Miracles always be with you

Breach of Contract

Posted by snowie , Monday, April 19, 2010 10:31 PM

This evening, while I’m reading some e-news, a new titled ‘RM324m suit over breach of contract’ snatched my attention. –NST online, 12 February 2010.

ALOR STAR: Two companies here are suing a Kuala Lumpur-based development company and a legal firm for RM324 million for alleged breach of contract.

Real Tech Entrepreneur (M) Sdn Bhd and Beta Semarak Sdn Bhd filed the suit against Sekutu Saujana (M) Sdn Bhd and the legal firm of Azhari and Sumari at the High Court Registry yesterday.

Real Tech managing director Ahmad Shahril Ariff Zainol, accompanied by Counsel Ahmad Rizal Effande Zainol, filed the suit on behalf of Real Tech and Beta Semarak.

The plaintiffs are seeking RM144 million for four million tones of granite in a coastal reclamation project and RM80 million for the electrified double-track project in Perlis.

The two companies are also seeking RM100 million in general damages, exemplary damages and costs.

The plaintiffs said they signed an agreement with Sekutu Saujana to supply granite for the projects on Jan 22, 2008, and had paid RM150, 000 as a refundable deposit to Azhari and Sumari, which acted as the stakeholder for Sekutu Saujana.
The plaintiffs claimed that Sekutu Saujana informed them that the notice of commencement to provide the materials would be given after signing the agreement.

However, after two years, Sekutu Saujana had yet to give the notice of commencement.

The plaintiffs claimed that the defendants could not give a definitive answer and the legal firm claimed it had given the deposit to Sekutu Saujana.
Based on my point of view and understanding of law of contract, the effect of an innocent party putting an end to the contract is that the innocent party must restore any benefits that he may have received from the other party- Section 65, Contracts Act 1950. If the innocent party has rendered services or had supplied goods, he may recover a reasonable sum for such services or goods rendered. If the innocent party has paid money under the contract, he may be entitled to recover the sum paid. In this case, Sekutu Saujana has to return the refundable deposit, RM150, 000 to the plaintiffs as deal in the agreement.