Remedies in Contract
Remedy
Definition
- A cure, a remedy is a redress for a wrong
- Any positive solution to a problem
Historical development
- Remedies are either legal or equitable
- Legal remedies are primarily monetary and the most common in the remedy
of damages
- Equitable remedies are usually specific and available only at the discretion
of the court.
Objectives
- To provide an appropriate relief
- To redress a wrong rather than to punish a defendant (civil remedy)
- In remedies of contract, there are needs:
o to have an ability to recognize which remedy is appropriate
o to have an ability to determine the likelihood of success
o to have an ability to seek/choose between alternative remedies
o to have an understanding on how to calculate damages
Damages
Definition
- pecuniary compensation obtainable by success in an action for a wrong
which is either a tort or a contract, the compensation being in the form of a
lump sum which is awarded unconditionally and is generally but not
necessarily expressed in currency.
Damages in contract
- where a contract has been breached, damages are available as a matter
of right
- Aims: to put the plaintiff as he would have been, if the contract is performed,
rather than to punish the defendant, ie to fulfill the plaintiff’s expectation by
putting him into as good as position as he would have been in if the contract
had been performed.
- Principle: to compensate the claimant for his losses, rather than to measure
the award by the amount of gain derived by the defendant.
o Damages are supposed to place the innocent party in the same
position that he or she would have been had the contract been
properly performed.
o Case: British Westinghouse Electric and Manufacturing Co.
Ltd v Underground Electric Rlys Co. of London Ltd, Viscount
Haldane LC held, the fundamental basis of an award of
contractual damages is thus compensation for pecuniary loss
naturally flowing from the breach.
o Case: Robinson v Harman, as per Baron Parke, “where a party
sustains loss by reason of breach of contract, he is so far as
money can do it to be placed in the same situation with respect to
damages as if the contract had been performed.”
- Damages in the most commonly claimed remedy granted by the court in
cases of breach of contract.
- A claim for damages arises in circumstances where there has been a failure
to perform without lawful excuse, one or more of the obligations (whether
condition or warranties or intermediate terms) contained in the contract.
- It gives the right to the innocent party to claim for a remedy for every breach,
whether the nature of the breach is serious or not.
- Object of awarding damages: to compensate the innocent party’s actual
loss but is not to benefit the innocent party. Hence, the function of damages
is compensatory in nature. Never punitive.
o Case: Tan Sri Khoo Teck Puat & Anor v Plenitude Holdings
Sdn Bhd, the Federal Court held that the general principle which
constitutes the starting point in assessment of damages for the
breach of contract is to place a party who has sustained a loss by
reason of breach, so far as money can do it, in the same situation
as if the contract has been performed.
Type of Losses
- A. Pecuniary losses: losses which can be quantified in financial terms such
as loss of profit, loss of earnings, cost of repairs/replacement and expenses
incurred.
- B. Non-Pecuniary losses: losses which are not economic or financial in
nature. Cannot be precisely stated in financial terms such as physical pain
and injury to feelings, mental distress and embarrassment.
Pecuniary losses
Basic methods of calculating loss:
- i) Expectation or loss of bargain basis
o the income which the innocent party had expected to obtained out
of the contract but was loss due to the breach of contract.
o Case: Robinson v Harman, “where a party sustains loss by
reason of breach of contract, he is so far as money can do it to be
placed in the same situation with respect to damages as if the
contract had been performed.”
o Case: Victoria Laundry (Windsor) Ltd v Newsman Industries
Ltd, the boiler was delivered late and the direct and obvious result
of that was the laundry could not use it to make a profit.
o May also include any claim from the innocent party for cost of
alternative performance when the defaulted party fails to perform
and it is necessary to find someone else to do the job. The
differences cost accrued from the breach between what the
 default party quoted and what the alternative person charges can
be claimed by the innocent party (Ruxley Electronics &
Constructions Ltd v Forsyth)
o Assessed in 2 ways:
§ Diminution in value: differences in value between the
performance received and what he expected from the
promise in the contract. (Illustration (a) Section 74)
• Case: Hadley v Baxendale, Plaintiffs operated
a mill, and a component of their steam engine
broke causing them to shut down the mill.
Plaintiffs then contracted with Defendants,
common carriers, to take the component to W.
Joyce & Co. to have a new part created. When
delivery was delayed due to Defendants’
neglect, causing Plaintiffs’ mill to remain closed
longer than expected, Plaintiffs sued to recover
damages. Held: since defendant’s delay in
transporting the shaft had caused the plaintiff
loss of profit, thus it can be taken into
consideration to assess the damage suffered
by the plaintiff loss of profit by way of diminution
in value.
• Case: Heller Factoring Sdn Bhd (previously
known as Matang Factoring Sdn Bhd) v
Metalco Industries (M) Sdn Bhd, the court
held that the proper measure of damages to be
awarded to Metalco to its status before the
seizure of the machine by Matang; that is the
difference in the price at which the machine was
bought by Metalco and the price at which it was
later resold by Matang plus all the abortive
expenditure which Metalco had incurred in
transporting and installing the machine in its
premises.
§ Cost of cure (performance measure): by taking the cost
of putting the plaintiff into the position which he would
have been in had the contract been fully performed.
• Case: Jones v Herxheirmer, the damages
may be assessed on the basis of what it has
cost or will cost the claimant to have the
contract performed by a third party in order to
ensure that the contract is fully performed.
• Case: Win Sin (M) Sdn Bhd v LPPKN, the
court awarded damages for loss of profit. The
plaintiff in this case suffered loss of profits due
to the failure of the defendant to deliver vacant
possession of the shop that the plaintiff intends
to rent for the purpose of expanding her
business. The court pointed out that the
defendant knew that the plaintiff needed the
premise for the purpose of their business. Thus,
the defendant was liable to account for the loss
of profits from the date of breach of agreement
until the date the plaintiff obtains another
premise to rent.
• Case: Tanjung Tiara Sdn Bhd v Southwind
Development Sdn Bhd, the court in their view
that plaintiff claim for damages was supported
by the estimated and consequential
computation of 25% of the contract value and
such computation was not merely based on an
estimate of the loss of profit but was supported
by evidence.
o Case: Ban Chuan Trading Co Sdn Bhd v Ng Bak Guan, in
claiming for loss of profits, the respondent stated that he intended
to use the said premise for his business of selling clothes where
he expected his business profits to increase by 20% because of
the location which was more favourable than the shop he was
occupying. But there was no evidence to support the claim. Mere
assertion is not evidence and the production of the assessments
alone should not be allowed.
- ii) Reliance/Wasted expenditure
o arises where the claimant has expended money which is then
wasted in preparation for or in partial performance of the contract.
o A claim for loss of capital expenditure, expenses incurred in rely
on the contract and performing obligations, these expenses are
now wasted due to the breach of contract.
o For a claim on reliance interest/loss or wasted expenditure, the
innocent party may recover expenditure incurred before or after
the contract provided that the expenditure was reasonably
contemplated (must not be too remote)
o 2 situations in which a plaintiff may wish to claim on the
reliance/wasted expenditure:
 § when the innocent party to a breach of contract has not
suffered any loss of profits but has incurred expenditure
in reliance of the contract
§ although the plaintiff may suffer loss of profit, he has
difficulty in ascertaining and proving the amount of profit
that he would have obtained if the contract had been
performed.
o Case: Anglia Television Ltd v Reed, Lord Dening stated the
plaintiff claims the wasted expenditure, he is not limited to the
expenditure incurred after the contract was concluded. He can
claim also the expenditure incurred before the contract, provided
that it was such as would reasonably be in contemplation of the
parties as likely to be wasted if the contract was broken.
o Case: Ismail v Haji Taib, the court held that the order of the
learned appellate judge would be set aside and the learned
president's order restored except that it would be varied by
ordering the defendant to pay $724 by way of special damages
(not $1,224.00) and nothing by way of general damages; the
relationship between the parties was governed by the ordinary law
of contract and was not affected by the padi committee's order
which it is true is permissive in nature.
o Case: Ban Chuan Trading Co Sdn Bhd v Ng Bak Guan
o Facts: the parties entered into a three-year tenancy agreement in
which the appellant failed to deliver vacant possession as the
previous tenant refused to vacate the premise. Despite having
been informed, the respondent attempted to pay the monthly rents,
which the appellants refused to accept, and did not take any action
to repudiate the agreement. A year later, the respondent issued a
notice to terminate the agreement and claimed from the appellant
loss of profits and money expended for the purchase of furniture
and mannequins in preparation of continuing his business at the
new premise.
o Held: However, the Court of Appeal found that the respondent was
only entitled to the money expended and not the loss of profits.
o Exception to the General Rule of Reliance Interest: when reliance
loss cannot be claimed
§ The plaintiff cannot choose to recover wasted
expenditure to protect his reliance loss, or when he has
made a bad bargain.
§ Bad bargain is when the defendant can show that the
loss is one which the innocent party would have suffered
even if the defendant had not breached the contract
§ Case: C & P Haulage v Middleton
§ Facts: Plaintiff obtained a 6 months renewable licence to
occupy the defendant’s garage. It was expressly
provided in the contract that any equipment installed in
the garage becomes the property of the garage owner,
defendant, at the expiration of the 6 months period.
Despite this clause, the plaintiff spent money on
improving the garage. 10 weeks before the end of 6
months period, the defendant in breach of contract,
ejected the plaintiff from the garage. The plaintiff brought
an action to recover the cost of improvements carried out
on the garage. The plaintiff failed in his action.
Plaintiff’s election to claim for expectation loss or reliance loss/wasted expenditure
- The court will have to decide whether or not to grant such damages.
