Yew Huoi, How & Associates | Leading Malaysia Law Firm

Menu

CONTRACT LAW – BROKER AND AGENT’S COMMISSION – COMMSSION OR BROKERAGE AGREEMENT

Brokerage contract or commonly known as commission agreement allows referral, agent or broker to earn a commission based on sales amount received by the principal.

How does commission agreement work?

  • A commission agreement is a conditional contract. The broker or agent is entitled to his commission or brokerage fee when the event, upon which his entitlement arises, has occurred. For examples when the sales are completed between the principal and the third party or when the principal received payments from third party.
  • Remuneration of the broker or agent typically takes the form of a commission, being a percentage of the value of the transaction the agent is to bring about for the principal.
  • When the event occurred, the principal is bound by the contract to pay the agreed sum stated in the commission or brokerage agreement.

How is the agreed sum calculated?

  • Agreed sum is usually calculated based on a formula provided in the agreement.
  • A multiplier or multiplicant basis is commonly stated in the agreement. For example, 10% of the principal total sales to the third party or 10% of the payment received by the principal from the total sales to the third party.

What if the principal refused to provide evidence, details or documents pertaining to the sales or payment received?

  • The broker or agent may take out a discovery application against the principal or third party.
  • Alternatively, if there is risk documents or evidence may be destroyed to defeat the broker’s or agent’s claim for commission, an Anton Pillar Order can be sought from the court against the principal or third party.
  • Is the broker or agent required to prove losses arising from principal’s breach or refusal to pay commission earned?
  • No. A commission agreement entails claim for payment of a debt and NOT claim for damages for breach of contract.
  • A commission agreement provides for definite sum of money fixed by the agreement in return for performance of a specified obligation. This is also known in law as the “occurrence of some specified event or condition”.
  • The rule on damages do not apply to claim for a debt. There is no need for the broker or agent to prove actual loss suffered as a result of the principal’s breach. The principle of law on remoteness of damage or mitigation of loss does not apply to contract of commission.
  • (Case in Point: Lim Beng Kuan v Helms Geomarine Sdn Bhd [2023] 9 MLJ 155 and Ng Chin Tai (trading in the name and style of Lean Seh Fishery) & Anor v Ananda Kumar a/l Krishnan [2020] 1 MLJ 16)
Back to Latest Legal Updates

Recent Post

CIVIL PROCEDURE – STRIKE OUT UNDER ORDER 18 RULE 19(1)(A),(B) RULES OF COURT 2012 – EXTENSION OF TIME APPLICATION

In Badan Pengurusan Subang Parkhomes v Zen Estates Sdn Bhd [2025] MLJU 3591, the High Court reaffirmed that non-compliance with Order 37 Rule 1(5) of the Rules of Court 2012 does not automatically invalidate assessment of damages proceedings. The Court held that procedural rules must be read with the overriding objective of ensuring justice, and that the six-month time limit to file a Notice of Appointment is directory, not mandatory. Finding no prejudice to the defendant and noting active case management by the plaintiff, the Court dismissed the developer’s strike-out bid and allowed an extension of time for assessment to proceed. The decision underscores the judiciary’s commitment to substantive fairness over procedural rigidity in post-judgment proceedings.

Read More »
16 November ,2025 No Comments

TORT – PURE ECONOMIC LOSS BAR REAFFIRMED: MMC LIABLE FOR NEGLIGENCE BUT PROTECTED FROM LOST PROFIT CLAIMS

In Asia Pacific Higher Learning Sdn Bhd v Majlis Perubatan Malaysia & Anor [2025] MLJU 3144, the High Court awarded over RM2 million in damages against the Malaysian Medical Council (MMC) for negligence, breach of statutory duty, and misfeasance during its accreditation of Lincoln University College’s medical programmes. While the court allowed direct financial losses such as survey costs, it barred claims exceeding RM550 million for lost profits, reaffirming the Federal Court’s rulings in Steven Phoa and UDA Holdings that pure economic loss is not recoverable from public or statutory bodies. The second defendant was further ordered to pay RM100,000 in exemplary damages for acting with targeted malice, marking a rare personal liability finding against a regulatory officer.

