BACKGROUND FACT:-

The plaintiff, a technology licensee for a specialised fuel marker, NanoTag, used for marking
subsidised diesel to detect abuse, claims breach of contract or work done on a quantum
meruit basis against the Government of Malaysia. The original agreement was for five years
which expired on 31 March 2011, but the plaintiff continued to provide services to the
defendant during the interim period from March to October 2011 while negotiations were
conducted for a new agreement. However, no new contract was awarded to any parties,
including the plaintiff, and the plaintiff was not paid for its services during the interim period.
The defendant contends that it was understood from the plaintiff's letter of offer that the
services were to be provided without charge and maintains that there was no obligation to
pay for the services rendered during the interim period.

TRIAL FACT OF THE CASE-

Plaintiff (Teras Kimia) and the defendant (Gov. MY) in a civil proceeding in the matter of a
contractual dispute for the work that has been done by the plaintiff after such a contract had
expired. (Original Contract enforceable from 1 April 2006 to 31 March 2011)

Plaintiff contended that a valid contract were concluded between plaintiff and the defendant,
they sought relief for a compensation based on quantum meruit for the work that has been
performed and executed by them which such work is not in a written contract form as the
initial contract (Original Agreement) had already expired on 31st March 2011 and the work
done were performed after original agreement is expired.

Relief that were sought were as follows:

i) Sum of services rendered to the defendant during interim period amounting to RM66,
146,435.60;
ii) Sum of security provided by the plaintiff to the defendant under the expired original
contract amounting to RM5,869,394.09
iii) Interest on the sum in i) at rate 4% from the date of judgment until the date of realisation
iv) Costs in the sum of RM45,000

However, for the defendant, they contended that there was no contract formed between
them after the original contract expired as a letter issued by the plaintiff right after the original
contract expired states the phrase “without commitment” in the letter and such letter were
recorded accordingly in the minute meeting of the defendant’s servant. The defendant,
through DW-2, understood such terms so that the plaintiff will continue to render services to
the defendant, in accordance with the term in the original contract, for free of charge and at
no cost. Furthermore, DW-2 receives instructions from the Ministry of Finance to not extend
the original contract. However, no communication was made in effect to convey the
information to the plaintiff.

Issues contended by the plaintiff and acknowledged by the court are as follows:
i) Whether the plaintiff was entitled to be paid for the service it provided during the interim
period (period after original contract expired up to the point where defendant does not
authorise compensation)

ii) Whether by reason of the conduct of the defendant and the course of dealing between
parties, particularly after the expiry of the original contract, the defendant is estopped from
denying the subsistence of an agreement to continue services provided by the plaintiff during
the interim period and to be paid for such services rendered on terms similar to that terms in
original contract.

iii) Whether the plaintiff is entitled to make a claim on a quantum meruit basis for the value
services and goods rendered to the defendant during the interim period, for which the
plaintiff had always intended so.

Decision of the court were as follows:

i) There is a valid contract during the interim period between plaintiff and defendant during
the interim period with similar term in original contract

ii) Defendants were estopped from denying a valid contract was concluded between the
parties during the interim period.

iii) Plaintiff was entitled to compensation from the defendant pursuant to the principle of
quantum meruit as per S. 71 of CA 1950 and were awarded accordingly.

RATIO DECIDENDI OF THE CASE

i) The reason why the court decides that a contract is subsisted between parties is that
throughout the Interim Period, the Plaintiff has the right to be compensated for the work
performed during this period due to that the plaintiff had a valid offer through a letter dated
31st March 2011 where letter states plaintiff wrote to the defendant offering to carry on with
the services it provided under the original contract (notwithstanding the expiry of the same)
without commitment on the part of the defendant for a period of two months until 31 May
2011. Additionally, there were no complaints, demur or protests concerning the job
accomplished or the services supplied. Furthermore, the defendant in fact cooperated with
the plaintiff in executing the work that is offered by the plaintiff.

ii) The reason why the court decides that defendant is estopped from denying a valid
concluded is because to subsisted a valid and legally binding agreement between the
plaintiff and the defendant as the plaintiff relying on the defendant acceptance of its services
anticipating at all material times that it would be paid for such service.

iii) According to S. 71 of Contract Act 1950, the plaintiff had fulfilled all the requirements to
established quantum meruit of which 1) the delivery of the services or goods is lawful, 2)
must be done for another person, 3) must not be intended to be done gratuitously and 4)
must be such that the other person enjoys benefit of the act or the delivery. The plaintiff had
provided evidence that the service and goods provided were in accordance with the original
contract and delivered seamlessly immediately prior after the expiry of the original contract
without a break. Therefore the court rewards compensation in accordance with the original
contract sum.

CRITIQUE OF THE CASE

(i) This case strengthens and widens the limitation in communicating acceptance.

(iii) pushing the boundaries of intention in offer and acceptance.

(iv) In the social aspect, people can sue the government. While in the economic aspect,
Nano Technology has helped the government to save 3.1 billion. Furthermore, in the political
aspect, The government must be responsible.