Note: When Jejak Inc. (Applicant/Purchaser) contracted with Ceria (Beneficiary/Supplier) to purchase diesel fuel, AMCSB (Lender) agreed with Applicant/Purchaser to supply a bank guarantee or letter of credit in favor of Beneficiary/Supplier for part of the purchase price, RM10.0 million, as part of a joint venture between Applicant/Purchaser and Lender. However, Lender failed to provide the bank guarantee or letter of credit, claiming that the bank guarantee was only payable directly to the Beneficiary/Supplier.

As a result of this failure, Applicant/Purchaser defaulted on the Sale and Purchase Agreement with Beneficiary/Supplier and paid damages to Beneficiary/Supplier totaling RM406,960.00 and forfeited a deposit previously given in the amount of RM2.0 million.

Applicant/Purchaser then sued Lender for damages for misrepresenting who the bank guarantee or letter of credit was payable to, claiming RM2,406,960.00 in damages. Applicant/Purchaser claimed further damages of RM5,913,760.00 for amounts owed to Beneficiary/Supplier and RM12,225,720.00 for economic loss and loss of potential profit.

The Malaysian High Court awarded Applicant/Purchaser RM2,406,960.00 for damages and the security deposit paid to Beneficiary/Supplier. The court denied Applicant/Purchaser's claim for amounts owed to Beneficiary/Supplier, but stated that Applicant/Purchaser could join Lender as a party in any suit by Beneficiary/Supplier to recover the outstanding balance. The court further denied Applicant/Purchaser's claims for economic loss and loss of potential profit as too remote and speculative, noting that Applicant/Purchaser had not shown any attempt to mitigate its loss through alternative financing.



The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.