In a tenancy agreement, an “Unexpired Lease Clause” means that if the tenant moves out before the lease expires, the landlord has the right to claim the remaining rent as compensation.
📌 For example:
The lease is for 24 months, but the tenant leaves after 18 months. If the agreement contains this clause, the landlord can claim the remaining 6 months’ rent.
However, ⚠️, Malaysia currently has no written law directly regulating such cases, so rights and obligations are based on common law and past court precedents.
📚 What do the courts say?
📍 Tractors Malaysia v. Kumpulan Pembinaan Malaysia (1979) 1 MLJ 129
The Federal Court emphasized:
“When a contract has been put in writing, we must look within it for all the terms agreed between the parties.”
✅ This means that once both parties have signed, they must comply with the lease terms and cannot alter or breach them at will.
🧾Unexpired Lease Case Summaries🧾🧠
Berjaya Times Square Sdn. Bhd. v Twingems Sdn. Bhd. & Anor (No.2) \[2012] 4 MLRH 99
The High Court supported the landlord’s claim for the full unexpired rent, but also established two legal principles:
⚖️ Legal Principle 1: No Unjust Enrichment
A landlord must prove actual losses due to tenant’s breach, and cannot use it as an opportunity to “make extra profit”.
For example:
✔️ Deposit already offsets part of the loss
✔️ Actual loss ≠ Total remaining rent
⚖️ Legal Principle 2: Duty to Mitigate Loss
Once aware of the breach, the landlord should take reasonable steps such as:
• 📢Advertising
• 🔍Finding a new tenant
❌ If the landlord makes no effort to mitigate but still claims all rent, the court generally will not support it.
Leong Kim Wai v. Minato Enterprise Sdn Bhd (No 2) \[2011] 1 LNS 1019
The court rejected the landlord’s claim for full three years’ rent.
Reasons include:
• Contract terms were unreasonable
• Landlord’s conduct was unfair
The court stressed: “One must come with clean hands to obtain relief.”
Sargunam Seeniappan v. Velloo Vallian @ Vellayan \[2017] 1 LNS 290
In this case, the landlord found a new tenant 6 months after the lease ended.
The court held: 💬
“Six months’ rent compensation is sufficient, no need for full unexpired term.”
This shows that courts consider actual losses and avoid overcompensation.
✅ How to Protect Your Rights in Tenancy? 🏠📑
Whether you are a landlord or tenant, take note of the following:
🔹 Clearly state “early termination clause” in the lease
🔹 Engage a lawyer to draft or review the agreement 🧑⚖️
🔹 Tenants must understand responsibilities and avoid breaching 💡
📞 Want to ensure your tenancy agreement is legally enforceable?
📍 Contact our legal team for comprehensive legal advice and document drafting services.
