Ayer Itam Tin Dredging Malaysia Berhad v YC Chin Enterprise Sdn Bhd [1994]

Ayer Itam Tin Dredging Malaysia Berhad v YC Chin Enterprise Sdn Bhd [1994]

In this case the learned Judge in deciding whether there was a concluded contract between the parties, dealt with both the nature of letters of intent and quantum meruit. He held that arrangement made ‘subject to contract’ or ‘subject to the preparation and approval of a formal contract’, or in similar terms, would mean that the parties were still negotiating and did not intend to be bound until a formal contract was made. ‘Subject to contract clause’ terms would not prevent the formation of a contract in exceptional circumstances. In the learned Judge’s view, with the several essential matters still remaining to be settled between the parties, the letter of intent did not constitute a binding contract at law but was only a record terms agreed by the parties as basis for a contract negotiation. As for the question of compensation for work done prior to the dispute, the learned Judge held that a claim on a quantum meruit basis for the preliminary works carried out on the site was successful but was subject to a maximum limit of RM300,000.

Ayer Itam Tin Dredging Malaysia Berhad vs YC Chin Enterprise Sdn Bhd [1994]