A good record of transaction documents is beneficial not only to maintain record of business activities or transactions as well as books of accounts, the transaction documents are the best evidence in the claim of goods sold and delivered. The key documents in every trading activities are Purchase Order, Delivery Order and Invoice:

1. Purchase Order: A Purchase Order is normally treated as the acceptance of the offer that is made in a quotation.[1] When there is no evidence of a prior quotation that was sent by the seller to the buyer, the Purchase Order will be treated as the offer made by buyer to the seller, specifying the quality and quantity of the order;
2. Delivery Order: A good Delivery Order is one that establishes a proper delivery[2] has been made, and that the buyer confirms acceptance[3] of the quality and quantity of the goods so delivered by signing on the Delivery Order or putting a rubberstamp of the buyer to acknowledge receipt of goods;
3. Invoice: An Invoice is a bill, it itemise goods delivered, with their prices.[4] It communicates to a buyer the specific items, price, and quantities they have delivered and now must be paid for by the buyer.

The Malaysian courts have made clear that, in any claim of goods sold and delivered, the party must prove that the order was made and the goods were received by the buyer. The proof is commonly by way of producing in court the Purchase Order, Delivery Order and the Invoice for the goods. The Court named them as the ‘Key Documents’. It is important to note that not only the Key Documents must be available for the claim of goods sold and delivered, it is important to ensure that:

1. the details in the Key Documents match each other to explain the transaction, the common way is by reference number or serial number of each transaction;
2. the Key Documents are properly dated;
3. the Key Documents contain sufficient details including name of the buyer and/or seller, description and quantity of goods, amount of transactions;
4. the Delivery Order must be signed by the recipient of goods indicating the acceptance of the quality and quantity of the goods delivered and accepted in good order and condition; and
5. the terms and conditions in the Key Documents (if any) must be adhered to.

Summary Judgment to claim for amount of goods sold and delivered

If a seller delivered goods based on the orders made by a buyer and the buyer fails to make payment, a summary judgment is the shortest route to obtain judgment without the necessity of a trial. It permits the seller to speedily obtain a judgment on the ground that where the buyer’s defence is clearly unsustainable and the facts favouring the seller are clearly established.[5] The complete Key Documents of transactions are proof of goods sold and delivered, allowing seller to claim the amount without producing evidence in an open court to prove the claim.

Consequences of not having the Key Documents

In the event that the seller does not have Key Documents or that the Key Documents do not have complete details on them, the seller will have to produce evidence in court to prove the amount he claims from the buyer. Parties will commonly call witnesses to show that orders were made and that goods were received in good condition without dispute by the buyer.

If you have any question or would like additional information on this topic, please reach out to us at wlaw@wleong.com.my or contact us at 03-7660 3207.