted the repudiation thereby terminating the sub-sub-contract.

The findings

Mr Justice Burrell made the following findings:

  • Any rumours to the effect that Driltech was to be wound up were without foundation and did not entitle Group Plan to terminate the sub-sub-contract.
  • Although there had been no truth in Group Plan’s statement that it was inviting tenders, Driltech was unaware that Group Plan had been bluffing until after it had sent its letter of 5 September stating that it accepted Group Plan’s repudiation of the sub-sub-contract.

Burrell J held that Group Plan had wrongfully repudiated the sub-sub-contract and that Driltech had validly accepted that repudiation. He awarded damages for the repudiation in the sum of HK$230,000. Group Plan appealed.

Dismissing the appeal, the Court of Appeal found that Group Plan’s letter of 14 August was a plain and unequivocal renunciation of the contract. "It stated in bald terms that the defendant was seeking others to carry out Repudiation and acceptance the RW1 works and that all additional costs were to be to the plaintiffs account. Nothing could be plainer. The defendant was declaring that it was no longer contractually bound to have the work done by the plaintiff."


Most construction contracts entitle the employer to terminate the contract if the contractor is wound up. However, employers seeking or threatening to employ contractual termination provisions should ensure that the circumstances justifying such a termination actually exist. Failure to do so may result in the purported exercise of a right to terminate itself amounting to a repudiation of the contract, because the employer is showing a clear intention no longer to be bound by the contract. If the contractor accepts the employer’s repudiation, the contract will terminate and the employer may be liable for the contractor’s losses (including loss of profit) arising out of its repudiation of the contract.

© Herbert Smith 2002

The content of this article does not constitute legal advice and should not be relied on as such. Specific advice should be sought about your specific circumstances.

For more information on this or other Herbert Smith publications, please email us.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions