Case Update: Court of Appeal Revives the Issue of Liquidated Ascertained Damages Clause

The Court of Appeal in its grounds of judgment dated 26 July 2019 in Macvilla Sdn Bhd v Mervyn Peter Guan Yin Hui & Another has revived the question of whether there is a need to prove actual loss where there is a liquidated ascertained damages clause.

The earlier Federal Court decision in Cubic Electronics had concluded that for liquidated damages clause, proof of actual loss is not mandatory. The onus was on the defaulting party to show that the liquidated ascertained damages clause was unreasonable.

In Macvilla, the Court of Appeal now sets out the method of interpreting section 75 of the Contracts Act 1950 in applying the liquidated ascertained damages clause. Continue reading

Federal Court Rules on Forfeiture of Deposits and Liquidated Damages Clauses

Malaysia’s apex court, the Federal Court, has decided on significant points of law relating to the right to forfeit deposits and the application of liquidated damages clauses. This is seen in the grounds of judgment of Cubic Electronics Sdn Bhd (in liquidation) v Mars Telecommunications Sdn Bhd.

These issues relate to the interpretation of section 75 of the Contracts Act 1950, whether there is a need to prove actual loss, and whether there has been an alignment of Malaysia law with the UK Supreme Court position in Cavendish.

This Federal Court decision significantly clarifies the previous position under Selva Kumar. Continue reading