- In principle, the innocent party has a free choice whether to claim on an
expectation or reliance basis. The two type of damages measures are
different but related things. Reliance losses measure to positive losses to
the innocent party but expectation losses measure prospective gains and
profits.
o Case: Cullinane v British ‘Rema’ Manufacturing Co Ltd
o Facts: plaintiff purchased a clay pulverizing machine from the
defendant, who warranted that the machine could process clay at
a rate of six tonnes per hour. However, the machine only process
at 2 tonnes per hour. Plaintiff claimed from the defendant capital
expenses incurred in installing the plant and also for loss of profits.
o Held: the court of appeal held that a plaintiff could not claim both
his capital loss, expenditure incurred as well as his loss of gross
profits. The plaintiff is required to choose between his two claims.
o Case: Heller Factoring Sdn Bhd (previously known as Matang
Factoring Sdn Bhd) v Metalco Industries (M) Sdn Bhd
o Facts: The appellants agreed to sell a machine built according to
certain specifications to the respondents for RM65,000 subject to
the lessee’s right (Pembinaan Siap Sdn Bhd) to redeem it within
14 days. The respondents then obtained the machine and
installed it at its premises for which a concrete foundation had
been built. However, the next month, the appellants came to the
respondents’ premises and removed the machine as they had
sold the machine to a third party for RM85,000. The respondents
contended that the appellants had breached the contract as the
machine was theirs subject to the lessee’s right to redeem it, which
the lessee did not exercise. The appellants contended that the
purchase by the respondents was subject to no higher prices
being offered. As the respondents refused to increase their price,
the machine was sold to the third party. The respondents brought
 a claim for RM20,000 being the loss of profit and an additional
sum of RM30,000 as expenses incurred in installing the machine.
o Held: The Court of Appeal in finding in favour of the respondents:
The machine was not a standard item machine that was easily
obtainable from the market, but was one that was built according
to particular specifications.
o Case: CCC Films (London) Ltd v Impact Quadrant Films,
decided that a plaintiff claiming for breach of contract had an
unfettered choice whether to claim for loss of profits or wasted
expenditure.
o Case: Blue Sea Pools Swimming Centre (Klang) Sdn Bhd v
Loo Ah Chew & Sons Sdn Bhd, the court allowed the plaintiff’s
claim for wasted expenditure incurred in renovation works, but
excluded the claim for losses of profit as “the plaintiff is not entitled
to make a claim for both”.
- iii) Restitution
Non-Pecuniary Losses
Introduction
- Lord Steyn in Farley v Skinner, “awards in this case should be restrained
and modest. It is important that logical and beneficial developments in this
corner of the law should not contribute to the creation of society bent on
litigation.”
- The difficulties of verifying genuine claims have caused the courts not to
grant damages for non-pecuniary loss:
o 1) because of the floodgates argument
o 2) the difficulty in assessing and accurately quantifying the
damages to be awarded.
- But non-pecuniary losses may be recoverable when they are within the
contemplation of the parties.
Definition
- Damages that do not have a discernible, quantifiable monetary value.
Categories of Non-Pecuniary Losses
- 1) pain, suffering, loss of amenities and expectation of life
o often recoverable, ie purchaser of goods may be injured from
using or consuming the said goods by reason of breach of
warranty.
o Case: Summers v Salford Corp, the plaintiff who was a tenant
was cleaning the window when it broke, causing injuries to her
hand. She sued the landlord for breach of the covenant of fitness
for habitation and was successful in her claim.
o Case: Ruxley Electronics and Construction Ltd v Forsyth
o Facts: The defendant contracted with the plaintiffs to build a
swimming pool in his garden and a building to enclose it for a price
of £70,178. The contract expressly provided that the maximum
depth of the pool should be 7 ft 6 in. After the work had been
completed, the defendant discovered that the maximum depth
was only 6 ft 9 in. The plaintiffs claimed the balance of the price,
and the defendant counterclaimed for breach of contract.
o In regards to the defendant’s claim for loss of amenity, the court
held: The general rule is that in claims for breach of contract, the
aggrieved party cannot recover damages for his injured feelings,
subject to the exception when the object of the contract is to afford
pleasure. Where the contract was one “for the provision of a
pleasurable amenity”, the court found that the defendant’s
pleasure was not so great as it would have been if the swimming
pool had been 7 ft 6 in deep, and thus, the defendant was awarded
damages for loss of amenity.
- 2) physical inconvenience and discomfort
o The common law permits the recovery of damages for pecuniary
loss and for physical discomfort and inconvenience but not for
injured feelings that may accompany a breach of contract.
o Case: Hobbs and wife v The London and South Western
Railway Company, the court awarded damages for the physical
inconvenience suffered by the plaintiff and his family who were set
down by the defendant railway company at the wrong station late
at night. They had to walk five miles home in the drizzling rain, in
the absence of available transport or accommodation. The court
emphasized that the award is strictly confined to real, physical
inconvenience, and there can be no award of damages for mere
inconvenience, annoyance or loss of temper.
o Case: Farley v Skinner
o Facts: the plaintiff employed the defendant, a land surveyor, to
inspect a property in the countryside located 15 miles from an
international airport seeking advice as to whether the property
would be seriously affected by aircraft noise. The defendant
breached the contract when he reported that it was unlikely that
the house would be greatly affected. The plaintiff bought the
property and incurred expenses in refurbishing it, but after moving
in, he was disturbed by the aircraft noise.
o Held: Had the plaintiff known of the noise disruptions, he probably
would not have bought the property. Where the surveyor’s
obligation to inspect whether the property was affected by the
noise formed a vital part of the contract, this deprived the plaintiff
from making an educated choice in the purchase of the property
for which he was granted damages.
 o Case: Watss v Marrow, any distress, anxiety, displeasure,
tension and aggravation caused by the breach is irrecoverable.
o Case: Subramaniam Paramisavam & Ors v Malaysian Airlines
System
o Facts: The plaintiffs’ baggage was re-weighted when they reached
KLIA. It was found to be 60kg in excess of the permitted weight.
They were asked to pay excess baggage charge at the airport.
They spent two hours in the airport due to this problem. They sued
the defendant for damages for mental distress, agony, humiliation,
loss of reputation and injured feelings.
o Held: The court found that the damages sought, which were not
within the contemplation of the parties, were irrecoverable.
However, the court awarded damages of RM300 for discomfort
and inconvenience.
- 3) injury to feelings/mental distress
o generally, the courts are reluctant to grant non-pecuniary losses
for injured feelings.
§ Case: Addis v Gramophone Co Ltd, despite the
wrongful dismissal from the plaintiff’s position as the
defendant’s manager and the “harsh and humiliating”
manner in which he was treated, there could be no award
of damages for his injured feelings or for the loss that he
may sustain from the dismissal making it more difficult
for him to obtain employment.
o However, courts are not more willing and ready to allow such
awards but only in very clear EXCEPTIONAL cases:
§ i) contract is one to provide enjoyment
• Case: Jarvis v Swans Tours Ltd, the plaintiff
was compensated by damages for his
disappointment, distress, annoyance and
frustration at not getting as good of a holiday as
had been promised. The plaintiff in his contract
with the defendants did not merely contract for
the travel facilities, board and lodging, but also
to enjoy himself.
• Case: Abdul Karim v T & R United (S’pore)
Pte Ltd, the defendant did not meet up the
contractual obligations in respect of a tour
package offered to the plaintiff. The plaintiff was
granted damages for mental distress,
disappointment and discomfort.
• Case: James Yu v Raffles Hotel Ltd, the court
awarded the plaintiff damages for mental
distress and disappointment for the defendant’s
failure to prepare sufficient food for the plaintiff’s
wedding reception. As a result of the
defendant’s breach, the plaintiff suffered much
embarrassment before his guests at the
reception.
§ ii) contract is entered into with the aim to prevent future
distress
• Case: Heywood v Wellers, where the contract
was entered into to retain the defendant-
solicitor to initiate legal proceedings against a
man who had been molesting the plaintiff and
to prevent any further distress, the breach by
the defendant prolonged the plaintiff’s distress,
and she was thus, awarded damages for
anxiety and mental distress.
§ iii) where the plaintiff’s distress is a direct consequences
of physical loss cause by the breach of contract
• Case: Perry v Sidney Phillips & Sons,
damages was granted where it can be foreseen
that mental distress will result as a direct
consequence of physical inconvenience
caused by the defendant’s breach.
• Case: Bliss v South East Thames Regional
Health Authority, the court reiterated the
general rule laid down by the House of Lords in
Addis that where damages fall be assessed for
breach of contract rather than in tort, it is not
permissible to award general damages for
frustration, mental distress, injured feelings or
annoyance occasioned by the breach. The
court recognized that Jarvis and Heywood are
exceptions to the general rule.
• Case: Hayes & Anor v James & Charles
Dodd (a firm)
• Facts: the plaintiffs bought a yard and a
workshop on the faith of their defendant-
solicitor’s advice. The advice was found to be
subsequently untrue and the yard and
workshop served no purpose to the couple. The
plaintiffs brought an action against the
 defendant for breach of its contractual duty of
care.
• Held: However, the court disallowed damages
for the plaintiffs’ anguish and vexation and
stressed that damages cannot be allowed for
anguish and vexation arising out of a breach of
a purely commercial contract.
§ iv) loss of reputation
• the courts in determining this form of non-
pecuniary loss will regard it as the manner
society regards the innocent party, not to the
innocent party’s injured feelings.
