The law of contract largely stands on the notion of parties' autonomy which allows contracting parties to exercise their free will in determining or dictating the contents of their agreement. In the fast-moving world of business, this concept of freedom of contract is not only liberating but also ensures commercial certainty. For instance, when parties choose to incorporate a "liquidated and ascertained damages clause" ("LAD") into their agreement, they are essentially agreeing to a fixed sum of compensation in the event of a breach. In simpler terms, a LAD clause is a mechanism through which parties can stipulate the consequences of a breach from the very outset of their contractual relationship. However there was the situation where Mr. Vijay Sinnapan finds that Foon Yee Construction Sdn Bhd fails to complete the construction of his bungalow on or before the stipulated contractual completion date and notifies Foon Yee Construction Sdn Bhd of his intention to deduct the specified liquidated damages under the provision of the contract of RM2500.00 per calendar day from its interim payments and/or monies due or becoming due to him. Foon Yee Construction Sdn Bhd objects the notice and contends that the amount is a penalty and that Mr Vijay Sinnapan must prove his losses. Mr Vijay Sinnapan argues that Section 75 of the Contracts Act 1950 contains no such provisions.

With reference to the three (3) Federal Court's decisions, PAM Contract 2018 (With Quantities) and the relevant provision of the Contracts Act 1950, you are required to advice the two parties on the current legal position of liquidated damages in Malaysia with respect to the validity of the imposition and challenges available to the parties.

Therefore, students are required to discuss: 1. Section 75 of the Contracts Act 1950 and the relevant judicial interpretation of the aforesaid provision;