It is common ground that the plaintiff and the defendant entered into a written agreement dated 1 February 1986 by which the plaintiff agreed to sell and the defendant agreed to purchase 1,108,000 fully paid-up shares of $1 each in a private limited company called Seasian Hotel Sdn Bhd for $845,970.91. It was an express term of the contract that the defendant was to pay the purchase price to the plaintiff on 28 February 1986 whereupon the plaintiff was obliged to deliver to the defendant the relevant share certificates together with the relevant memorandum of transfer duly executed by the plaintiff as vendor.

Just two days after the parties had entered into the said agreement for the sale of the shares the defendant wrote its letter of 3 February 1986 to the plaintiff asking the plaintiff to agree to allowing the defendant to defer paying the purchase price for six months pleading the severe strain on its financial resources by the downturn in the economy that was being experienced by the country. The plaintiff replied immediately in writing saying that they could not agree to the proposed deferment of the payment. The plaintiff followed that letter by a solicitor's let