• According to Burrows in Remedies for Torts and
Breach of Contract, has categorized 4 groups
of cases in which damages for loss of reputation
have been awarded:
o 1) the defendant’s breach comprises a
refusal to allow an actor’s appearance
or it is a breach to publish an author’s
book.
o 2) the breach comprises the
mismanagement of advertising where
a defendant fails to include an
advertisement in a newspaper,
thereby resulting in loss of business to
the plaintiff. The loss of business can
be viewed as analogous to an
instance where there has been a lost
opportunity to enhance one’s
reputation.
o 3) a bank in breach of contract,
refuses to honour the plaintiff-trader’s
cheque or fails to supervise the
plaintiff’s business as agreed so that
the plaintiff goes bankrupt
o 4) the defendant in breach of contract
supplies to the plaintiff goods which
are not of quality sought by the
plaintiff’s customers. Pecuniary
damages are recoverable for the loss
of goodwill.
• Case: Malik v Bank of Credit and Commerce
International SA (in liquidation), long serving
employees of the defendant bank were
dismissed upon its liquidation due to its corrupt
and dishonest manner of operation. The
plaintiffs claimed damages, alleging that their
inability to obtain alternative employment was
due to the shame attached to being former
employees of the defendant bank. Held: The
plaintiffs’ contracts of employment contained an
implied term imposing an obligation of mutual
trust and confidence between the parties. Thus,
the defendants were under an obligation to act
honestly in its business dealings. Where the
plaintiffs had suffered injury to reputation as a
result of the defendants’ breach of the implied
term, damages for loss of reputation was
recoverable.
• Case: CCA Holdings Ltd v Palm Resort Bhd,
the plaintiffs were managers of the defendants’
club under a technical assistance and
managerial agreement. The defendants
terminated the agreement on the ground that
the club had not generated profits as required
in the agreement. The plaintiffs alleged that as
a consequence of the termination, they suffered
loss of reputation and goodwill which will impact
them as managers of prestigious clubs
internationally. However, in considering
whether the damages for loss of credibility and
reputation could be awarded, the court held that
the facts of the case did not fall within the
exceptional situations where damages for loss
of reputation may be granted.
Limitation to awards of damages
- Compensatory damages are subject to limitation imposed by the rules
preventing claims for losses which are deemed to be too remote from the
breach. This is considering the fact that the contract breaker cannot be
pinned with liability for every single loss suffered by the innocent party.
- Courts have taken into consideration the limitations when rewarding
awards of damages for breach of contract requirements of remoteness and
mitigation, since the contract breaker cannot be held liable for losses,
through flowing from his breach of contract, that are too remote.
 - The function of remoteness principle: to control the extent of recovery of
kinds and of quantum of loss.
- The general common law formulation is in broad terms of “foreseeability”
or “contemplation of loss”.
Rule in Hadley v Baxendale
- Facts: Plaintiffs operated a mill, which they were forced to shut down when
the crank shaft of their steam engine broke. They contacted the
manufacturer of the engine, W. Joyce & Co. (Joyce), and Joyce agreed to
make a new shaft from the pattern of the old one. Therefore, a servant of
Plaintiffs went to the office of Defendants, common carriers, to have the
crank shaft taken to Joyce. Plaintiffs’ servant told Defendants’ clerk that the
mill was shut down and the shaft must be sent immediately. The clerk
informed Plaintiffs’ servant that if the shaft were given to them by twelve
o’clock any day, it would be delivered by the next day. Plaintiffs took the
shaft to Defendants the next day before noon. Due to Defendants’ neglect,
the delivery to Joyce was delayed, and Plaintiffs did not receive the new
shaft for several days after they should have received it.
- Held: the court held that the loss of profit was too remote and defendant
not liable.
- Alderson B laid down the test of remoteness in 2 rules:
o “Where two parties have made a contract which one of them has
breached, the damages which the other party ought to receive in
respect of such breach of contract, should be:
§ Such as may fairly and reasonably be considered either
arising naturally, that is according to the usual course of
things from such breach of contract itself; or
§ Such as may reasonably be supposed to have been in
the contemplation of both parties, at the time they made
the contract, as the probable result of the breach of it
- Case: Victoria Laundry (Windsor) Ltd v Newman Industries Ltd
- Facts: the plaintiffs bought a new boiler for their laundry and dry cleaning
business from the defendant, but received it 5 months after the contracted
date of delivery. The defendant knew that the plaintiff required the boiler for
their business. The plaintiff claimed for loss of profits during the period of 5
months, and the loss of profit from a highly lucrative dyeing contract with
the Ministry of Supply.
- Held: The plaintiff was entitled to the loss of profits arising from the
defendant’s delay in delivering the boiler, but was not entitled to the
exceptional loss of profit it could have earned from the dyeing contract with
the Ministry of Supply as it was not reasonably foreseeable that the plaintiff
would suffer such loss.
- Lord Asquith reformulated the rule in Hadley v Baxendale with a specific
focus on reasonable foreseeability:
o The loss suffered by the plaintiff must be at the time of the contract
reasonably foreseeable as liable to result from the breach of
contract. In determining what was reasonable by the parties, the
court must take into account the knowledge possessed by the
parties.
o Knowledge possessed is of two kinds:
§ Imputed knowledge: Any reasonable individual can be
assumed to know the ordinary course of things and to be
aware of the loss that is liable to result from a breach of
contract in the ordinary course. The law will impute or
ascribe to every individual, knowledge of the loss that is
liable to result naturally or in the ordinary course of things
from a breach of contract. (first limb in Hadley v
Baxendale)
§ Actual knowledge: Where parties actually have
knowledge of special circumstances outside the ordinary
course of things of such kind that a breach in those
special circumstances would be liable to cause more loss.
(second limb in Hadley v Baxendale)
o Case: Koufos v C Czarnikow Ltd
o Facts: The charterer chartered a ship from the shipowner to carry
sugar from Constanza to Basrah. The charterer had intended to
sell the sugar as soon as the ship reached Basrah. Their intention
was not communicated to the shipowner and the shipowner did
not know about it. However, it was shown that the shipowner knew
that there was a market for sugar in Basrah. In breach of contract
for charter, the ship deviated and reached Basrah 9 days late.
During these 9 days late, the market price for sugar at Basrah fell
and the charterer suffered loss.
o Held: the charterers were entitled to recover the difference in price
caused by the delay.
o Case: H Parsons (Livestock) Ltd v Uttley Ingham & Co Ltd, the
Court of Appeal held that the defendants could have contemplated
a serious possibility that the pigs might become ill due to the defect
in the hopper.
Position in Malaysia
- Section 74(1) of the Contracts Act 1950: When a contract has been
broken, the party who suffers by the breach is entitled to receive, from the
party who has broken the contract, compensation for any loss or damage
caused to him thereby, which naturally arose in the usual course of things
from the breach, or which the parties knew, when they made the contract,
to be likely to result from the breach of it.
- Section 74(2) of the Contracts Act 1950
 - Case: Bee Chuan Rubber Factory Sdn Bhd v Loo Sam Moi
- Facts: the appellants entered into a contract to sell a piece of land and to
build a house thereon for the respondent. In breach of contract, the
appellants delayed in the completion of the contract.
- Held: The court awarded damages to the respondent at $100 for every
month from the time delivery was due on 21st September 1970 until 3rd
April 1975 when delivery was finally given. The Federal Court affirmed the
trial judge’s decision. Damages are recoverable for a breach of contract for
delay in the completion of an ordinary dwelling house required for personal
occupation. Such damages which include the reasonable cost of living
elsewhere and storing furniture came within the first limb of the rule in
Hadley v Baxendale.
Remoteness and measure of damages in specific cases
- a) sale and purchase of land
o Case: Tan Sri Khoo Teck Puat v Plenitude Holdings Sdn Bhd
o Facts: The appellant had agreed to sell to the respondent certain
land for the purpose of development. The respondent failed to pay
the balance purchase price within the stipulated period and the
appellant terminated the agreement. The respondent initiated
action for damages, which included a loss of profits, for delay in
delivering title as a result of wrongful termination by the appellant.
o Held: However, in assessing the damages, the Federal Court held
that any price increase in the land should be deducted from the
loss of profits, or else it would put the respondent in a better
position than it would have been if the contract had been
performed. Where the value of the land had increased by nearly
RM70 million, the court found that the respondent had in fact
suffered no loss by reason of the breach of the agreement and
had not proved its claim for loss of profits. The court awarded the
respondent nominal damages of RM10.
- b) goods sold and delivered
o Case: Bee Wah Plastic Factory Sdn Bhd v Francis Soh Kai
Shuen (b/s Shatin Marketing & General Agencies)
o Facts: the appellants agreed to make and supply plastic gum
bottles by using the mould provided by the respondent. The
appellants had failed to make the bottles and the Magistrate’s
Court awarded damages amounting to RM20,972 to the
respondent. The appellants appealed
o Held: the HC held that the loss of profit claimed by the respondent
was a direct loss caused by the failure of the appellants in
supplying the bottles, there was insufficient evidence to prove loss
of profits claimed. The HC only allowed nominal damages.
- c) overdraft facility
o Case: Bank Bumiputra Malaysia Bhd, Kuala Terengganu v
Mae Perkayuan Sdn Bhd
o Facts: The respondent proposed to develop a few pieces of land
in Dungun, and agricultural lands in Alor Gajah into housing
estates. The appellant agreed to grant an overdraft facility of
RM4.5 million to the respondent for both projects. The appellant
knew that the repayment for facility for the Alor Gajah project
would be recovered from the Dungun project’s profit revenue.
