THE BRITISH & CHINESE CORPORATION LIMITED.
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Majesty's Government.
The Corporation will certainly endeavour to do so, and for convenience I will take the conditions seriatim. Paragraph 4. Condition (a). I think this can be accepted by the Corporation without dispute.
Paragraph 4. Condition (b). This could be accepted with certain reservations which the Corporation believe His Majesty's Government would consider reasonable, e.g., the cancellation of the concession could not be agreed to unless the Corporation were at fault and the non-construction of the line were due to their dilatoriness, incapacity to accomplish the work, or intentional obstruction. To hold them responsible in case of force majeure would be unreasonable as would also any proposal to cancel their concession without full repayment of all costs incurred to date for survey and all other outgoings. With such reservations as these to be liberally and fairly interpreted, the Corporation would not demur to the acceptance of the condition.
Paragraph 4. Condition (c). The Corporation recognize that it is essential that the Legislative Council of Hong Kong should approve the terms of the Agreement for the reasons stated in your letter. We should point out however that the Chinese have a voice in the settlement of this question in view of the fact that a section of the Line, if through communication is to be maintained, will be within Chinese Territory.
Paragraph 4. Condition (d). The Directors regret that they are unable to alter their views in regard to the question of leasing the line for various reasons which I need not recapitulate beyond saying that the conditions of the preliminary agreement do not in the first place contemplate such an arrangement, and assuming that with the aid of His Majesty's Government a new agreement were obtained, it seems to the Directors quite certain that the Chinese Government would never consent to profits over the Chinese section being made respon-