MAIN ISSUES:

- WHETHER LETTER OF QUOTATION IS A VALID AGREEMENT, BINDING TERMS

- WHETHER ADVANCE PAYMENT IS CONSIDERED AS DEPOSIT
- WHETHER CLIENT’S PAYMENTS OF RM30K CAN BE REFUNDED
- WHETHER OPPOSITE PARTIES BE LIABLE FOR NON – PERFORMANCE SINCE FAILURE TO DELIVER
- OPPOSITE PARTY ENGAGED SUB CONTRACTOR TO PROVIDE MACHINE WITHOUT INFORMING

CASES RELEVANT EXCERPTS

CTMCC [9] The Plaintiff’s case is that the Defendant has never duly delivered the 2 Passenger Hoists,
ENGINEERING nor has the Plaintiff accepted and/or received the 2 Passenger Hosts. The 2 Passenger Hoists
(M) SDN BHD v sent have not been approved by the Malaysian authorities although this was expressly
YES JOST required under the said Contract Terms. The delivery was for temporary storage and it was
MACHINERY SDN not officially accepted or received by the Plaintiff. The delivery order dated 25.08.2016 for
BHD [2022] MLJU the 2 Passenger Hoists (‘the DO’) was also not signed by the Plaintiff. The failure of delivery
395D constitutes a total failure of consideration and/or fundamental breach of contract by the
Defendant.

[10] The Plaintiff further premised that the 2 Passenger Hoists did not correspond with the
description provided under the said Contract Terms. It was stated in Clause 6 of the said
Contract Terms that the 2 Passenger Hoists need to obtain the approval of PE Design and
the approval of the Department of Occupational Safety and Health (‘JKKP’). Since the 2
Passenger Hoists have not been given the approvals of the PE Design and from the JKKP,
they were not in compliance with the requirement of the said Contract Terms.

Decisions and Findings of the Court

After perusing the cause papers, the witnesses’ statements, the notes of proceeding and the
written and oral submissions and replies by the parties, I allow the Plaintiff’s claim partially,
namely that the Defendant is to refund the sum of RM235,320-00 to the Plaintiff. I further
dismiss the Defendant’s counterclaim.

The core issue in our current case is whether the 2 Passenger Hoists were duly delivered by
the Defendant on 25.08.2016. To answer this issue, it is imminent for this court to consider a
few things. Firstly, the Plaintiff in its submission impressed on this Court that it was agreed
by both parties that the 2 Passenger Hoists were put at the Plaintiff’s site for temporary
storage purpose only and they were not officially received by the Plaintiff. The Plaintiff has
never officially acknowledge received or accepted the same and/or signed on the DO. The
approval from the relevant authorities have not been obtained.

Fordeco Based on the clear evidence that the Respondent had signed and accepted the Letter of
Construction Sdn Quotation unconditionally, the Letter of Quotation became the concluded agreement
Bhd v Wong Sin between the Appellant and the Respondent. Based on the undertaking by the main
Ten [2008] MLJU contractor to the Respondent that it would make the payment for the contract work directly
1083 to the Appellant, the Appellant felt secured and so it waived the term on advance payment.
The Respondent was present at the project site to oversee the progress of the contract work
and he never stopped the work or indicated to the Appellant that they have yet to sign a
formal agreement. After completion of the contract work, the Appellant submitted its claim
for payment in the form of a letter containing details of the contract work performed. The
Respondent had never raised any objection and is thus taken to have acquiesced thereto.
Even though there is undertaking (in principle only) from the main contractor to make direct
 payment to the Appellant, the Respondent is not absolved from his responsibility to pay the
Appellant under section 42 of the Contracts Act 1950. Further, the Respondent having
enjoyed the benefit of completed contract work must pay for the contract work under
section 71 of the Companies Act.
Alpha Focus (M) Whether the RM100,000.00 paid was deposit for services
Sdn Bhd v [14] On the RM100,000.00 that the Defendant had paid to the Plaintiff, the Defendant
Chengaljati Sdn contended that it was a deposit and not payment of rental for the use of the machinery and
Bhd [2017] MLJU equipment. Thus, the Defendant contended that it should be returned to the Defendant.
2338 However, from the note on the payment slip, the Court finds that it had shown otherwise:

“Bayaran untuk sewa mesin as per invoice no. 1001 RM100,000.00 No. cek BBMB 724517”
(at Bundle B, page 3).”

