The specifications in contracts must be adhered to strictly; failure to comply constitutes a breach justifying lawful contract termination.

Introduction

[1] This case concerns an alleged unlawful termination of a contract which was entered into between the plaintiff and the defendant. The plaintiff alleged the defendant had unlawfully terminated a contract identified as 'SADA/K/3/2010 of 2010' dated 1 December 2010 (hereinafter referred to as 'the said contract').

[2] In the said contract, the plaintiff agreed to supply and deliver a chemical known as 'Polyaluminium Chloride' (hereinafter referred to as "PAC") to the defendant. The plaintiff adduced its version of the said contract during the trial, and it was marked as exh "B-A1" - Ikatan Dokumen Bersama (Bahagian A & B) Jilid 1, pp 1-52" (hereinafter referred to as "the plaintiff's contract").

[3] The tenure of the said contract for the plaintiff to supply the PAC to the defendant was for two years, effective from 1 August 2010 to 30 August 2012.

[4] The plaintiff alleged that on 27 June 2011 the defendant had unlawfully terminated the contract. As a result of the defendant's unlawful termination of the contract, the plaintiff suffered losses. The plaintiff claimed against the defendant, inter alia, for unpaid invoices amounting to RM93,428.85, general damages of RM3,000,000.00 and other damages as well.

[5] The defendant averred the version of the plaintiff's contract which was adduced at the trial by the plaintiff is incomplete. The defendant adduced its version of the contract in its case, and it was marked as exh "B-A2" - Ikatan Dokumen Tambahan Defendan (2), pp 312-373)" (hereinafter referred to as 'the defendant's contract').

[6] The defendant alleged that there are several pages missing in the plaintiff's contract, in particular Part G (Bahagian G - Spesifikasi Kerja). Other than the missing pages, both the plaintiff's and defendant's version of the contract have the same contents. When the term 'the said contract' is used in this judgment it refers to the general terms in the contract that are found in both versions of the contract.

[7] The defendant asserted that the PAC 18 supplied by the plaintiff was not in accordance with the Technical Specification. The Technical Specification of the product PAC 18 was purportedly provided by the plaintiff. As a result of the non-compliance of the Technical Specification by the plaintiff, the defendant terminated the contract. The Technical Specification is attached in the defendant's contract (see the defendant's contract at p 365 of exh "B-A2"- Ikatan Dokumen Tambahan Defendan (2)), but not in the plaintiff's contract. The plaintiff alleged that the PAC specification is stated in its version of the contact, not the Technical Specification in the defendant's contact as claimed by the defendant.

[8] The defendant alleged that after it had terminated the said contract, the defendant had to engage another supplier CCM Usaha Kimia (M) Sdn Bhd to supply the same PAC 18 (and PAC 10) for the remaining period in the contract (July 2011 to 30 August 2012), but at a higher cost.

[9] The defendant averred that if not for the plaintiff's breach, vis-à-vis the PAC 18 supplied by the plaintiff was not in compliance with the Technical Specification, the defendant would not have incurred, inter alia, an extra sum of RM1,889,797.08. As such, the defendant counter claimed against the plaintiff for its losses.

Background Facts

[10] The plaintiff is a private limited company carrying on the business of manufacturing and supplying of PAC in liquid form. PAC is a coagulant agent used to treat raw water. After the raw water has been treated with the PAC and has gone through other processes, it is then safe to be supplied to the public for consumption and use. There are variance