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

Case Update: Court of Appeal Decision on Sale by Tender by Receivers

SALE BY TENDER: WHEN DOES A CONTRACT ARISE?

Nathalie Ker discusses a Court of Appeal case on a sale by tender by receivers and managers. This article was originally published in Skrine’s Legal Insights Issue 03/2018.

It is common practice for the receivers or liquidators selling the assets of a company to conduct a sale by tender, issuing an Information Memorandum and inviting tenders from various parties. In such a situation, when does acceptance take place and when is a contract formed?

The Court of Appeal delved into these issues in the recent case of Emas Kiara Sdn Bhd v Michael Joseph Monteiro & Ors; Farcoll Estate Sdn Bhd & Ors (Interveners) [2018] 8 CLJ 17 (“Emas Kiara v Monteiro”).

The Court applied the principles of formation of contract to the issue as to whether a contract existed between the Appellant, Emas Kiara Sdn Bhd (“Emas Kiara”), and the 1st and 2nd Respondents who were receivers and managers (“R&M”) of the 3rd Respondent, Lembah Beringin Sdn Bhd (“Lembah Beringin”). Continue reading