case study prep

Indemnity carve-outs

Limit indemnities by excluding specific categories (e.g., indirect or consequential loss, reputational harm) to reduce perceived exposure while preserving protection for foreseeable harm

Tiered liability caps

Different caps for different types of breaches (e.g., 100% of contract value for willful misconduct, 10% for ordinary negligence) to reward good faith and deter reckless behavior

Insurance-backed guarantees

Transfer risk to a third party by requiring one side to hold insurance (e.g., professional indemnity, cyber, or performance insurance).

Force majeure redefinition

Tailor for modern risks (pandemics, supply chain disruptions, regulatory changes); prevents later “acts of God” disputes.

Change-in-law or hardship clauses

Allow contract adjustments if legal or economic conditions shift materially; help parties share uncertainty fairly.

Risk escrow

For high-stakes liabilities, deposit funds in escrow released only if a trigger event occurs.

Revenue-sharing

Instead of fixed sums, link payment to future revenue or usage metrics; keeps both sides invested in success.

Earn-outs

Used in M&A to bridge valuation gaps by tying part of price to performance; turns disagreement over value into a testable future event.

Price adjustment formulas

Peg to inflation, commodity indices, or FX rates; neutralize macroeconomic uncertainty.

Retention/holdback

Withhold a percentage until obligations are completed; protects against underperformance while signaling trust.

Performance bonds or parent guarantees

Offer financial security to a nervous counterparty without conceding additional liability.

Deferred or staged payments

Break large sums into milestones; progress-based payments reduce risk for both sides.

Service-Level Agreements (SLAs)

Define measurable standards and remedies; replace emotional debate with objective metrics.

Step-in rights

Allow one party to temporarily take control if the other fails; reassures the client without threatening termination.

Benchmarking clauses

Enable periodic comparison to market standards, ensuring fairness over time.

Delivery flexibility

Offer substitution rights or phased implementation if full delivery isn’t feasible upfront.

Termination-for-convenience

Provides an exit with a compensation formula, reducing perceived long-term lock-in.

Performance audits or progress reporting

Add transparency and build trust between parties.

Joint steering committees

Regular joint oversight creates shared ownership and faster problem-solving.

Escalation clauses

Require issues to move up to senior management before arbitration; turn confrontation into collaboration.

Audit and information rights

Allow verification without accusation, preventing suspicion from festering.

Confidentiality carve-outs

Maintain trust while enabling disclosure to regulators, auditors, or affiliates.

Non-compete / exclusivity limitations

Define narrow scope and duration to prevent overreach while preserving partnership value.

Relationship reviews

Formal checkpoints to assess satisfaction and adapt terms before resentment builds.

License-back clauses

Let sellers or inventors retain use rights even after transfer; helps preserve creative freedom.

Joint ownership of improvements

Fairly share the benefits of co-developed innovations.

Data-sharing frameworks

Specify usage rights, anonymisation, and storage responsibilities.

Cybersecurity warranties

Ensure accountability for breaches and specify remedies.

Open-source or modular licensing

Allow partial sharing while keeping core IP protected.

Tiered dispute resolution

Start with negotiation → mediation → arbitration; encourages resolution before escalation.

Neutral expert determination

Used for technical or valuation issues where objectivity matters more than law.

Choice-of-law hybrids

Select neutral forums or split governance (e.g., commercial law under ICC rules, IP law under national courts).

Sunset clauses

Let contentious clauses expire unless renewed, avoiding permanent disagreement.

Renegotiation triggers

Automatic review if circumstances change (e.g., volume, law, or price shifts).

Cooling-off periods

Delay termination rights to create space for reconsideration.

Civil Justice Reform

A 2009 reform aimed at increasing cost-effectiveness, speeding up justice, and encouraging early dispute settlement.

Statement of truth

A verification required for pleadings, witness statements, and expert reports under Order 41A.

Order 13A admissions

Allows defendants in money claims to admit all or part of liability to save time and costs.

Sanctioned offers and payments

Offers/payments made under Order 22 to encourage settlement, with cost consequences.

Questionnaire & case management conference

Parties file timetabling/listing questionnaires and attend case management hearings after pleadings.