Before the term of the overdraft facility ended, the appellant
withdrew the overdraft facility and demanded payment of the
money due together with interest. Where the appellant had
breached the bridging loan agreement, the respondent claimed for
damages for both projects.
o The Supreme Court held: the claim for loss of profit in regards to
the Dungun project was allowed as the appellant had known that
if the overdraft facility was frozen, the project would be affected.
The court stated that the loss of profits was the natural and
probable result of the breach of agreement (first limb of Sec. 74(1)),
and the appellant knew of the loss the respondent would suffer if
they committed the breach (second limb of Sec. 74(1)). However,
the court did not allow the claim for loss of profit for the Alor Gajah
project which was dependent upon the application of profits
expected from the Dungun project, and was thus, too remote.
- d) building contracts
o Case: Joo Leong Timber Merchant v Dr Jaswant Singh a/l
Jagat Singh, it was held that in Malaysia there is no legal authority
which states that the failure to mitigate must be pleaded.
Mitigation of loss
- The common law imposes upon the victim of a breach of contract a duty to
mitigate or minimize the losses flowing from the breach. Meaning, the
innocent party cannot recover any part of the damages that he could have
avoided by taking all reasonable steps possible in the circumstances.
- Section 74(3) of the Contracts Act 1950
- Explanation to Section 74 of the Contracts Act 1950: In estimating the
loss or damage arising from a breach of contract, the means which existed
of remedying the inconvenience caused by the non- performance of the
contract must be taken into account.
- Case: British Westinghouse Electric Co Ltd v Underground Electric
Railway, the plaintiff has a duty to take all reasonable steps to mitigate the
loss consequent on the breach, and is barred from claiming any part of the
damage which is due to his neglect to take such steps.
- Case: Kebatasan Timber Extraction Co v Chong Fah Shing
- Facts: The appellants contracted to supply timber to the respondent, which
was to be delivered at the site where the respondent had erected a saw-
mill. Three lots of timber were delivered. The second lot, instead of being
delivered to the mill, was dumped more than 500 feet away from the mill.
The respondent purchased new timber elsewhere in substitution of the
second lot and claimed for the cost of doing so.
- Held: The respondent had a duty to take reasonable steps to mitigate its
loss. Instead of expending money to purchase new timber, all that was
required of the respondent was to arrange to move the logs to the saw-mill.
- Case: Malaysian Rubber Development Corp Bhd v Glove Seal Sdn Bhd
- Facts: The plaintiffs were to supply to the defendants two million rubber
gloves per month from November 1988 to October 1989. The defendant
breached the agreement in failing to issue an irrevocable letter of credit in
favour of the plaintiffs. The plaintiffs claimed damages of approximately
RM6.2 million being loss of profits, interest, marketing costs and losses
incurred.
- The Supreme Court held: In cases involving sale of goods, the innocent
party should act immediately upon the breach, and buy or sell in the market,
if there is an available market. In the absence of an available market, the
innocent party is to act reasonably to mitigate his loss.
- Case: Berjaya Times Square Sdn Bhd v Twingems Sdn Bhd & Anor
and another action
- Facts: both entered into a 3 year fixed term tenancy agreement to rent
space in the square for a food and beverage outlet. However, after only 77
days, Twingems closed its business. The plaintiff did not agree but
Twingems returned the keys to the plaintiff.
- Held: allowing the claim of the plaintiff for losses as the losses suffered by
the plaintiff were actual losses (Pursuant to Cl. 10(2), where the plaintiff
was entitled to claim for the monthly rentals and service charges). The
plaintiff had no obligation to mitigate its losses.
- The test of whether a plaintiff has mitigated his loss has thus been
formulated:
o “whether a prudent man would have acted in the same way if the
original wrongful act arisen through his own default.
th
- In Halsbury’s Law of England 4 edn. Vol 12 para 1195 explains the
following situations represent examples of mitigation:
o A) in a sale of good situation, the plaintiff is under a duty to mitigate
his loss by going to the market and buying and selling, if there is
an available market
o B) to accept an offer by the defendant to supply goods on different
terms
o C) in actions for breach of contract of employment, a plaintiff who
has been wrongfully dismissed must take reasonable steps to
obtain other suitable employment. He is not entitled to remain idle
at the defendant’s expense simply because no precisely similar
employment can be found, but he can accept employment which,
having regard to his standing, experience and personal history he
can reasonably be expected to accept even at a lower salary.
- Burden of proof that the plaintiff has failed to mitigate is on the
DEFENDANT.
o Case: Raja Lope & Anor v Malayan Flour Mills Bhd, the High
Court held that a defendant who wishes to rely on the defence that
a claimant has failed to mitigate his loss must plead the issue of
mitigation.
Rules of Mitigation
- 1) Avoidable losses: a plaintiff will not recover damages for losses it should
have avoided
o Case: Tansa Enterprise Sdn Bhd v Temenang Engineering
Sdn Bhd, where the defendant breached the contract to supply
common bricks, which was available in the open market at the
material time, the plaintiff should have mitigated his loss by
entering into a substitute contract for the bricks.
- 2) Avoided losses: if a plaintiff avoids a loss, damages are not recoverable
for that loss
o Case: British Westinghouse Electric Co Ltd v Underground
Electric Railway, the appellants sold faulty and inefficient
turbines to the respondents, which the respondents still accepted
and used. After several years, the respondents replaced the
turbines, which proved to be much more efficient than the ones
which should have been supplied by the appellants. The court
held that where the respondents were not obligated to replace the
turbines, the efficiency of the replaced turbines reduced the
respondents’ working expenses such that all loss was
extinguished.
- 3) Money spent in mitigation: money spent in mitigation or attempting to
mitigate losses is recoverable.
o Case: Hoffberger v Ascot International Bloodstock Bureau
Ltd, where the defendants breached the contract to buy a horse,
the plaintiff kept the horse for an entire year in hopes of selling it
at a higher price. However, after a year, the horse was sold at a
much lower price, and thus the court awarded damages to the
plaintiff in having kept the horse for a year.
Types of Damages
1. General Damages
- Damages that flow naturally from the commission of a wrong and which
need not specifically pleaded or proven.
- Damages that the law presumes to have resulted from the defendant’s
breach of contract.
- Damages that do not need to be pleaded as the law presumes that such
damages result from the infringement of a legal right or duty.
- General damages are those losses, usually but not exclusively non
pecuniary, which are not capable of precise quantification in monetary
terms.
- Examples:
o Anticipated future loss
o Damages for pain & suffering, loss of amenity
o Difference between contract price and market price
o Reasonable expenses incurred
2. Special Damages
- Losses which can be calculated in financial terms
- Lord Macnaghten in Stroms Bruks Aktie Bolag v Hutchison, special
damages are exceptional in their character, and there they must be claimed
specifically and proved strictly.
- Damages that must be specifically pleaded. The court would require the
precise amount of pecuniary loss and relevant evidence must be adduced.
- Damages which accrued in the particular situation caused by the breach
and which would not customarily flow from all situations of that type.
3. Nominal Damages
- Usually of a small sum
- Whenever there is a breach of contract by the defendant but the plaintiff
suffers no actual loss or fails to sufficiently prove such loss, the plaintiff is
generally entitled to nominal damages.
- Case: Owners of the Steamship “Mediana” v The Owners, Master, and
Crew of the Lightship “Comet”, nominal damages affirm that there has
been an infraction of a legal right, and although it does not give the plaintiff
rights to any real damages, it gives the plaintiff the right to a verdict or
judgment where his right has been infringed.
- Case: Tan Sri Khoo Teck Puat v Plenitude Holdings Sdn Bhd, where
the court found that the respondent had in fact suffered no loss by reason
of the breach of the agreement and had not proved its claim for loss of
profits, the court awarded the respondent nominal damages of RM10.
- Granted when the plaintiff suffers loss but it is unable to prove his loss.
- Case: Industrial & Agricultural Distribution Sdn Bhd v Golden Sands
Constructions Sdn Bhd, the plaintiffs claimed that the excavators had
depreciated in value owing to the defendants used of them over 2 months
period, as the plaintiffs failed to prove the depreciation, the HC awarded
nominal damages of RM100.
4. Exemplary Damages
- As the purpose of damages in contract is to put the plaintiff in the position
he would have been in if the contract had been performed, the defendant’s
conduct is irrelevant.
- In UK, exemplary damages are no longer available for a breach of contract.
- Case: Addis v Gramaphone Co Ltd, the position that exemplary damages
should not be awarded in a breach of contract.
- In Malaysia, exemplary damages have been awarded and used to punish
a defendant in exceptional situations.
- Case: Rookes v Barnard, the House of Lords established three categories
when exemplary damages may be awarded:
o There has been oppressive, arbitrary or unconstitutional conduct
by government servants
o The defendant’s conduct had been calculated by him to make a
profit for himself which may exceed the compensation payable to
the plaintiff
o A statute has expressly authorised it
- Case: Dennis v Sennyah, general damages RM1,500 and special
damages RM620.10 was awarded.
- Case: Dato’ Abdullah Hishan v Sharma Kumari Shukla
- Facts: The plaintiff loaned the defendant money for her to purchase certain
shares and the defendant offered to convert to Islam to marry him. The
defendant breached the agreement and the plaintiff sought exemplary
damages, arguing that the defendant had misled the plaintiff into believing
that she would convert to Islam to marry him.
- Held: This case fell within the second category set out in Rookes v Barnard
as it amounted to behaviour calculated to bring about a profit. The
defendant’s promise to marry had encouraged the plaintiff to give the loan.
The defendant’s profit extended to her desire and aspiration to be called
‘Datin’, as well as her travel expenses and expensive gifts. Thus, the
plaintiff was awarded RM500,000 in exemplary damages.
