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.