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InsiderTAPS (1 September 2006)

Insider TAPS Issue 005 - Facility Agreement may be avoided in Malaysia due to Banker Customer Relationship

The Malaysian Federal Court (the highest court in the land) recently decided that where a bank and its prospective customer negotiated the terms of a facility and one of the negotiated terms was omitted when the Bank drew up the final facility agreement, that agreement can be avoided by the customer when the Bank sought to claim on the security to the facility upon default.


The Court held this to be the case where the customer left it to and trusted the bank to insert the terms and with the absence of the Bank advising the customer to obtain separate legal advice because a banker customer relationship had arisen from the commencement of negotiation where this culminates in an agreement.