5. Aggravated Damages
- In certain circumstances the court may award more than the normal
measure of damages by taking into account the defendant’s motive and
conduct (Huljich v Hall)
- Often claimed together with exemplary damages
- Injury to the plaintiff which has been aggravated by malice or manner of
doing that injury, the insolence or arrogance by which it is accompanied, is
not justification for an award of exemplary damages.
 - Case: Dato’ Abdullah Hishan v Sharma Kumari Shukla, aside from the
exemplary damages, the court also awarded the plaintiff aggravated
damages of RM500,000.
6. Liquidated Damages and Penalties
- Liquidated damages: the fixed and contractually agreed sum which are
many payables by the defaulting party upon a breach of contract. The
definition of 'Liquidated Damages' in The Black's Law Dictionary, an
amount contractually stipulated as a reasonable estimation of actual
damages to be recovered by one party if the other party breaches.
- Penalty: according to the US Legal, is the stipulated damages a party to a
contract should pay in case of breach. It is the sum of money the party
agrees to pay or forfeit by way of punishment in case of breach of the
contract. Penalty can also be said to be sums which are grossly
disproportionate to the actually loss that will be suffered by the innocent
party in the event of a breach.
- Common Law Common Law terms liquidated damages as a “penalty” as it
is actually meant to terrorize the other party into performing his obligation
under the contract.
- Case: Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd,
the court will decide if they are liquidated damages or a penalty. If a
provision in a contract constitutes a penalty, then that provision is
unenforceable by the parties.
- Case: Esanda Finance Corp Ltd v Plessnig & Anor, an agreed sum is a
penalty if it is extravagant, exorbitant or unconscionable in relation to the
loss likely to be suffered.
- Malaysian position based on Section 75 of the Contracts Act 1950
- Section 75 of the CA 1950: when a contract has been broken, if a sum is
named in the contract as the amount to be paid in case of such breach, or
if the contract contains any other stipulation by way of penalty, the party
complaining of the breach is entitled, whether or not actual damage or loss
is proved to have been caused thereby, or to receive from the party who
has broken the contract reasonable compensation not exceeding the
amount so named or, as the case may be, the penalty stipulated for.
- In short, Section 75 allows reasonable compensation to be awarded by the
court irrespectively of whether actual loss or damage is proven. Thus, proof
of actual loss is not the sole conclusive determinant of reasonable
compensation although evidence of that may be a useful starting point. In
Malaysia, there no distinction of liquidated damages and penalty where
there is a breach of contract, an innocent party cannot recover simpliciter
the sum fixed in a damages clause regardless of whether it is stipulated as
a penalty or liquidated damage
- Case: Wearne Brothers (M) Ltd v Jackson
- Facts: An appeal against the award of damages for breach of contract in
respect of a hire purchase agreement relating to a motor car. The main
ground of appeal was that the learned president of the sessions court failed
to consider whether the relevant clause in the hire purchase agreement
was a penalty clause or was a genuine pre- estimate of the damage as on
the date of the agreement. The learned president merely applied the
common law principle for the assessment of damages for breach of contract.
The judge in his decision has mentioned that where the distinction between
liquidated damages and penalty has ceased because in either case, the
court must determine reasonable compensation.
- Held: A party cannot claim whether the clause in the agreement was a
penalty clause or not was irrelevant in view of section 75, which provides
that in every case the court must determine what is the reasonable
compensation. The effect of the section is that the plaintiff cannot claim
simpliciter the sum fixed in the contract whether as penalty or liquidated
damages and the plaintiff must prove the loss suffered by him.
- Case: Selva Kumar A/L Murugiah v Thiagarajah A/L Retnasamy
- Facts: Both the appellant and respondent in this case are medical
practitioners. The appellant entered into an agreement in writing with the
respondent whereby the respondent sold his clinic to the appellant for a
total purchase price of RM120,000. Pursuant to the agreement, the
appellant paid to the respondent RM12,000 on signing the agreement, and
thereafter paid a further sum of RM48,000. The balance of RM60,000 was
to be paid by 15 monthly instalments of RM4,000 each. However, at the
stage when the appellant had paid up to a total sum of RM96,000 towards
the total purchase price, he refused to go on paying the remaining six
monthly instalments. The respondent sought to forfeit the paid amount by
relying on a clause in the agreement which in effect, provided that if the
appellant defaulted, all moneys paid to date of such breach would be
forfeited absolutely to the respondent as agreed liquidated damages, and
the agreement would be terminated.
- Held: where the respondent failed to prove actual loss suffered, he was
only entitled to forfeit the deposit of RM12,000. The remaining sum of
RM84,000 was ordered to be refunded to the appellant.
o The plaintiffs need to prove their loss and they managed to prove
as their actual damage, the sum of Rs500 which they recovered.
Thus, it is obvious that any submission as to whether a certain
clause in a contract is a penalty or liquidated damages is an
exercise in futility. In effect, section 75 deems a liquidated
damages clause to be penal and therefore invalid. Accordingly,
any sum expressed as liquidated damages cannot, be
automatically recovered by the injured party.
o The second issue is on the requirement to prove loss in order to
determine compensation. The court held that the words in
question, 'whether or not actual damage was proved to have been
caused thereby', are limited or restricted to those cases where the
court would find it difficult to assess damages for the actual
damage or loss, as distinct from or opposed to all other cases,
when a plaintiff in each of them will have to prove the damages or
the reasonable compensation for the actual damage or loss in the
usual ways. Hence, a plaintiff who is claiming for actual damages
in an action for breach of contract must still prove the actual
damages or the reasonable compensation in accordance with the
settled principles in Hadley v Baxendale. Any failure to prove such
damages will result in the refusal of the court to award such
damages.
o The third issue, on the assessment of damages where the value
is not known. For cases where the court finds it difficult to assess
damages for the actual damage as there is no known measure of
damages employable, and yet the evidence clearly shows some
real loss inherently which is not too remote; the court ought to
award substantial damages as opposed to nominal damages
which are reasonable and fair according to the court's good sense
and fair play. In any event, the damages awarded must not exceed
the sum so named in the contractual provision.
o Where the parties failed to bring evidence or to prove damage. In
any case where there is any actual loss or damage from the
evidence or nature of the claim and damage for such actual loss
is not too remote and could be assessed, the parties must bring in
further evidence or to prove damages for such actual loss or
damage. The failure to do so will result in the refusal of the court
to award such damages.
o The claim for deposit. Apart from the real loss (which has not been
proved), the vendor ought to be entitled, in any event, to forfeit any
reasonable amount of earnest money or deposit. The sum of
deposit in this case was RM12,000, which was paid on signing the
agreement by the purchaser to the vendor.
o The court viewed that the sum of RM12,000, considering the
circumstances of this case, is not too large to prevent it from being
fully forfeitable. The court would not interfere with it, and thus
would allow the vendor to forfeit it or keep it.
- Case: Cubic Electronics Sdn Bhd (in liquidation) v Mars
Telecommunications Sdn Bhd
- Facts: The appellant owned a piece of land with plant and machinery in
Mukim Bukit Katil, Melaka. The land was charged to OCBC Bank (M) Bhd
(‘OCBC’), as a secured creditor of the appellant. OCBC presented a petition
to wind up the appellant and was granted by Shah Alam High Court on 25
July 2011. Following the appellant’s winding-up, the liquidators decided to
sell the properties by open tender and issued an information memorandum
containing the terms, conditions and requirements of the tender exercise.
Before the exercise could be carried out, the respondent offered to buy the
properties for RM90 million and submitted a cheque for RM1 million as
earnest deposit, on 3rd October 2011. The liquidators accepted the offer
and the earnest deposit (even though under the terms of the information
memorandum the respondent should have paid RM2.6 million as earnest
deposit) and did not proceed with the tender exercise. The liquidators
notified the respondent that under the terms of the information
memorandum if the respondent failed to sign a sale and purchase
agreement (‘SPA’) for the purchase of the properties within 30 days from
7th October 2011, they had the right to cancel the sale and forfeit the RM1
million ‘as agreed liquidated damages and not by way of penalty’. Before
the 30-day deadline approached, the respondent asked for an extension of
time of one month to pay the balance of the 10% deposit under the SPA
until 23rd November 2011. The liquidators agreed to grant the extension
(subject to the same forfeiture warning as before) upon the respondent
paying an additional RM500,000 towards the earnest deposit. The
appellant had in November 2011 received and declined a proposal by
UTeM Holdings to purchase the properties for RM135 million on the basis
that it had already finalized the SPA with the respondent. On 22nd
November 2011, the respondent requested for a second extension of time
which was again granted on the respondent’s payment of a further
RM500,000 towards the earnest deposit. On 21st December 2011, the
respondent asked for a third extension of time, the liquidators made it clear
that it would be the final extension subject to the respondent paying an
additional RM1 million towards the earnest deposit and a further RM40,000
as interest calculated at 8% per annum on the unpaid balance deposit of
RM6m payable upon the signing of the SPA. The liquidators reminded the
respondent that if it defaulted in paying the additional RM1 million earnest
deposit and RM40,000 in interest and also failed to execute the SPA and
pay the balance RM6 million deposit by the final extended deadline, all
earnest deposit sums paid would be forfeited as agreed liquidated
damages pursuant to the terms of the information memorandum. On 25th
January 2012, the respondent sent a cheque for RM6 million to the
appellant together with a request for another extension of time to sign the
 SPA. On 30th January 2012, the appellant refused the request, terminated
the sale, returned the respondent’s cheque and informed the respondent
that it was forfeiting the total sum of RM3.04 million that the respondent had
paid as earnest deposit and interest. The properties were subsequently
sold to a third party (‘Neraca Niaga Sdn Bhd’) by way of an open tender.