Milestone dates

Court-fixed dates (CMC, PTR, trial dates) that cannot be varied without Court approval.

Writ of summons

The prescribed form used to begin civil litigation involving factual disputes.

Pleading stage

Exchange of writ, statement of claim, acknowledgment of service, defence, reply, and counterclaim.

Close of pleadings

The point when all required pleadings have been served; litigation moves to preparation for trial.

Timetabling questionnaire

Filed after close of pleadings to help the Court set directions for the case.

Case management summons

Application (often required when a party is unrepresented) seeking procedural directions.

Discovery and inspection

Exchange of lists of documents and provision for inspection.

Witness statements & expert reports

Evidence exchanged before trial.

Pre-trial review (PTR)

A Judge reviews readiness for trial and gives final directions.

Setting down for trial

The plaintiff files an application to list the case for trial once preparation is complete.

Running List

Trial dates not fixed; parties receive short-notice call-ups.

Fixture List

Trial dates are specified and scheduled in advance.

Trial

Hearing where evidence and submissions are presented; judgment may be immediate or later.

Enforcement of judgment

Steps taken by the successful party to enforce the Court’s orders.

Taxation of costs

Court assessment of costs the losing party must pay.

Originating summons

Used where issues are mainly legal and factual disputes are minimal.

Affidavit/affirmation

Written evidence filed in support or opposition to an originating summons.

Hearing of originating summons

Court considers submissions and affidavit evidence; may order conversion to writ procedure.

Warranty

A statement of fact in a contract and contains contractual assurances given by the seller to the buyer as to the accuracy of those statements.

• Subject to ordinary contractual principles for damages i.e mitigation, remoteness

• Requires seller to disclose information about known problems (=> due diligence)

• Allocates risk between buyer and seller by granting buyer remedy (breach of warranty claim, trigger for events of default)

Indemnity clause

An enforceable promise to reimburse the claimant for a loss suffered or to provide a fixed basis for compensation for a specified loss.

• Not subject to ordinary contractual principles i.e mitigation

• Usually where there is a known and specific issue the buyer wants to protect against

Li Ching Wing v Xuan Yi Xiong [2004] 1 HKC 353

Facts: Amoy Gardens, lease not frustrated by SARS quarantine

Approved Panalpina

• Judge Lok said that ‘an event which causes an interruption in the expected use of the premises by the lessee will not frustrate the lease, unless the interruption is expected to last for the unexpired term of the lease, or, at least, for a long period of that unexpired term.’

Novation

where a new contract is formed and substituted for the existing contract which is discharged with the consent or agreement of all the parties to the contract

• usually to allow introduction of a new party + discharge of a party

• Under the common law, novation was the only method of assigning a contractual right.

Consumer rights protections

England has CRA 2015 with strong consumer protections; Hong Kong lacks an equivalent and relies on older, narrower statutes.

Unfair contract terms

England applies UCTA + CRA fairness tests; Hong Kong relies only on Cap.71 with weaker controls.

Privity of contract

England allows third-party enforcement under the 1999 Act; Hong Kong retains strict privity with limited exceptions.

Penalty clauses

England uses the Cavendish “legitimate interest” test; Hong Kong largely keeps the older “genuine pre-estimate of loss” approach.

Good faith

England recognises limited good-faith duties in some relational contracts; Hong Kong rejects broad good-faith duties almost entirely.

Interpretation of contracts

England applies modern contextualism (ICS, Wood v Capita); Hong Kong is more literal and conservative.

Illegality doctrine

England follows the flexible Patel v Mirza factors test; Hong Kong tends to use older, stricter principles.

Constitutional influence

England’s Human Rights Act affects some private-law reasoning; Hong Kong’s Basic Law has had only limited impact on contract law.

M&A process

1. Preliminary stage - client expectations, conflicts check, NDAs, LOIs

2. Due diligence - due diligence memos, red-flag reports, anticipate risks + protections

3. Deal structuring - optimal legal structure, tax structuring, regulatory review (antitrust/competition, CFIUS, sector-specific licenses).

4. Drafting and negotiation - APAs, SPAs, Transition services agreements, non-competes

5. Regulatory approvals

6. Financing

7. Closing