[15] Besides the express words in the said payment slip, the Quotation, specifically Clauses
A1 and A2 clearly stated that rental was payable for the use of the machinery and
equipment. It says in Clause A1 of the Quotation that:

“The above quoted machinery rentals shall be inclusive of operator and operating overheads
which shall be borne by (hereby refers to as “Alpha Focus (M) Sdn Bhd.”). The Hirer (refers
as “Chengaljati Sdn Bhd”) shall provide diesel.”

[16] The above Clause A1 is to be read with Clause A2 which provides that:

“The normal working hours for operator shall be from 8 am to 5 pm, Saturday to Thursday
with one hour lunch break and any usage beyond the time frame shall be paid as overtime
for operator.”

[17] From the above clauses it is clear that the rental to be paid by the Defendant shall
include the cost of the Plaintiff’s operators unless the operators work within normal working
hours as stated in the above provisions. Beyond the said working hours, overtime should be
payable by the Defendants.

[18] In furtherance of the above, the Defendant’s argument fails, because the Quotation
does not require a deposit to be paid. What is required from the Defendant is for it to pay
the first month’s rental in advance. This is evident from the Clause E of the Quotation, which
provides that:

“1 month advance payment for rental of equipment and operator to be paid within 7 days
upon invoice. Overtime cost for operator is to be paid within 30 days of invoice. In the event
of non-payment, we reserve our right to dismantle and remove the equipment from site
without further notice.”

[19] The timing in which the Defendant had paid the RM100,000.00 points to the fact that it
was not for the payment of deposit but for rental of the machinery and equipment. The said
amount was paid after the Plaintiff had issued invoice number 1001 for the amount of
RM196,000.00 for 28 days, being the first month’s rental. The Defendant’s payment slip
shows that the Defendant was paying for Invoice No. 1001, for rental of machinery and
equipment, and not for deposit. Since the evidence, both oral and documentary had shown
that the payment was not for deposit but was towards rental of machinery and equipment
supplied by the Plaintiff to the Defendant, this defence fails and the Defendant is not
entitled to the refund of the RM100,000.00 that it had paid to the Plaintiff.
Polyset Ltd v Bokhary PJ in setting out the facts said that four sums were paid in advance. The first sum
Panhandat Ltd was described as "deposit and part payment'. The three subsequent payments were also
[2002] 3 HKLRD similarly described, the only difference is that they have inserted the word 'further' — which
319 now read as 'further deposits and part payments'.

[143] Thus in Polyset, as in the instant appeal, both payments, albeit the entire
consideration were described as 'security deposit'.

[144] Thus it is for the parties to define what sum constitutes a deposit under the contract.
In dealing with this point, Ribeiro PJ in Polyset observed that:

distinguishing between deposit and mere advance payment: that the nature or legal
incidents of a deposit can be defined. The character of the payment depends on the parties'
intention ascertained by construing the agreement…

[145] So is 10% a reasonable sum to be forfeited from the entire amount of RM15m? On
this point in Linggi Plantations Ltd v Jagatheesan [1972] 1 MLJ 89 the Privy Council imported
a test of reasonableness.
Invescor Sdn Bhd Thus it is for the parties to define what sum constitutes a deposit under the contract. In
v Sobena Maju dealing with this point, Ribeiro PJ in Polyset observed that:-
Sdn Bhd [2007]
MLJU 653 "... distinguishing between deposit and mere advance payment: that the nature or legal
incidents of a deposit can be defined. The character of the payment depends on the parties'
intention ascertained by construing the agreement...".

So is 10% a reasonable sum to be forfeited from the entire amount of RM15 million? On this
point in Linggi Plantations Ltd v Jagatheesan [1972] 1 MLJ 89 the Privy Council imported a
test of reasonableness.

Lord Browne-Wilkinson observed, inter alia that:-

"... In order to be reasonable a true deposit must be objectively operating as "earnest

money" and not as a penalty."

Thus, the reasonableness of a deposit is to be tested against the conventional or customary

level of deposits generally taken as an earnest of performance.

As manifested in various authorities, the test normally accepted to ascertain whether a sum
is within the bounds of as earnest of performance and therefore deemed a true deposit is
where it represents 10% of the purchase price of the land. In short, it's conventionally
accepted that a the deposit of 10% is a true deposit. (See Sun Properties Sdn Bhd v Happy
Shopping Plaza [1987] 2 MLJ 711).

As case laws in various jurisdictions have shown, a deposit of 10% of the purchase price is
quite commonplace and has enjoyed widespread commercial approval and acceptance.