Yew Huoi, How & Associates | Leading Malaysia Law Firm

Menu

LETTER OF DEMAND – IGNORANCE – CONSEQUENCES

My company entered into a Facility Agreement (“FA”) with the bank. I am the guarantor. Due to MCO, we defaulted the loan in the FA. The bank took legal action against my company and demanded the sum from me as guarantor. Can I ignore the letter of demand? What is the legal implication?

  • Legally, not all demand notices must be replied to. Failure to respond does not tantamount to an admission.
  • HOWEVER, failure to response relates to the issue of conduct of a person. The conduct of a person is relevant to how the court value a person’s evidence in court.
  • Therefore, you should not ignore a letter of demand. A valid defence (if any) will be weak in evidence for failure to reply to a letter of demand.

 What if I did not sign the guarantee to the FA as a guarantor and my signature was forged?

  • If your signature is forged, you should immediately reply and state it is forged.
  • You should also lodge a police report for forgery.
  • Failure to do any of the above will weaken your defence of forgery in evidence.

 Why is there such a problem in evidence since the law does not require demand notices to be replied to?

  • The evidentiary presumption arises from the following common-sense approach.
  • This is because under an ordinary course of business, if one man of business states in a letter to another that he has agreed to do certain things, the person who receives that letter must answer it if he means to dispute the fact that he did not agree.
  • This is an ordinary response presumed in commercial cases.
  • Similarly, if your signature is forged, a police report should be lodged.
  • Failure to do so will weaken your case in evidence. Estoppel will set in. Your defence will be perceived as an afterthought.

What should I do when I receive a letter of demand?

  1. Check the timeframe given to you to reply to the demand.
  2. Consult a lawyer as soon as possible.
  3. Instruct your lawyer to immediately reply to the demand.
  4. State your defence clearly and as early as possible.
  5. If there is a defence of fraud and forgery, immediately lodge a police report so that an investigation can be carried out.
  6. Send the documents alleged to be forged for examination by an expert.

Case in point: Small Medium Enterprise Development Bank Malaysia v Lim Woon Katt [2016] 9 CLJ 73

Back to Latest Legal Updates

Recent Post

JURISDICTION – CHOOSING THE RIGHT COURT: THE SEA JUSTICE CASE HIGHLIGHTS WHERE MARITIME DISPUTES SHOULD BE HEARD

In The Sea Justice cases [2024] 2 Lloyd’s Rep 383 and [2024] 2 Lloyd’s Rep 429, the Singapore courts tackled a key question: which country should handle a maritime dispute when incidents span international waters? After examining the location of the collision, existing limitation funds in China, and witness availability, the courts concluded that China was the more appropriate forum. This ruling highlights that courts will often defer to the jurisdiction with the closest ties to the incident, ensuring efficient and fair handling of cross-border maritime disputes. This approach is also relevant in Malaysia, where similar principles apply.

Read More »
17 November ,2024 No Comments

BREACH OF CONTRACT – FORCE MAJEURE – FORCE MAJEURE UNPACKED: WHEN ‘REASONABLE ENDEAVOURS’ DON’T BEND CONTRACT TERMS

The UK Supreme Court clarified the limits of force majeure clauses, ruling that “reasonable endeavours” do not require a party to accept alternative performance outside the agreed contract terms. This decision emphasizes that force majeure clauses are meant to uphold, not alter, original obligations – even in unexpected circumstances. The case serves as a reminder for businesses to define alternative options explicitly within their contracts if flexibility is desired.

Read More »
17 November ,2024 No Comments

NEGLIGENCE – MEDICAL NEGLIGENCE – HOSPITAL ACCOUNTABILITY REINFORCED: COURT UPHOLDS NON-DELEGABLE DUTY IN MEDICAL NEGLIGENCE

In a landmark ruling, the court reinforced the hospital’s non-delegable duty of care, holding that even when services are outsourced to independent contractors, the hospital remains accountable for patient welfare. This decision emphasizes that vulnerable patients, reliant on medical institutions, must be safeguarded against harm caused by third-party providers. The ruling ultimately rejected the hospital’s defense of independence for contracted consultants, underscoring a high standard of duty owed to patients.

Read More »
17 November ,2024 No Comments

CONTRACTS – CONTRACT FOR THE SALE OF GOODS FOB – REMOTENESS OF DAMAGES IN BACK-TO-BACK CONTRACTS – COURT DEFINES LIMITS ON LIABILITY

In a complex dispute involving back-to-back contracts, the court clarified the boundaries for assessing damages, emphasizing that a chain of contracts does not automatically ensure liability passes through. Although substantial losses resulted from delays and disruption, the court highlighted the importance of the remoteness of damages, noting that each contract’s unique terms ultimately limited liability. This decision emphasise the need for parties in chain contracts to carefully define indemnity and liability provisions, as damages are assessed based on foreseeability rather than simply the structure of linked agreements.

Read More »
17 November ,2024 No Comments

TORT – BREAKING CONFIDENTIALITY – COURT CRACKS DOWN ON INSIDER LEAKS AND CORPORATE CONSPIRACY

In a recent ruling on corporate confidentiality, the court held two former employees liable for disclosing sensitive business information to a competitor, deeming it a breach of both employment contracts and fiduciary duties. This case highlights the serious consequences of unauthorized sharing of proprietary data and reinforces that such disclosures can lead to substantial legal and financial repercussions, even for the receiving parties if they knowingly benefit from confidential information.

Read More »
17 November ,2024 No Comments
en_USEN
zh_TWZH ms_MYMY en_USEN
× Contact Us