- Held:
o The decision of the High Court was that the court dismissed the
respondent’s claim holding that the liquidators were entitled to
terminate the sale agreement and forfeit the deposits and interest
payment on the respondent’s failure to execute the SPA. The
court held that the appellant did not have to prove any loss or
damage in order to forfeit the deposits as they were true earnest
deposits paid towards purchase of the properties and were not
penalties and therefore section 75 of the Contracts Act 1950 had
no application.
o The decision of Court of Appeal overturned the High Court’s
decision and ruled that the parties had only agreed to the first
payment of RM1 million as the earnest deposit and only that sum
was forfeitable; that since no SPA was signed the respondent was
not liable to pay a deposit of RM9 million to buy the properties.
The Court of Appeal held that the appellant failed to prove that it
had suffered any loss and the forfeited monies were not a genuine
pre-estimate of loss or reasonable compensation as required
under section 75 of the Contracts Act 1950.
o The Federal Court held by allowing the appeal by the appellant,
setting aside the decision of the Court of Appeal and reinstating
the decision of the High Court but for different reasons.
§ That there was no necessity for proof of actual loss or
damage in every case where an innocent party sought to
enforce a damages clause in a contract. Section 75 of
the Contracts Act 1950 allowed reasonable
compensation to be awarded by the court irrespective of
whether actual loss or damage was proven. The court
stated that in the case of Selva Kumar Murugiah v
Thiagarajah Retnasamy and Johor Coastal
Development Sdn Bhd v Constrajaya Sdn Bhd, should
not be interpreted (as what the subsequent decisions
since then have done) as imposing a legal straightjacket
in which proof of actual loss is the sole conclusive
determinant of reasonable compensation. Reasonable
compensation is not confined to actual loss, although
evidence of that may be a useful starting point.
§ Regardless of whether the damage was quantifiable or
not, it was incumbent upon the court to adopt a common-
sense approach by taking into account the legitimate
interest which an innocent party might have and the
proportionality of a damages clause in determining
reasonable compensation. In a straightforward case,
reasonable compensation could be deduced by
comparing the amount that was payable on breach with
the loss that might be sustained if indeed the breach had
occurred. Thus, to derive reasonable compensation,
there must not be a significant difference between the
level of damages spelt out in the contract and the level
of loss or damage which was likely to be suffered by the
innocent party.
§ On the correspondence between the parties disclosed
that the additional sums totalling RM2.04 million were
paid by the respondent in return for the appellant
extending the time for the respondent to execute the SPA
and that upon execution of the SPA the said payments
would go towards part payment of the total earnest
deposit of RM9 million for the purchase of the properties.
The additional payments, thus, bore the characteristics
of a deposit which was subject to the same test of
reasonableness under the law applicable to damages
clause under section 75 of the Contracts Act 1950.
§ That the parties were well aware that if the respondent
defaulted in executing the SPA, the earnest deposit
payments it had made would be forfeited as agreed
liquidated damages. On each occasion when an
extension of time was granted, the appellant repeatedly
warned that failure to execute the SPA would result in
forfeiture of the amounts paid as ‘agreed liquidated
damages and not by way of penalty’. Accordingly, the
respondent’s conduct was strong evidence of its
agreement that the additional payments of RM2 million
would form part of the earnest deposit guaranteeing its
execution of the SPA and which would eventually be
counted towards payment of the total earnest deposit of
RM9 million.
§ Where the parties had agreed to the payment of the
RM40,000 as interest charged for the respondent’s delay
in paying the balance of the earnest deposit of RM6
million. The parties agreed that the sum was non-
 refundable regardless of whether or not the sale went
through and regardless of any breach.
- Case: Kerajaan Malaysia v KCSB Konsortium Sdn Bhd
- Facts: where there was an Army Camp in Skudai that remained
uncompleted after 13 over years. In consideration of the defendant
completing the project, the plaintiff at the outset of the contract transferred
the two pieces of the exchanged lands to the defendant. As required under
the contract, the defendant duly furnished a land bond of RM256m and a
performance bond of RM12.8m. The defendant had some serious financial
problems. This was where the defendant failed to renew both of the
performance bonds that should be renewed. With no security in the bonds
equivalent to the value of the exchanged lands already transferred to the
defendant for which the plaintiff could not get back, there was only the sure
loss if the project could not be completed at all. On 17 August 2004, the
parties agreed that the works at the project was revalued and the land bond
was reduced based on the balance work to be completed. However, later
the defendant disclosed that they lacked the financial resource to
recommence work that they had stopped.
- Held: HC that allowing the plaintiff’s claim where it could not be disputed
failure to renew the performance bond and the land bond was both a breach
of the contract. The plaintiff was entitled to RM269,502,986.14 for which
allowed judgment to be entered against the defendant and the plaintiff must
still show and prove what is the loss it has suffered.
- Case: Macvilla Sdn Bhd v Mervyn Peter Guan Yin Hui & Anor
- Facts: the appellant is a housing developer and the respondent is the buyer
of one unit of condominium in the project developed by the appellant,
known as “Vision Residence”. They entered into a sale and purchase
agreement and the respondent claimed for liquidated ascertained damages
for the late delivery of the vacant possession of the Property and common
facilities for RM32,011.79. This is where stipulated in the agreement that
“in the event that the housing delays in handing over the vacant possession
according to the deadline, the purchaser is entitled to not less than 10% of
the purchase price”.
- Held: The Tribunal of Homebuyers Claims allowed the claim of the
respondent and gave an award in favour of the respondent. The developer
appealed to the High Court and appeal to the Court of Appeal. The Court
of Appeal held in favour of the respondent and stated that the 10% claimed
was reasonable. The principles relied in this case by the Court of Appeal
are, Section 75 of the Contract Act 1950 is related to a claim by an innocent
party against the defaulting party. that if there is a stipulated sum as agreed
damages, there is a presumption that it is a penalty. If the defaulting party
agrees to the clause there is no issue and if the defaulting party objects to
the clause, the plaintiff has an obligation to prove loss and damage.
Deposit
- Paid as security for the performance of a contract. Should a breach occur
and is caused by the payer, then the payee can forfeit the deposit
automatically without having to prove any actual loss cause by the breach.
- Rationale: a deposit is a guarantee for the performance of the contract, if
the contract is not performed, this guarantee can be called upon.
Definition
- An initial payment made under a contract to show that the payer is earnest
intensely serious in carrying out the contract.
- Lord Hailsham LC in Linggi Plantations Ltd v Jagatheesan, a deposit is
not merely a part payment but it is also an earnest money to bind the
bargain entered into creates by fear of its forfeit a motive in the payer to
perform the rest of the contract.
Purpose
- If the purchase is carried out, it goes towards the purchase price but the
primary purpose for the deposit is to act as guarantee that the purchaser
means business.
- Case: Howe v Smith, CoA, plaintiff is not entitled for a specific performance
and on the issue of deposit, it was a guarantee for the performance of the
contract since the plaintiff defaulting in performing his contractual
obligations he had no right to a return of the deposit.
- Case: Guna Sittampalan & Anor v Aik Hua Properties Sdn Bhd, where
money is deposited with either contracting party on the formation of a
contract, it will, prima facie, be interpreted as a security for performance,
and hence, forfeited if the depositor in breach of the contract fails to perform
his side of the bargain.
- Case: Sun Properties Sdn Bhd v Happy Shopping Plaza Sdn Bhd
- Facts: There was a sale and purchase agreement for shares of RM10
million and RM1 million was paid as a deposit.
- Held: 10% of the purchase price was a normal sum for a deposit. Thus, the
sum of RM1 million was a true deposit which, upon the purchaser’s failure
to pay the first instalment on the due date, entitled the vendor to forfeit it.
- Case: Linggi Plantations Ltd v Jagatheesan, a deposit or earnest money
is part of the purchase price when the transaction goes forward, it is
forfeited when the transaction falls through by reason of the fault or failure
of the vendee.
- Deposit is not a benefit received under the contract within the meaning of
Section 65 of the Contracts Act 1950, but a security that the purchaser
would fulfill his contract. Section 75 had no application to the forfeiture of a
deposit.
Issue of unpaid deposit
- Case: Morello Sdn Bhd v Jagues (International) Sdn Bhd, when a
deposit is forfeited, it represents damages for a vendor for the loss of his
 bargain. Thus, a vendor is entitled to sue for recovery of an unpaid deposit Part-payment
upon termination of the contract for a breach committed. The fact that there - An installment towards the contract price, unlike deposits, part payments
is no provision in the contract on forfeiture of the deposit does not prohibit cannot be forfeited automatically upon a breach of contract.
the vendor from obtaining an unpaid deposit. - The innocent party will have to return these payments or installments to the
General Rule party in breach but the former is entitled to sue the latter for any losses
- A true deposit can be forfeited by the innocent party upon there being a suffered as a result of the breach of contract.
breach of the contract. However, there are certain instances where the - Case: Mayson v Clouet
court may in its discretion grant equitable relief against the forfeiture of a - Facts: a contract for the sale of land was entered into between a vendor
deposit. and purchaser, which provided that a deposit should be paid immediately.
- Case: Stockloser v Johnson, Dening LJ laid down two conditions before Two instalments of cash were to be paid at certain dates. The contract
equity can intervene to prevent forfeiture of money paid under a contract: provided that, in the event of a breach, the deposit is to be forfeited. The
o The forfeiture clause must be a penalty, must be of a penal nature purchaser paid the deposit and the two instalments, but defaulted in paying
in that sum forfeited must be out of proportion to the damage the balance of the price. The vendor rescinded the contract and the
o It must be unconscionable for the defendant to retain the money. purchaser sued to recover the instalments.
