(delivering the judgment of the Board): The principal question arising on this appeal is whether the terms of the Contracts Act 1950 of Malaysia are such that parties to a guarantee cannot contract out of certain sections of the Act which define circumstances in which a surety is discharged from his obligations to the creditor. Subsidiary questions which arise are whether this issue is one which was proper to be decided by the High Court under the summary jurisdiction conferred by Order 14 of the Rules of the Supreme Court; if not, whether the matter should now be dealt with, not on a final basis, but on the interlocutory basis of restoring the order of the High Court which gave the appellants unconditional leave to defend.

The appellants are three directors of a company called Leisure Industries Sdn. Bhd. They hold 60% of the issued capital. There is no evidence whether they were the only directors. In March 1975 the appellants approached the Kuala Lumpur branch of the respondent, Citibank N.A., for the grant of credit facilities to the company. In the result the Bank wrote a letter to the company dated March 24, 1975 confirming that it was prepared to make funds available "... substantially according to the terms and conditions outlined below ... ". The letter then set out the amount and purpose of the loan, rate of interest, commitment fee, repayment dates and other details. The final repayment instalment was to be made on July 1, 1977. Against the side note "Security" there appeared the following: —

"(a) A registered first fixed and floating charge stamped for M$600,000 over all fixed and current assets, both present and future.

(b) Joint and Several Guarantee for M$600,000 signed by [the appellants]."

Against the side note "Conditions of Disbursement" there appeared the following: —

"Conditional upon the following terms:—

(a) Satisfactory completion of securities and documentation;

(b) Letter of Undertaking signed by all shareholders not to divest their respective shareholdings without the Bank's prior written consent and to inject additional capital into the company in the event of cash shortfall as long as the term loan is outstanding."

The penultimate paragraph of the letter was as follows: —

"This commitment is conditional upon the preparation, execution and delivery of legal documentation in form and substance satisfactory to us and to our solicitors incorporating substantially the terms set forth above."

The company, by the signature of two of its directors, signified its acceptance of the terms of the letter. Their Lordships will refer to this letter as "the Letter of Agreement". On the same day the appellants signed a guarantee in favour of the Bank. In consideration of the Bank giving credit to the company the appellants jointly and severally guaranteed payment on demand of all money owing by the company to the Bank together with interest, provided that the total sum recoverable should be limited to M$600,000 with interest. The guarantee contained terms commonly found in a bank guarantee, including the following: —

"7. The Bank may at all times without prejudice to this guarantee and without discharging or in any way affecting our liability hereunder and without notice to any of us ... (5) deal with exchange release modify or abstain from perfecting or enforcing any securities or any other guarantees or rights which the Bank may now or hereafter have from or against the customer or any other person.

8. The liability of any of us hereunder shall not be affected by any failure by the Bank to take any security... 16. Not one of us shall be discharged or released from this guarantee by any arrangement made after this guarantee or any dealing between the customer and the Bank without our knowledge or consent or by any variation or alteration without our knowledge or consent in the agreement between the customer and the Bank for the making of advances or otherwise giving credit or affording banking facil