Yew Huoi, How & Associates | Leading Malaysia Law Firm

Menu

PROPERTY LAW – LEGAL IMPLICATIONS OF SALE AND PURCHASE AGREEMENT BREACHES AND THE RIGHT TO OFFSET IN MALAYSIAN PROPERTY TRANSACTIONS

  1. Scenario Summary

    X, a property developer, and Y entered into a sale and purchase agreement (SPA) on 2.1.2016 for a property valued at RM500,000, with the promise of delivering vacant possession by 1.1.2018. According to the SPA, Y was to pay the purchase price in instalments as outlined in the Third Schedule. However, Y failed to pay the final 20% of the purchase price, leading X to terminate the SPA due to breach of contract.

    The legal questions arising are:

    i. Whether X is responsible for the delay in delivering vacant possession as per the SPA and if the liquidated ascertained damages (LAD) significantly exceed the unpaid 20% of the purchase price, negating X’s right to demand the outstanding balance.

    ii. Whether Y has the right to offset the 20% unpaid portion of the purchase price against the LAD, thereby nullifying the obligation to pay the remaining balance.

  2. Applicable Legal Principles
    – The right to offset, as per section 526 of the Companies Act 2016, is permissible only where there are mutual credits between the parties, and these credits are due.

    – In scenarios where a company is not undergoing liquidation, the issue of favoring certain creditors over others does not apply. The buyer is entitled to offset the LAD against the remaining purchase price if the LAD exceeds this outstanding balance.

    – In the event of company liquidation, the liquidator should collect the outstanding purchase price to benefit the Housing Development Account, ensuring equitable treatment without giving undue preference to any party. Any remaining funds in this account should be proportionately distributed among purchasers entitled to LAD for delayed delivery upon the conclusion of the liquidation process.
  3. Relevant Case Law
    • Sazean Development Sdn Bhd v Maha Pesona Sdn Bhd [2023] MLJU 544
    • Techno Asia Holdings Bhd v Mount Austin Properties Sdn Bhd [2007] 4 MLJ 576
    • Sentul Raya Sdn Bhd v Hariram Jayaram & Ors [2008] 4 CLJ 618
    • Foo Ah Kow v Yeap Poh Lam [2016] 6 CLJ 686
Back to Latest Legal Updates

Sorotan Terkini

STRATA TITLES ACT – DEVELOPER MUST ACCOUNT FOR COMMON PROPERTY COMPENSATION: HIGH COURT IMPOSES CONSTRUCTIVE TRUST

In JMB Kelana Square v Perantara Properties Sdn Bhd & Ors [2025] 12 MLJ 51, the High Court held that a developer who received compensation for land compulsorily acquired for the LRT 3 project could not retain sums attributable to common property. Although the compensation was paid entirely to the developer as registered proprietor, the Court found that part of the acquired land constituted common property, and the developer therefore held RM6.05 million on constructive trust for the Joint Management Body. The decision affirms that JMBs have proprietary standing to recover compensation for common property and that courts will intervene to prevent unjust enrichment in strata developments.

Read More »
1 Februari ,2026 Tiada Ulasan

UNFAIR DISMISSAL – MEDICAL LEAVE IS NOT MISCONDUCT: HIGH COURT UPHOLDS INDUSTRIAL COURT’S PROTECTION OF SICK EMPLOYEE

In Aerodarat Services Sdn Bhd v Lawerance Raj a/l Arrulsamy & Anor [2025] 11 MLJ 26, the High Court dismissed an employer’s judicial review and affirmed that prolonged medical leave does not, by itself, amount to misconduct justifying dismissal. The Court held that the employer failed to prove the critical element of intention not to return to work or unwillingness to perform contractual duties, despite high absenteeism caused by serious illness and surgery. The ruling reinforces that employers must distinguish between genuine illness and misconduct, and cannot rely on medical absence alone to terminate employment.

Read More »
1 Februari ,2026 Tiada Ulasan

WILL AND PROBATE – COURT OF APPEAL INVALIDATES WILL OF 97-YEAR-OLD TESTATOR: CAPACITY, SUSPICION AND UNDUE INFLUENCE PROVED

In Kong Kin Lay & Ors v Kong Kin Siong & Ors [2025] 5 MLJ 891, the Court of Appeal set aside a will executed by a 97-year-old testator, holding that there was real doubt as to testamentary capacity, compounded by serious suspicious circumstances and undue influence by certain beneficiaries. The Court emphasised that while the “golden rule” is not a rule of law, failure to obtain medical confirmation of capacity where doubt exists is a grave omission. Credibility issues with the drafting solicitor, beneficiary involvement in the will’s preparation, and suppression of evidence led the Court to declare the will invalid and order intestacy.

Read More »
1 Februari ,2026 Tiada Ulasan

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.

Read More »
1 Februari ,2026 Tiada Ulasan

DISCOVERY APPLICATION – HIGH COURT ORDERS JPN TO DISCLOSE FAMILY TREE — STATUTORY RIGHT OVERRIDES ADMINISTRATIVE SECRECY

In V Kalanathan a/l Veeran v Ketua Pengarah Jabatan Pendaftaran Negara (JPN) & Ors [2025] 12 MLJ 529, the High Court directed JPN to disclose the family tree details of a deceased co-proprietor to assist in probate proceedings. The Court held that such information, recorded in JPN’s digital registers, constitutes a “document” under Order 24 rule 7A ROC 2012 and is not an official secret in the absence of a valid OSA certification. JPN’s reliance on internal circulars was rejected, as statutory rights under the Births and Deaths Registration Act 1957 cannot be curtailed by administrative policy. The ruling reinforces that discovery against government agencies is permissible where necessary to ensure the fair disposal of proceedings.

Read More »
1 Februari ,2026 Tiada Ulasan

PROFESSIONAL NEGLIGENCE – SOLICITOR – PANEL SOLICITORS LIABLE: LITIGATION BRIEF DOES NOT EXCUSE FAILURE TO PROTECT BANK’S SECURITY

In Malayan Banking Bhd v Russell Lua Kok Hiyong & Ors [2025] 12 MLJ 599, the High Court held the bank’s former panel solicitors professionally negligent for failing to safeguard the bank’s proprietary interest in a charged property during litigation. The Court ruled that a solicitor’s duty to protect a client’s interests extends beyond the confines of a ‘litigation-only’ brief, particularly where the risk of loss is obvious and foreseeable. Limitation was held to run only when actual loss crystallised, and all partners were found jointly and severally liable under the Partnership Act 1961. The decision is a clear warning that solicitors must act proactively to protect client interests, even outside their immediate scope of instruction.

Read More »
1 Februari ,2026 Tiada Ulasan
ms_MYMY
en_USEN zh_TWZH ms_MYMY
× Hubungi Kami