Equitable relief against forfeiture of deposit - Held: Despite the purchaser’s default in complying with his contractual
- Case: K Umar Kandha Rajah v EL Magness, in a sale and purchase obligations, he was entitled to recover the instalments paid to the vendor.
agreement for land, the vendor failed to surrender title to the land and later The contract had clearly distinguished between the deposit and the
terminated the contract and forfeited the deposit of RM5000. The Federal instalments, and only provided for the forfeiture of the deposit.
Court granted the purchaser relief against forfeiture as it would be unjust
for the vendor to forfeit the deposit in light of the vendor’s failure to
surrender title to the land within the agreed time.
- Case: Chen Chow Lek v Tan Yew Lai
- Facts: Respondent agreed to sell the appellant a terrace house. There was
a provision in the agreement that if the purchaser failed to pay the
installments and interest, the vendor would be entitled to forfeit all
payments already made by the purchaser and also recover possession of
the said house. The appellant had paid all the installments except for a
balance of $100 at the time of the trial. Based on the appellant’s failure to
pay this balance, the respondent terminated the contract and forfeited all
payments made. The appellant claimed for relief against the forfeiture.
- Held: granted the said relief and stated that the forfeiture clause was meant
to guarantee payment of the installments and interest for the price of the
house. The court referred to Stockloser v Johnson and held that based on
the sum paid, the appellant is entitled to the relief because if it was not
granted, the forfeiture would amount to a penalty since the appellant had
almost paid the full purchase price of the house.
Specific Performance
- Works at the discretion of the court
- Equitable remedy
- Will not rescind the contract
- Specific Performance can be said as an decree by the court that requires
the party against whom it is directed to do what he promised to do under a
contract.
Nature
- Case: Zainab bte Mohamed v Syarikat Permodalan Johor Sdn Bhd,
Abdul Malik Ishak J, specific performance is an equitable relief given by the
court to enforce against a defendant the duty of doing what he agreed by
contract to do. It can be seen that the remedy of specific performance is in
sharp contrast with the remedy of damages for breach of contract - where
the court orders pecuniary compensation for failure to carry out the terms
of the contract.
Effect:
- to put parties into the position they would have been in had the contract
been performed and it is the equitable equivalent of damages in respect of
claimant’s expectation loss.
Judicial principles
- 1. Specific performance of a contract will only be granted where a valid and
enforceable contract exists
- 2. Contract must be valid in form, has been made between competent
parties and in unobjectionable in its nature and circumstances
- 3. Parties must have agreed, expressly or impliedly to all the essential
- 4. Ready and willing to perform his part.
Cases in which specific performance enforceable
- Section 11 of the SRA 1950:
o a) When the act agreed to be done is in the performance, wholly
or partly, of a trust;
§ Specific performance may be granted for those
beneficiaries in the event when a person is appointed as
a trustee and misapplied the trust
§ Case: KK Kumaran v TS Sambanthanmurthi
§ Facts: Plaintiff bought a share in a plot of land whose title
was registered in the name of the defendant. The plaintiff
claims that sometime in 1975, the defendant approached
him to buy a share in the said land, which he did. He paid
to the defendant's solicitors a total sum of RM15,000 and
received in return receipts confirming this purchase. He
claims that the defendant gave him the impression that
the land would be subdivided. The defendant had
informed the plaintiff that he would sell the land and give
to the plaintiff the latter’s due proceeds from the sale.
§ Held: However, after several years the sale had not yet
to taken place. It was found by the High Court that, as
the defendant was to be regarded the plaintiff’s trustee in
respect of the share due to the fact that the defendant
had recognized the plaintiff’s entitlement to a share in the
land although he is the sole proprietor of the land. By
informing the plaintiff since 1981 that he was going to sell
the said land, and from the proceeds of sale the plaintiff
should receive his entitlement, the defendant under
section 11(1)(a) of the SRA be compelled to carry out the
act that he agreed to do that is to sell the land.
o b) When there exists no standard for ascertaining the actual
damage caused by the non-performance of the act agreed to be
done;
§ Provides that a contract may be specifically enforced
where there exists no standard for ascertaining the
actual damage caused by its non-performance. In other
words, specific performance will be granted if there is no
standard to ascertain the damage.
§ Case: Gan Realty Sdn Bhd v Nicholas & Ors
§ Facts: This was an application to dissolve the ex parte
injunction granted to the plaintiffs restraining the
defendants from parting with their shares in the Oriental
Bank of Malaya Berhad, the 6th defendant. On 4th May,
1968 they negotiated with the plaintiffs concerning the
sale of their respective shares in the bank. The terms and
conditions of the agreement are confirmed in a letter
dated 5th May, 1968 written by the plaintiffs' former
solicitors to the defendants' former solicitors. The
plaintiffs claim for specific performance of the agreement
and a permanent injunction.
§ Held: It was held that an agreement for sale and
purchase of share could be specifically enforced
because the shares were not available in the open
market. This means that there is no standard for
ascertaining the actual loss which would be caused by
the non-performance of the agreement. Here the
inconvenience caused to the plaintiffs would be
irreparable and could not be remedied by damages.
Hence, specific performance was granted by the court
 o c) When the act agreed to be done is such that pecuniary
compensation for its non-performance would not afford adequate
relief; or
§ Specific performance will be granted if monetary
compensation is inadequate.
§ In other words, where the act agreed to be done is such
that pecuniary compensation for its non-performance
would afford inadequate relief
§ Case: Lim Sin Oo v Cheah Tjeng Sion, the court
granted the plaintiff specific performance as pursuant to
an agreement to sell his landed property to the defendant,
the plaintiff had terminated three existing tenancies in the
building and paid compensation to the tenants, and also
terminated his business carried out on the premises.
§ Read together with Section 11(2) of the SRA
§ Case: Zaibun Sa bte Syed Ahmad v Loh Koon May &
Anor
§ Facts: The respondent applied for specific
§ performance to direct the appellant to transfer the land to
him as agreed under the contract. There was also an oral
agreement that the vendor should pay RM5000 to the
purchaser if he breaches the agreement.
§ Held: Liquidation of damages is not a bar to specific
performance. The oral agreement did not prevent the
granting of specific performance.
o d) When it is probable that pecuniary compensation cannot be got
for the non-performance of the act agreed to be done.
Contracts which the subject has partially ceased to exist
- Section 12 of the SRA
Power to Award Compensation in Certain Cases
- Section 18 of the SRA
- Case: Lee Hoy v Chen Chi, where the sale and purchase agreement was
for 9 acres of land, but the IDT only stated 5.28 acres, the purchaser applied
to rescind the contract based on misrepresentation. The High Court
dismissed the application on the ground that there was no
misrepresentation, but awarded compensation under Section 18(3).
- The Federal Court, in disagreeing with the High Court, held: Compensation
under Section 18(3) can only be awarded where there is a claim for specific
performance.
- Case: Quah Ban Poh v Dragon Garden Pte Ltd, the High Court granted
the plaintiff’s application for specific performance of a sale and purchase
agreement of a house by ordering the defendant to surrender the IDT and
transfer the house to the plaintiff, and it also awarded damages for
incomplete work and defects under Section 18(3).
Contract which is not specifically enforced
- Section 20(1) of the SRA:
a) a contract for the non-performance of which compensation in money
is an adequate relief
o Case: Rainbow Estates Ltd v Tokenhold Ltd, it was held
that specific performance should be available when damages
are not an adequate remedy or, in the more modern
formulation, when specific performance is the appropriate
remedy. But the question of whether damages will be an
adequate remedy for a breach of contract is often put in terms
of whether the injured party would be able to purchase a
substitute performance if given the remedy of damages.
b) a contracts which runs into such minutes or numerous details or which
is so dependent on the personal qualifications or volition of the parties
or otherwise from its nature is such, that the court cannot enforce
specific performance of its material terms
o Case: Dayang Nurfaizah Bte Awang Dowty v Bintang Seni
Sdn Bhd, a management agreement between the plaintiff, a
professional recording artist with the defendant, her personal
manager, was a contract to render personal services which
cannot be specifically performed.
o Specific performance is generally not granted for construction
contracts as they contain numerous details and require
continuous supervision.
§ However, in Oon Hock Lai v Lee Kok Leong, the
defendant agreed to sell a piece of land and to
construct a building thereon for the plaintiff, which
was to be completed in seven months. The plaintiff
claimed for specific performance against the
defendant when the defendant abandoned the
construction after completing part of the building.
