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