LAW Partnership Secures Victory In High-Stakes Commodities Dispute

LAW Partnership Secures Victory in High-Stakes Commodities Dispute

The leading law firm in Kuala Lumpur, Malaysia, LAW Partnership is pleased to announce its successful representation in a high-stakes commercial litigation involving a significant breach of a commodities supply agreement. The High Court’s ruling serves as a vital reminder of the necessity for strict adherence to delivery obligations and the high legal threshold required to justify the forfeiture of deposits. Despite our client fulfilling upfront financial commitments through a substantial security deposit, the supplier failed to meet delivery schedules. This persistent non-performance compelled our client to terminate the contract and seek a refund of the remaining deposit. In response, the adverse party sought to forfeit the deposit and initiated a counterclaim for loss of profits, alleging a technical breach of payment by our client.

Key Judicial Findings

Priority of Delivery Obligations

The Court affirmed that a supplier’s failure to comply with an agreed delivery schedule constitutes a fundamental breach. Crucially, the Court held that a purported minor technical delay in payment, if any, does not justify a total cessation of delivery, particularly when the supplier is already in substantial delay and holds significant security, without issuing any contemporaneous demand or notice before stopping delivery.

The Proportionality of Forfeiture

In application of s.75 of the Contracts Act 1950, the Court clarified that the burden of proof lies with the party seeking to forfeit a deposit. The Court ruled that such forfeiture must be proven as “reasonable compensation,” finding that seizing a substantial deposit in these circumstances was disproportionate and legally untenable.

Stringent Evidentiary Standards for Counterclaims

The dismissal of the adverse party’s counterclaim for loss of profit reinforces the judiciary’s stance that such claims must be backed by concrete documentary evidence. Speculative losses without proof of possession or external validation will not satisfy the “balance of probabilities.”

The Decision

The Court ultimately validated our client’s right to terminate the agreement and ordered the full refund of the deposit, while dismissing the adverse party’s counterclaim in its entirety.

This successful outcome was spearheaded by Suaran Sidhu (Partner), supported by Cheryl Chung (Associate). This victory highlights LAW Partnership’s capability in navigating the intricacies of commercial breach-of-contract claims and ensuring that LAW Partnership’s clients’ interests remain protected by both the letter of the law and the strength of strategic enforcement.

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