A legally binding contract exists despite the absence of a formal sales agreement when parties have expressed their intent through conduct and correspondence.

[1] The respondent's claim against the appellant in the present case is for the refund of RM742,213.46 being deposits and part payments made by the respondent to the appellant for the purchase of four units of shoplots, being Lot 48, Lot 49, Lot 50 and Lot 51 in Sri Bintang Height, Segambut, Kuala Lumpur. The appellant was the developer and vendor of the said shoplots and the respondent was the purchaser.

[2] The appellant's counterclaim against the respondent is for a sum of RM102,786.54 as a loss suffered by the appellant as a result of the respondent's breach in not proceeding with the purchase of the shoplots.

[3] After full trial, the learned High Court judge allowed the respondent's claim but dismissed the appellant's counterclaim. Hence the present appeal.

Brief Facts

[4] Sometime on 2 November 1996, the respondent signed four sales proforma forms, all dated 2 November 1996, for the purchase of the four shoplots in question and paid the initial earnest deposits of RM20,000 for each lot. The purchase price of each lot are as follows:

(a) Lot 48 - RM895,000

(b) Lot 49 - RM695,000

(c) Lot 50 - RM695,000

(d) Lot 51 - RM695,000

[5] According to the respondent, at the time he paid the earnest deposits, a member of the staff of the appellant had told him that the appellant's panel banks could give him loan up to 80% of the purchase price.

[6] Subsequently, on 17 December 1996, the purchase price of Lot 48 was increased from RM895,000 to RM1,180,000. Later the price was reduced to RM1,160,000 on the respondent's request.

[7] Due to the increase in the price of Lot 48, the respondent had on 24 March 1999, informed the appellant that he decided to forgo his purchase of Lot 51 and requested for the refund of the earnest deposit that he had paid for Lot 51. However, the appellant informed the respondent that the amount RM69,500 that the respondent had paid as earnest deposit for Lot 51 will be transferred to the account of Lot 48.

[8] At the material time, the parties had not signed any sale and purchase agreement yet for the purchase. It was deferred on the ground that the respondent had indicated that he can only sign the sale and purchase agreements once he got the approval from the Registrar of Companies for the incorporation of a new company that he had set up for the purpose of the purchase. The company was incorporated on 15 November 1997.

[9] The respondent was unable to secure any loan from the appellant's panel of end financiers due to the economic situation at the time. The respondent said that from his enquiries with the banks, the banks were unwilling to finance purchase of properties for investment. By letter dated 10 February 1998, the respondent informed the appellant that he was not proceeding with the purchase of Lot 50 due to difficulties in obtaining bank loan. The respondent also expressed his interest in the appellant's Special Payment Scheme (SPS) for the purchase of Lots 48 and 49 and asked for clarification.

[10] The appellant replied by letter dated 11 February 1998 proposing to apply the Special Payment Scheme (SPS) for Lots 48, 49 and 50 if Standard Chartered Bank, a bank on the appellant's panel of end financiers, rejected t