Yew Huoi, How & Associates | Leading Malaysia Law Firm

CONTRACT – TERMINATION – WRONGFUL TERMINATION

What if you have invested into a project with another party to run an operation. However, because they had issued a termination notice, you were then unable to carry out your contractual obligations under the agreement and no reason was given by them. Can I sue them for wrongfully terminated contract? 

  •  Yes, you can bring a legal action against that party for wrongfully terminated contract as he or she does not provide any reason for the termination. Wrongful termination is a repudiation of the contract and hence a serious breach of the contract in and of itself.

Q. What is the right to terminate?

  •  Termination can be divided into two categories: 1) termination for cause, often known as termination for default; and 2) termination for convenience. There is no general contract concept that allows termination for convenience, thus termination for convenience can only come from the conditions of a contract that allow it. Only a serious breach of the contract by the other party can result in a termination for cause.

Q. What qualifies as a material breach to the contract?

  •  A review of contract case law may be used to determine what constitutes a material breach or default, or the contract itself may specify what constitutes a material breach or default. A breach of contract occurs when a party fails to meet one or more of the contract’s terms. However, only a material breach entitles the non-breaching party to treat the material breach as a violation of the entire contract, and a material breach entitles the non-breaching party to treat the material breach as a breach of the entire contract.

The following facts are considered by courts in determining whether a breach was material:

  1. Was there a failure of an essential contract element that led the non-breaching party to sign the contract?
  2. Did the breach affect the content of the contract, defeating the purpose for which the non-breaching party signed it?
  3. Did the breach affect a crucial subject that was central to the contract’s essence?
  4. Did the non-breaching party get significantly less or something different than what he had bargained for?

Q. What damages can I claim for a wrongfully terminated contract?

  •  Direct damages, consequential damages, and all other damages necessary to put the non-breaching party in the same position it would have been in if the contract had been fully performed by the parties are available to the non-breaching party following its termination of the contract or in response to a wrongful termination by the other party. Besides that, the courts will also provide remedies such as specific performance and rescission to put the non-breaching party back in its original position.

Recent Post

NAVIGATION AND SHIPPING LAW – COLLISION REGULATIONS – COLLISION AT SEA – A WAKE-UP CALL FOR ADHERING TO NAVIGATION RULES

The collision between the FMG Sydney and MSC Apollo highlights the critical importance of adhering to established navigation rules. Deviations, delayed actions, and reliance on radio communications instead of clear, early maneuvers can lead to disastrous outcomes. This case serves as a stark reminder for mariners: follow the rules, act decisively, and prioritize safety above assumptions.

Read More »

SHIPPING AND ADMIRALTY IN REM – A SINKING ASSET – COURT ORDERS SALE OF ARRESTED VESSEL TO PRESERVE CLAIM SECURITY

In a landmark admiralty decision, the High Court ordered the pendente lite sale of the arrested vessel Shi Pu 1, emphasizing the principle of preserving claim security over the defendant’s financial incapacity. The court ruled that the vessel, deemed a “wasting asset,” could not remain under arrest indefinitely without proper maintenance or security. This case reinforces the necessity for shipowners to manage arrested assets proactively to prevent significant financial and legal repercussions.

Read More »

EMPLOYMENT LAW – IS DIRECTOR A DIRECTOR OR EMPLOYEE? UNPACKING DUAL ROLES IN EMPLOYMENT LAW

The Court of Appeal clarified the dual roles of directors as both shareholders and employees, affirming that executive directors can qualify as “workmen” under the Industrial Relations Act 1967. The decision emphasizes that removal as a director does not equate to lawful dismissal as an employee unless due process is followed. This case highlights the importance of distinguishing shareholder rights from employment protections, ensuring companies navigate such disputes with clarity and fairness.

Read More »

REGULATIONS – GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT 1947 ) – ARTICLE I

This legal update explores key provisions of the General Agreement on Tariffs and Trade (GATT 1947), focusing on Article I (Most-Favoured-Nation Treatment), Article II (Schedules of Concessions), Article XX (General Exceptions), and Article XXI (Security Exceptions). Article I mandates that any trade advantage granted by one contracting party to another must be extended unconditionally to all other parties. Article II ensures that imported goods from contracting parties receive treatment no less favourable than that outlined in agreed schedules, while also regulating permissible taxes and charges. Articles XX and XXI provide exceptions for measures necessary to protect public morals, health, security interests, and compliance with domestic laws. The provisions reflect the foundational principles of non-discrimination, transparency, and fair trade, while allowing for limited, well-defined exceptions. This summary is intended to provide a concise reference for businesses and legal practitioners involved in international trade law.

Read More »
en_USEN
× Contact Us