FACULTY OF MAJOR LANGUAGE STUDIES
SEMESTER III 2024/2025
LAC4443 COMMERCIAL LAW (KBC4)
CASE REVIEW
LECTURER’S NAME:
SYED MOHD NAJIB SYED OMAR
PREPARED BY:
NAME MATRIC NUMBER
HARIZ HAKIMI BIN ABDUL HALIM 1230314
Case Review:
KGN JAYA SDN BHD v PAN RELIANCE SDN BHD [1996] 1 MLJ 233
Parties in The Case:
• Plaintiff: KGN Jaya Sdn Bhd
• Defendant: Pan Reliance Sdn Bhd
Facts of the Case:
In the case of KGN Jaya Sdn Bhd v Pan Reliance Sdn Bhd, KGN Jaya Sdn Bhd (the plaintiff)
alleged that Pan Reliance Sdn Bhd (the defendant) breached their agreement, resulting in
financial losses to the plaintiff. The plaintiff asserted that they had fully complied with the terms
of the contract, while the defendant denied the allegations, claiming either compliance with
the contract or the existence of justifiable grounds for any non-performance. The court was
required to examine the terms of the contract, assess the evidence submitted by both parties,
and determine the merits of the claims and counterclaims to resolve the matter.
The issue is whether Pan Reliance Sdn Bhd breached its contractual obligations under
the agreement with KGN Jaya Sdn Bhd. Specifically, the court needed to examine two key
questions: (1) whether the defendant failed to perform their duties as stipulated in the contract,
and (2) whether the plaintiff’s financial losses were directly caused by the defendant’s breach.
Under Malaysian contract law, as governed by the Contracts Act 1950, several principles are
relevant to this case. Section 40 of the Act defines a breach of contract as occurring when one
party fails or refuses to fulfil their contractual obligations. Additionally, Section 74 of the Act
allows the injured party to claim compensation for losses or damages that naturally arise from
the breach, provided that such losses were within the contemplation of both parties when the
contract was formed. The burden of proof rests on the plaintiff to demonstrate that a breach
occurred and that it caused the claimed damages. Conversely, the defendant may raise valid
defences, such as force majeure, frustration, or contributory fault by the plaintiff, to negate or
limit liability.
In this case, the plaintiff argued that they had fully complied with the contractual terms and
fulfilled all their obligations under the agreement. They contended that the defendant failed to
meet their obligations, such as the timely delivery of goods or services, causing the plaintiff
financial losses. The defendant, however, denied the breach, claiming either full compliance
with the terms of the contract or justifiable reasons for any alleged shortcomings. The
defendant further argued that any failure to perform was due to unforeseen circumstances
beyond their control or actions by the plaintiff that contributed to the outcome.
The court examined the evidence presented by both parties. On one hand, the plaintiff
submitted proof of compliance with the contract and documentation of financial losses
resulting from the defendant’s alleged breach. On the other hand, the defendant attempted to
justify their actions or non-performance by citing potential external factors or plaintiff-induced
issues. Applying Section 40 of the Contracts Act 1950, the court assessed whether the
defendant’s performance deviated from the specific terms of the contract. Additionally, Section
74 was applied to determine whether the financial losses claimed by the plaintiff were
foreseeable and directly attributable to the breach.
The analysis revealed that the defendant had indeed failed to perform certain obligations
outlined in the agreement, and the plaintiff had suffered quantifiable financial losses as a direct
result. The court found insufficient evidence to support the defendant’s claims of justifiable
non-performance. Furthermore, the financial losses presented by the plaintiff were deemed
foreseeable and within the contemplation of both parties when the contract was formed.
In conclusion, the court determined that Pan Reliance Sdn Bhd was liable for breaching the
contract with KGN Jaya Sdn Bhd. The plaintiff successfully demonstrated that they had
complied with the terms of the agreement, while the defendant’s failure to fulfil their obligations
constituted a breach. The court ordered the defendant to compensate the plaintiff for the
financial losses incurred. This case highlights the importance of adhering to contractual
obligations and the consequences of non-performance under Malaysian contract law. It also
underscores the role of the courts in interpreting agreements, assessing evidence, and
providing remedies to ensure justice in contractual disputes.
