Highlights

  1. People in business or commercial transation usually ignore the needs to record any conversation into writing because they don’t have enough time or they did not see the necessity to do so;
  2. However, when a business relationship turns sour, that is when you realise the importance to have every agreement, every business decision made orally, even for the smallest matter, to be put in writing;
  3. The mistakes that most people or companies or industrial players always do is ignoring letter that came to their office which contained allegation or demand that might be untrue;
  4. Such ignorance is not a bliss, but fatal if the dispute between you and your business partner or your client or your contractor is brought to the Court.
A Letter: To Reply Or Not To Reply?

 

Q1. I have recently received a letter of demand from my supplier demanding me to pay some debt but I never owed him any money. Should I ignore the letter because the letter contained untrue allegation.

Answer:

You have to reply to deny each of the allegations made against you.

Q2. What will happen if I don’t reply?

Answer:

It is an established principle of the law that if you failed to reply a letter which has been addressed to you, especially in a commercial transaction, it implies that you are agreeable to the content of the letter1. Although not all demand or allegation must be replied or challenged, the conduct of you ignoring such letter will paint a picture that the content of the same is correct. Thus, it is your responsibility to reply to any allegations made against you or your company.2

Q3. If an action is filed against my company in the Court based on the claimant’s letter of demand but I did not reply to the letter, does it mean I have no defence?

Answer:

It does not necessarily mean you have no defence, however, your conduct of not replying the letter of demand will be considered by the Court as part of Court’s assessment whether to allow or dismiss the claimant’s claim.

Q4. How does my failure to reply a letter will affect my defence should there be a suit filed against me or my company in the Court?

Answer:

Your defence may be considered as afterthought or something that you thought only after the claim has been brought to the Court.

Q5. My company received a Letter of Demand but I did not notice it because it was sent to my company secretary instead to my company’s address. Can I ignore the letter? Because technically it was not sent to my company.

Answer:

According to Order 62 Rule 4 of Rules of Court 2012, service to a company is to be affected by leaving a copy of document at registered office. Hence, if your company’s registered address is the company secretary, service is deemed to be affected to the said address. Hence, it is the company legal duty to have a registered address and update the same to the Registrar of Company if there are any changes to the address.3

Q6. I am in construction business and my work requires me to be fast. Sometimes my main contractor or employer will instruct me to do additional work but my employer don’t usually issue anything in writing. Now I am worried if I cannot claim my additional work because he would claim that nothing in writing can prove his instruction. What should I do?

Answer:

It would be depending on your contract whether additional work must be put in writing as Variation Order. However, it would be the best practise and prudent in a commercial transaction that any verbal communication or instruction to be put in writing either by your employer or by you to confirm your employer’s instruction as a safeguard should there be dispute arise between you and your employer.

Q7. Can I initiate an action in Court without sending a Letter to demand my opponent to rectify their wrongdoings?

Answer:

Yes, however, the fact that there is no letter of demand will weaken your claim against your opponent. However, if a letter of demand is required before you can initiate suit in a contract, for example in a Letter of Guarantee and Indemnity, non-issuance of the letter will cause your action to be struck out due to pre-matured action.4

Q8. Why is it important to put everything in writing in a commercial transaction?

Answer:

In commercial cases (not civil), Courts have taken notice that, in the ordinary course of business, if one man of business states in a letter to another that he has agreed to do certain things, the person who receives that letter must answer it if he means to dispute the fact that he did so agree5. Therefore, you always have to be prepared if things go sour in a commercial transaction by putting your agreement or disagreement in writing and not merely by verbal reply.

Q9. What should I do if I am not sure what to reply when I received a letter of demand?

Answer:

You should quickly refer the letter of demand to a law firm and seek for legal advice.

FOOTNOTES 

[1]Planet Pharmacy Sdn Bhd & Anor v Yap Siew Fern (P) & Anor [2016] MLJU 952.

[2]Small Medium Enterprise Development Bank Malaysia (formerly known as Bank Perusahaan Kecil dan Sederhana Malaysia Berhad) v Lim Woon Katt [2016] MLJU 390.

[3]Section 46 of Companies Act 2016.

[4]EON Bank Bhd (previously known as Oriental Bank Bhd) v Mohd Yunus bin Alias & Ors [2010] 9 MLJ 587.

[5]Small Medium Enterprise Development Bank Malaysia (formerly known as Bank Perusahaan Kecil dan Sederhana Malaysia Berhad) v Lim Woon Katt [2016] MLJU 390.

THIS FAQ IS PREPARED AND PUBLISHED BY GENERAL LITIGATION, CORPORATE INSOLVENCY AND APPELLATE DEPARTMENT OF THE DISPUTES RESOLUTION OF MESSRS GAN & ZUL, ADVOCATES & SOLICITORS.
Prepared by:

Ben Lee Kam Foo (Partner)
Head of Dispute Resolution
Arbitrator & Adjudicator
Fellow of ADR, AIAC
Cross Border Taxation Planning

Shafihani Binti Md Ali
(Senior Associate)
General Dispute Resolution
Appellate Division
Contractual, Land and Commercial Disputes
Pre and Post Liquidation Disputes

Gan & Zul is an established legal firm in Malaysia which consists of experienced litigation lawyers. Our firm provides a wide spectrum of legal services covering various aspects of laws includes dispute resolution, debt recovery, land, bankruptcy, insolvency and corporate dispute. We are also a firm construction lawyers based in Kuala Lumpur.
If you have any queries or require additional information, kindly email us at kul.litigation@ganzul.com or call us at 03-2242 3836

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