LEGAL UPDATES – CONTRACT – PAYMENT FOR WORK DONE – APPELLATE REVIEW – ADDITIONAL WORK, YOU ASKED FOR IT, YOU PAY FOR IT: COURT ORDERS PAYMENT FOR ADDITIONAL WORKS
Can an employer refuse to pay for additional works after requesting and benefiting from them? In Samudera Wibawa Sdn Bhd v Prudence Energy Sdn Bhd [2026] 10 MLJ 229, the High Court said no. The Court held that contemporaneous WhatsApp messages, quotations and invoices clearly established that the additional works had been requested and approved, entitling the contractor to payment. The decision also reaffirms that a party cannot rely on its own conduct to avoid contractual obligations, and that claims for special damages must be strictly proved with proper evidence.
LEGAL UPDATES – CONTRACT – BREACH – LEGITIMATE EXPECTATION – HOPE IS NOT A CONTRACT: COURT REJECTS CLAIM BASED ON LEGITIMATE EXPECTATION
Can a party recover millions based on an expectation that a business relationship would continue? In Shapers International Sdn Bhd & Ors v Halal Industry Development Corp Sdn Bhd & Anor [2026] 10 MLJ 58, the High Court held that it cannot. While the plaintiffs successfully recovered the unpaid balance confirmed by a binding independent audit, the Court rejected their RM32 million claim for loss of future opportunities, holding that legitimate expectation cannot override clear contractual terms. Where a contract expressly requires fresh negotiations and written agreement for future projects, commercial expectations alone do not create enforceable legal rights.
CONTRACT LAW – ‘UK COURTS’ MEANS ENGLAND: COURT UPHOLDS JURISDICTION DESPITE VAGUE CLAUSE
In SMT Global Logistics Ltd v Georgian Airlines LLC [2025] Lloyd’s Rep. Plus 89, the Commercial Court held that a clause referring disputes to “the court in accordance with current legislation of the United Kingdom” was a valid jurisdiction clause in favour of the High Court of England and Wales. The Court also confirmed that the Montreal Convention does not apply to pure contractual claims for non-performance, such as repayment and loss of profits. Emphasising a broad and commercially sensible interpretation, the Court enforced the parties’ choice of forum and refused to stay proceedings, reaffirming that jurisdiction clauses will be upheld unless there are overwhelming reasons to depart.
GUARANTEE – PERSONAL GUARANTEE ≠ PAY ON DEMAND: COURT DRAWS THE LINE BETWEEN SURETYSHIP AND DEMAND GUARANTEES
In CE Energy DMCC v Bashar [2026] Lloyds’s Rep 267, the Commercial Court clarified that not all guarantees labelled “on demand” will be treated as demand guarantees. On a proper construction, the court held that the personal guarantee in question was a contract of suretyship, requiring proof of the principal debtor’s liability rather than automatic payment upon demand. Crucially, the court found that the debtor’s “irrevocable” admissions of debt in a payment agreement created a binding contractual estoppel, which the guarantor could not challenge. The decision also confirms that, where payment is due on a “day certain”, a seller may still claim the price notwithstanding retention of title. The case underscores the importance of precise drafting and the risks of entering into settlement agreements that conclusively fix liability.
NOT AN ‘AGREEMENT TO AGREE’: ENGLISH COURT OF APPEAL SAVES LONG-TERM SUPPLY CONTRACT DESPITE OPEN PRICE CLAUSE
In KSY Juice Blends UK Ltd v Citrosuco GmbH [2025] 2 Lloyd’s Rep 581, the UK Court of Appeal held that a long-term supply contract was not unenforceable merely because part of the price was stated as “open price to be fixed”. The Court implied a term that, in the absence of agreement, the price would be a reasonable or market price, noting that the product’s value could be objectively benchmarked against the market price of frozen concentrated orange juice. Emphasising that courts should preserve commercial bargains rather than destroy them, the decision confirms that section 8(2) of the Sale of Goods Act 1979 operates as a saving provision, not a bar to enforceability.
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.
BREACH OF CONTRACT – COURT FINDS EDGENTA IN BREACH: SUPPLYING USED LINENS NOT GOOD ENOUGH FOR UKM HOSPITAL
In Universiti Kebangsaan Malaysia v Edgenta Facilities Management Sdn Bhd [2025] 11 MLJ 783, the High Court held that Edgenta breached its laundry services contract with UKM by failing to supply new linens as intended under the agreement. Although the contract did not explicitly use the word “new,” the Court admitted extrinsic evidence under section 92(b) of the Evidence Act 1950 to establish both parties’ common understanding. The Court also upheld UKM’s RM3.99 million penalty as valid and proportionate, finding that the formula including “days delayed” was consistent with the contract and served a legitimate commercial purpose. Edgenta’s counterclaim for wrongful deductions was dismissed for lack of proof.
MONEYLENDING – ILLEGALITY– COURT OF APPEAL: LICENSED MONEYLENDERS CAN RECOVER VOID LOANS UNDER RESTITUTION
In Golden Wheel Credit Sdn Bhd v Dato’ Siah Teong Din [2025] MLJU 2245, the Court of Appeal ruled that a licensed moneylender may recover loan monies under section 66 of the Contracts Act 1950, even when the moneylending agreements are void for technical non-compliance with the Moneylenders Act 1951. The Court held that while the agreements were void and unenforceable, they were not illegal, as the lender was duly licensed and the transactions were genuine. Applying the Federal Court’s Detik Ria principles, the Court found that restitution was proportionate and justified, ordering repayment of RM3.38 million to prevent unjust enrichment.
BREACH OF CONTRACT – COURT OF APPEAL AFFIRMS LAD: CONTRACTOR LIABLE FOR DELAY, EXTRA CLAIMS REJECTED
In Savelite Engineering Sdn Bhd v Askey Media Technology Sdn Bhd [2025] CLJU 1808, the Court of Appeal upheld the employer’s entitlement to RM768,900 in liquidated damages (LAD) for a 233-day delay in completing a factory project. The Court held that time was of the essence, and the contractor was estopped from denying liability after applying for extensions of time. Applying section 75 of the Contracts Act 1950 and Cubic Electronics, the LAD was found proportionate (~9% of the contract price) and thus reasonable compensation. Claims for additional losses, such as lost rental profits and indemnity to tenants, were barred where an LAD clause exists.
BREACH OF CONTRACT – ACQUIESCENCE AND CLEAN HANDS: COURT OF APPEAL BARS PURCHASER FROM ENFORCING SPA
In Vila Mekar Sdn Bhd v Wong Yie Dee [2025] MLJU 2104, the Court of Appeal overturned the High Court’s order for specific performance of a Sale and Purchase Agreement (SPA). The Court held that the Purchaser’s attempt to terminate in 2010 was invalid, as he failed to pay the required compensation, and by acquiescing to the Developer’s delay, the SPA remained subsisting. Later, the Purchaser’s refusal to pay progress claims and termination of his housing loan constituted clear breach and repudiation. Emphasising the equitable maxim that “he who comes to equity must come with clean hands,” the Court removed the Purchaser’s caveat and awarded costs to the Developer.
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