The High Court allowed specific performance of the
agreement as the plaintiff had sufficiently defined
the construction works required by exhibiting
comprehensive building plans for the construction of
the building.
c) a contract the terms of which the court cannot find with reasonable
certainty
o Case: Soo Lip Hong v Tee Kim Huan
o Facts: Parties signed an option for the sale of a shop house
at a specified purchase price. However, the vendor failed to
 sign the sale and purchase agreement and to collect the
balance of the purchase price from the purchaser.
o Held: that as no sale and purchase agreement had been
signed, there was no concluded contract. Specific
performance cannot be granted as many essential terms had
yet to be agreed upon between the parties and thus remained
largely a matter of conjecture.
d) a contract which is in nature revocable
e) a contract made by trustees either in excess of their powers or in
breach of their trust
f) a contract made by or on behalf of a corporation or public company
which is in excess of its powers.
g) a contract the performance of which involves the performance of a
continuous duty extending over a longer period than three years from
its date
o Case: Marble Terrazo Industries Sdn Bhd v Anggaran
Enterprise Sdn Bhd & Ors
o The plaintiffs claimed that the defendants had verbally agreed
to allow the plaintiffs to extract rocks material from certain
land for a period of 20 years. Pending the outcome of the suit,
the plaintiffs sought a temporary injunction to restrain the
defendants from allowing other parties to mine the land.
o The High Court held that no such injunction could not be
granted by virtue of section 54(f) of the SRA due to the
contract being not specifically enforceable under section
20(1)(g).
h) a contract which a material part of the subject matter supposed by both
parties to exist, has before it has been made, ceased to exist
Discretion of the Court
- Section 21 of the SRA: the jurisdiction to decree specific performance is
discretionary, and the court is not bound to grant any such relief merely
because it is lawful to do so; but the discretion of the court is not arbitrary
but sound and reasonable, guided by judicial principles and capable of
correction by a court of appeal.
- Case: Lamare v Dixon, Lord Chelmsford stated that “the exercise of the
jurisdiction of equity as to enforcing the specific performance of agreements,
is not a matter of right in the party seeking relief, but of discretion in the
Court”.
- Court discretion not to decree specific performance
o Section 21(2)(a) of the SRA: where the circumstances under
which the contract is made are such as to give the plaintiff an
unfair advantage over the defendant, though there may be no
fraud or misrepresentation on the plaintiff’s part;
§ Case: Ooi Siew Eng & Ors v Link Ventures Sdn Bhd
(In Liquidation) & Another Appeal, the decision of the
High Court, denied the specific performance, however in
Appeal, specific performance should be granted as it will
not give appellants any unfair advantage on Link
Ventures. This also will not cause hardship on the
respondent as there is nothing that they can't foresee.
o Section 21(2)(b) of the SRA: where the performance of a
contract would involve some hardship on the defendant which he
did not foresee, whereas its non-performance would involve no
such hardship on the plaintiff.
§ Case: Sekemes Sdn Bhd v Lian Seng Co Sdn Bhd,
court granted specific performance to plaintiff and denied
contention of defendant where they claimed that it would
cause hardship to complete the purchase of plot of land
as they are not able to pay. The court held that hardship
was self-inflicted because development project that
required significant funds without ensuring that it had
sufficient financial resources.
- Court discretion to decree specific performance
o Section 21(3) of the SRA: A case in which the court may properly
exercise a discretion to decree specific performance is where the
plaintiff has done substantial acts or suffered losses in
consequence of a contract capable of specific performance.
o Case: Ganam d/o Rajamany v Somoo s/o Sinnah, where the
defendant and plaintiff entered into a contract. The defendant had
paid RM 26,000.00 to the plaintiff but only paid less than one third
of the amount of the contract. It was decided by the court that the
defendant was unable to bring the case as under section 21(3).
Grant Specific Performance with Specific Terms
- This purely based on the exercise of the court’s discretion.
- This can be seen in the case of Loo Choo Teng & Anor v Cheok Swee
Lee & Ors, the court allowed and grant specific performance for a sale and
purchase agreement. The terms for this is that, the defendant should apply
to the court for formal sanction to sell property in accordance with the
Probate and Administration Ordinance 1959, in relation to clause 8 of the
agreement.
Injunction
- The very principle of injunction law is that you do not obtain injunctions for
actionable wrongs for which damages are the proper remedy.
Definition
- Stroud’s Judicial Dictionary: a judgment or an order to do, or refrain from
doing a particular thing
Types
1. Interlocutory/Interim Injunction
- Section 51(1) of the Specific Relief Act: Temporary Injunction are such
as are to continue until a specified time, or until the further order of the court.
They may be granted at any period of a suit, and are regulated by the law
relating to civil procedure
- Principles in granting a temporary injunction as in American Cyanamid Co
v Ethicon Ltd, whether there is a serious question to be tried, that is, that
the claim is not frivolous and vexatious. If there is a serious question to be
tried, the court will consider whether, based on the balance of convenience,
where the justice of the case lies.
- Affirmed in Keet Gerald Francis Noel John v Mohd Noor Abdullah, the
court must:
o Assure that there is a serious question to be tried
o Consider where the justice of the case lies, by weighing the harm
that the injunction would produce by its grant against the harm that
would result from its refusal (balance of convenience)
- Other considerations:
o Case: Associated Tractors Sdn Bhd v Chan Boon Heng &
Anor:
§ Duty of disclose
§ Undertaking as to damages
§ Delay
§ Public interest
2. Perpetual Injunction
- Final determination of right
- Section 51(2) of the SRA: A perpetual injunction can only be granted by
the decree made at the hearing and upon the merits of the suit; the
defendant is thereby perpetually enjoined from the assertion of a right, or
from the commission of an act, which would be contrary to the rights of the
plaintiff.
- Two categories:
o 1. Mandatory injunction
§ Section 53 of the SRA: When, to prevent the breach of
an obligation, it is necessary to compel the performance
of certain acts which the court is capable of enforcing,
the court may in its discretion grant an injunction to
prevent the breach complained of, and also to compel
performance of the requisite acts.
§ Case: Redland Bricks Ltd v Morris & Anor, the
principles laid down were used as guidelines in granting
IMJ:
• i. The plaintiff at present must show a very
strong probability that grave damage will accrue
to him in the future.
• ii. Damages is not an adequate form of remedy.
• iii. The court must take into consideration the
cost for the defendant in preventing or
mitigating the loss suffered.
• iv. The defendant must have known exactly
what he has to do.
o 2. Restraining injunction
§ A remedy in the form of an order of the court that
prohibits a party from doing or continuing to do a
particular act.
§ It can be granted in the form of a perpetual injunction as
under Section 52 as the final settlement of the suit to
restrain a party, or a temporary injunction as under
Section 51(1)
§ Case: Azman bin Mohd Yussof v Vasaga Sdn Bhd,
the Court allowed the plaintiffs’ application for an
injunction in restraining the defendant from operating a
disco and pub business on the grounds that the business
disturbed their peace, tranquility and safety resulting
from the loud music till late at night as well as the
vibration of the buildings and others. The defendant had
claimed that the court should not have granted a
prohibitory order which can cause serious losses to the
defendant if there were other sufficient relief. It seemed
that the disturbance could not be compensated with
money and there were other remedies besides putting a
stop to the disturbance
When Injunction cannot be granted
- Section 54(a) to (k) of the SRA
- Section 54(f) of the SRA: An injunction cannot be granted to prevent the
breach of a contract which cannot be specifically enforced.
o This is applicable in three circumstances:
§ Section 20(1)(b): Where the particular contract is
dependent on the personal qualification or volition of the
parties
 § Section 20(1)(g): Where the performance of the contract - The court in Malaysia plays important roles in granting relief but the court
involves a continuous duty for a period of more than in Malaysia seems reluctant in granting the order for breach of contract as
three years it is a coercive remedy.
§ Where the case concerns an illegal agreement - The judge had to take various consideration to ensure that no parties suffer
o Case: Marble Terrazo Industries Sdn Bhd v Anggaran any harm more than it already is
Enterprise Sdn Bhd & Ors - Case: Horizon Film Entertainment Sdn Bhd & ORs v Mohamad Azlan
o Facts: The plaintiffs claimed that the defendants had verbally Norani & Anor
agreed to allow the plaintiffs to extract rocks material from certain - Facts: involved the application for interlocutory Injunction or Interim
land for a period of 20 years. Pending the outcome of the suit, the Injunction with respect to copyright infringement and repudiatory breach of
plaintiffs sought a temporary injunction to restrain the defendants contract disputes relating to movie film production. There was agreement
from allowing other parties to mine the land. made on 1 April 2019 between plaintiff and defendant for film entitled “The
o Held: The High Court held that no such injunction could not be Seventh Flower”. The agreement was terminated on 8 April 2019 where
granted by virtue of section 54(f) of the SRA due to the contract plaintiff claim that defendant breach it and vice versa. The defendant then
being not specifically enforceable under section 20(1)(g). entered into new agreement with another party
- Exception - Held: After all consideration had been made taking into account that the
o Section 55 of the SRA: where a contract comprises an affirmative movie film production is a largely commercial undertaking or venture with
agreement to do a certain act, coupled with a negative agreement, view of profit, damages would definitely be an adequate remedy. The
express or implied, not to do a certain act, the circumstance that plaintiff failed to show that damages would be difficult to assess. The judge
the court is unable to compel specific performance of the found that balance of convenience tilts in favor of not granting interim
affirmative agreement shall not preclude it from granting an injunction.
injunction to perform the negative agreement
o Case: Pertama Cabaret Nite Club Sdn Bhd v Roman Tam
o Facts: A contract was signed between the parties which provided
that the respondent had to perform in the appellant’s nightclub for
a specific number of times (affirmative agreement). It was inferred
from the agreement that the respondent was prohibited from
performing in any other nightclub in Kuala Lumpur during the
contract period (negative agreement). The respondent was in
breach of the agreement and the appellant sought an injunction to
restrain him. The application was rejected at the lower court.
o Held: However, at the Federal Court, it was held that where the
court is unable to compel specific performance of the affirmative
undertaking, it is not precluded from granting an injunction under
the negative undertaking where the appellant had not failed to
perform the contract so far as it is binding upon him.
Relationship between Injunction and Breach of Contract (Damages is not an
adequate remedies)
- One of the main requirement of granting relief injunction is that when breach
had occurred, money is not an adequate relief.
- There are however other relief that may be sought by plaintiff where money
is not an adequate relief such as an order for specific performance.