What is a Commercial Contract in Malaysia?

The Foundation of Your Business

A commercial contract is a legally binding agreement between two or more parties for a business transaction, like buying or selling a product or service. The contract outlines the terms and conditions that all parties must follow, and it explains what happens if someone doesn’t keep their end of the deal.

The Benefits of Commercial Contracts

A Key Document for Business Success

Having a well-drafted commercial contract in Malaysia offers many benefits to business owners, such as:

• Clearly defining business relationships, agreements, and the rights of each party
• Reducing the risk of misunderstandings
• Protecting valuable assets, including intellectual property and real estate
• Laying out steps for resolving disputes
• Providing documentation that can be reviewed by a qualified business lawyer

Commercial Contract Drafting Services

Our Expertise Covers a Range of Contracts

We have extensive experience drafting various commercial contracts, including:

• Business Contracts
• Partnership Agreements
• Shareholders’ Agreements

Meeting Your Commercial Contract Needs

Reducing Risks and Avoiding Disputes

At Sabrina Hashim & Co, we’re dedicated to offering reliable legal support. We follow a thorough process to ensure our clients get the best results. Our contracting process includes the following steps:

1. Planning: We help you plan how to manage your commercial agreements, assign responsibilities, and ensure that the contract’s obligations will be met.
2. Implementation: We put the plan into action, ensuring all necessary information is provided to structure the terms of the contracts.
3. Pre-Contract: New contracts are carefully drafted, reviewed, and signed, making sure all relevant terms and conditions are included.
4. Handover: We ensure that the legal team or contract manager understands all aspects of the contract so they can manage it after it’s signed.
5. Contract: Once the contract is active, all parties must follow the agreed terms.

What Should Be Included in a Commercial Contract?

A commercial contract in Malaysia should clearly state the details of the transaction. This includes:

• The quantity of goods or services to be provided
• The payment or compensation to be made
• The consequences if either party doesn’t fulfill their obligations

Key Clauses in a Commercial Contract

Every commercial contract is different, but here are 7 important clauses that are usually included:

1. Parties and Purpose: Clearly identify the parties involved and the purpose of the contract.
2. Termination Triggers: Outline conditions under which the contract can be terminated.
3. Damages: Specify the amount to be paid if a party doesn’t fulfill their obligations.
4. Dispute Resolution: Include a process for resolving any disputes that may arise.
5. Force Majeure: Protect the parties from unexpected events, like natural disasters.
6. Confidentiality: Ensure that information shared between parties remains private.
7. Jurisdiction: State which country’s laws will apply to the contract.

Does a Commercial Contract Have to Be in Writing?

In Malaysia, a commercial contract doesn’t have to be in writing—it can be verbal or implied. However, having a written contract is strongly recommended. If misunderstandings arise, a written contract gives you something to refer back to.

Can a Commercial Contract Be Terminated Without a Termination Clause?

Yes, a contract can be terminated even if there’s no specific termination clause. However, reasonable notice must be given, and if there’s a dispute over what is considered reasonable, the court will decide.

What Does ‘Good Faith’ Mean in a Commercial Contract?

‘Good faith’ means acting honestly during an agreement. Parties must:

• Be accountable in their performance
• Avoid acting with malicious intent
• Not abuse their power when setting the contract’s terms

Disclaimer: The information provided is for general purposes only. ANN & AIN, ADVOCATES & SOLICITORS make no representations or warranties regarding the accuracy or fitness of the information for any particular purpose. While we have made every effort to ensure the information is accurate as of the time of writing, it should not be relied upon for making any financial, investment, real estate, or legal decisions. Always seek professional advice that considers your personal circumstances.