Milky entered into a contract for the hire of 6 rooms in New Castle Hotel in ...

Milky entered into a contract for the hire of 6 rooms in New Castle Hotel in Kowloon West. The purpose of the contract was to watch the fireworks gala in the Victoria Harbour on the 1st July (Reunification Day) through the windows of the rooms. Milky planned to invite her close friends and their families to stay in the 6 rooms to enjoy the fireworks. Just two hours before start of the fireworks, the Hong Kong Police Force received a serious threat from some terrorist organizations that they would launch large scale attack to the crowds who gathered to watch the fireworks. The Hong Kong Government immediate ordered the cancellation of the fireworks and gave an order that this kind of gala will not be launched at least for five years. Milky, having already paid a deposit, refused to pay the balance of the room charges. The hotel took legal action to recover the balance.

Required:

Analyse the chance of success by the hotel and explain in detail the legal principles that you base on for analysis.

Expert Solution

Legal issue: Can the hotel recover the balance room charges from Milky?

Rule: Case laws and statue

Taylor v Caldwell

Chandler v Webster

Application: Milky wanted to watch the fireworks gala in the Victoria Harbour on the 1 July (Reunification Day) her close friends and their families. She entered into a contract for the hire of 6 rooms in New Castle Hotel in Kowloon West. Just before the start of the fireworks the Hong Kong Government immediate ordered the cancellation of the fireworks. Milky already paid a deposit for the rooms but refused to pay the balance of the room charges. The hotel sued Milky for the recovery of balance amount.

“Under Hong Kong law, when an event for which no contractual party may be faulted occurs to significantly alter the parties' rights and obligations originally intended under the contract, the doctrine of frustration operates to discharge the contract.” (Gall, Chan, Wong, 2020)

In the case of Taylor v Caldwell; a music theater was hired for musical performances; however, before the date fixed for the performances a fire broke and burned the theater. The court held that as it is not possible for the defendants to fulfill the contract, doctrine of frustration will be applied and the contract will be discharged. As observed in Chandler v Webster, the loss occurred due to discharge of contract on account of frustration lies where it falls. All amount paid before the discharge become recoverable and all amounts payable before the discharge ceases to be payable.

Conclusion: The above analysis suggests that the Hotel will not be able to recover the amount payable by Milky as per the contract.

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ekkarill92 answered 2 years ago

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