Read More »
16 November ,2025 No Comments

ERINFORD INJUNCTION – COURT OF APPEAL CLARIFIES: EX-PARTE ERINFORD INJUNCTIONS ARE THE EXCEPTION, NOT THE RULE

In Edisijuta Parking Sdn Bhd v TH Universal Builders Sdn Bhd & Anor [2025] 5 MLJ 524, the Court of Appeal clarified that ex parte Erinford injunctions at the appellate stage should only be granted in truly exceptional circumstances where giving notice would defeat the purpose of the order. Wong Kian Kheong JCA held that, under rule 50 of the Rules of the Court of Appeal 1994, such applications should generally be heard inter partes to ensure fairness and prevent abuse. Exercising powers under section 44(1) of the Courts of Judicature Act 1964, the Court granted a conditional interim Erinford injunction pending appeal, fortified by a RM200,000 deposit and an undertaking to pay damages. The ruling provides clear guidance on balancing urgency, procedural fairness, and judicial efficiency in appellate injunctions.

Read More »
16 November ,2025 No Comments

TOTAL FAILURE CONSIDERATION – FEDERAL COURT OVERRULES BERJAYA TIMES SQUARE: TOTAL FAILURE OF CONSIDERATION REDEFINED

In Lim Swee Choo & Anor v Ong Koh Hou @ Won Kok Fong [2025] 6 MLJ 327, the Federal Court unanimously overruled Berjaya Times Square Sdn Bhd v M Concept Sdn Bhd and clarified that the doctrine of total failure of consideration applies only to restitutionary relief, not to contractual termination. The Court held that the correct test is whether the promisor has performed any part of the contractual duties in respect of which payment is due, adopting Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574. Finding that the appellants had partly performed their obligations and the respondent had derived benefits, the Court rejected the respondent’s claim for restitution and restored the appellants’ contractual claim. The landmark decision restores clarity between contract and restitution, reinforcing commercial certainty in Malaysian law.

Read More »
16 November ,2025 No Comments

CONTRACT (BILL OF LADING) – NO DUTY TO DETECT FRAUD: COURT CLEARS MAERSK OF LIABILITY FOR FALSE CONTAINER WEIGHTS

In Stournaras Stylianos Monoprosopi EPE v Maersk A/S [2025] 2 Lloyd’s Rep 323, the English Commercial Court held that carriers are not liable for fraudulent misdeclarations by shippers where bills of lading are issued for sealed containers. The Court ruled that Maersk had no duty to verify or cross-check declared weights against Verified Gross Mass (VGM) data under the SOLAS Convention, as its obligation under the Hague Rules extended only to the apparent external condition of cargo. However, the judgment signals that a limited duty of care could arise in future where a carrier is put on notice of fraud. For now, carriers may rely on shipper declarations, but consignees must exercise commercial vigilance and due diligence when relying on bills for payment.

Read More »
16 November ,2025 No Comments

EXEMPLARY DAMAGES – STATUTORY BODY DUTY – DAMAGES – OBTAINING APPROVAL

In Big Man Management Sdn Bhd v Tenaga Nasional Bhd [2025] 5 MLJ 290, the Federal Court reinstated nearly RM3.56 million in special damages and awarded RM100,000 in exemplary damages against TNB for wrongfully disconnecting electricity to an ice factory. The Court ruled that “strict proof” of special damages does not mean a higher burden beyond the civil standard of proof and affirmed that TNB, as a statutory monopoly, breached its statutory duty by using disconnection as leverage to collect payment. The judgment underscores that public utilities cannot misuse statutory powers, and consumers wrongfully deprived of essential services may be entitled to punitive remedies in exceptional cases.

Read More »
16 November ,2025 No Comments
en_USEN
zh_TWZH ms_MYMY en_USEN
× Contact Us