In today’s rapidly developing cross-border trade environment, what worries companies most is not whether a deal can be made, but whether payment will be received after goods are delivered. This is not a hypothetical scenario—it is a real challenge faced by many exporters.

Recently, the Landing Malaysia team successfully represented a Taiwanese enterprise in a sales contract dispute with a Malaysian company. In less than one month, we assisted our client in recovering over USD 140,000 in full and brought the litigation to a proper conclusion. This case not only demonstrates the team’s professionalism and execution capability, but also provides similar businesses with a clear path and practical experience for handling purchase disputes.

I. Legal Mechanisms for Handling Sales Contract Disputes in Malaysia

In Malaysia, sales contract disputes are handled under the following legal framework:

• Contracts Act 1950 – establishes the fundamental principles for contract formation and performance.
• Rules of Court 2012 – governs civil litigation procedures.
• Commercial practices and case precedents.

Overview of the process:

1. Letter of Demand
   Issue a formal demand letter, stating the facts of the breach and setting a payment deadline.
2. Filing the Writ of Summons & Statement of Claim
   If the other party refuses to respond or pay, formal litigation can be initiated.
3. Service by the Court
   Serve court documents on the defendant company in accordance with the law, commencing the litigation process.
4. Judgment in Default or Proceeding to Trial
   If the defendant fails to appear in court on time, a default judgment can be applied for; otherwise, the matter proceeds to defence and trial.
5. Enforcement
   If the defendant still fails to pay after a favourable judgment, enforcement measures such as winding up the company, seizing assets, or freezing bank accounts can be pursued.

II. Case Study: Full Recovery of Payment

Case Background
Our client, a Taiwanese enterprise, is a global leader in the manufacturing of Flexible Printed Circuit (FPC) Materials, with long-term production and supply of specialised materials for flexible printed circuit boards, including Flexible Copper Clad Laminates (FCCL) and Coverlay insulating films. These are widely used in precision products such as smartphones, wearable devices, and medical electronics, with distribution across Asia, Europe, and the United States. Since 2024, the company had been supplying high-value FPC materials to the Malaysian buyer.

Case Handling Process

Step 1 – Evidence Review and Issue Identification
The client provided complete invoices, packing lists, and delivery records, confirming the buyer’s long-term payment default without any dispute raised.

Step 2 – Attempt to Negotiate & Issuance of Letter of Demand
On April 4, 2025, we issued a letter of demand requiring the buyer to pay USD 144,716.50 within the specified time limit.

Step 3 – Formal Filing of the Case
When negotiations failed, we swiftly filed the Writ of Summons and Statement of Claim at the Kajang Sessions Court on April 25, 2025.

Step 4 – Prompt Service to Increase Pressure
On April 30, 2025, we successfully served the documents on the defendant company. The court was about to enter the default judgment stage.

Step 5 – Payment and Withdrawal of Case
Under legal pressure, the buyer made full payment. Our client recovered the entire amount in May and filed a Notice of Discontinuance on May 23, 2025, successfully closing the case.

III. Common Legal Risks in Procurement Contracts

From this case, our team summarised the common risk points and corresponding recommendations:

High-risk situations:

• Verbal orders or purchase orders with vague information.
• Delivery accepted but payment refused.
• Only invoices retained, with no proof of delivery or acceptance.
• Misuse of “quality issues” as a defence.

Recommendations:

• Retain contracts, orders, invoices, packing lists, and signed delivery receipts.
• Ensure all orders and deliveries are confirmed in writing by the other party.
• Issue a formal letter promptly upon discovering overdue payments to mitigate losses.
• Specify jurisdiction and governing law clauses in the contract (Malaysian courts and law).

IV. Professionalism Makes Cross-Border Recovery More Secure

The success in this Taiwanese enterprise case was no accident. It was the result of a sound legal system, the right strategy, and swift execution. For every company engaged in cross-border trade, supply chain management, or international procurement, knowing how to prevent disputes, recover payments, and apply lawful pressure is a crucial part of business operations.

We understand that what clients want is not just to “win a lawsuit,” but to “get their money back as quickly as possible.”

If your company has legal needs in cross-border contracts, debt recovery, or litigation strategy, please feel free to contact us. Our professional team will tailor a solution for you.

Team Members

Liu Zhaofu
Senior Partner, Head of Construction & Real Estate Department, Landing Law Offices
Practice Areas: Construction & Real Estate, Capital Markets, Criminal Defence
Email: zhaofu.liu@landinglawyer.com
Tel: +86 13918595526

Wang Xiaofeng
Lawyer, Malaysia Team, Landing Law Offices
Practice Areas: Malaysian Investment, Trade, and Dispute Resolution
Email: ada.wang@landinglawyer.com
Tel: +86 15002113575

Chen Yousheng
Lawyer, Malaysia Team, Landing Law Offices
Practice Areas: Contract Disputes, Debt Recovery, Family Law, Bankruptcy, and Estate Administration

Lu Qianlin
Intern Lawyer, Landing Law Offices
Practice Areas: Construction & Engineering, Asset Securitisation, Debt Financing Issuance, and Civil & Commercial Dispute Resolution