Section 28 Contract Act Malaysia

Section 28 of the Contract Act Malaysia: Understanding the Terms and Conditions

As a business owner or individual entering into a contractual agreement, it is important to understand the terms and conditions outlined in Section 28 of the Contract Act Malaysia. This section specifically addresses the consequences of a breach of contract, providing guidance on how damages may be determined and awarded.

What is Section 28 of the Contract Act Malaysia?

Section 28 of the Contract Act Malaysia outlines the legal remedies available in the event of a breach of contract. According to this section, the innocent party is entitled to receive compensation for any losses suffered due to the breach. This compensation can be in the form of money, or in certain cases, specific performance or an injunction.

What are the types of damages that can be awarded under Section 28?

There are three types of damages that can be awarded under Section 28 of the Contract Act Malaysia:

1. General damages: This refers to the actual losses suffered as a result of the breach of contract. For example, if a party breaches a contract to buy goods, the innocent party may be entitled to receive compensation for the loss of profit that was expected from the sale.

2. Special damages: Special damages are recoverable when the loss is caused by a specific event that was foreseen by the parties when entering into the contract. For example, if an employee breaches a contract by divulging trade secrets to a competitor, the employer may be entitled to receive compensation for the specific loss suffered due to the breach.

3. Nominal damages: Though nominal damages are awarded in cases where there is no actual loss suffered by the innocent party, they are awarded to acknowledge that a breach of contract did occur.

What is the significance of Section 28 for businesses?

Section 28 is important for businesses as it establishes the legal remedies available in the event of a breach of contract. Understanding the specific damages that can be awarded allows businesses to protect themselves by including specific terms in contracts, such as liquidated damages clauses that establish beforehand the amount of compensation to be paid in case of a breach.

In conclusion, Section 28 of the Contract Act Malaysia provides crucial guidance on the legal remedies available in cases of breach of contract. As a business owner or individual entering into contractual agreements, it is important to understand this section in order to protect oneself and to ensure that contracts are legally enforceable.