The following is an article related to disputes in construction project.
CASE STUDY: Konajaya Sdn Bhd V Perbadanan Urus Air Selangor Bhd ([2009] 5 MLJ 263) Part 1: In reference to the this case, the Konajaya sdn Bhd (Konajaya) as a plaintiff and Perbadanan Urus Air Selangor Bhd (Perbadanan) as a defendant had entered into a contract for the Perbadanan to carry out certain design and construction works. Konajaya successfully completed the works on 22 February 1999. In accordance to the contract, the Perbadanan provided the Konajaya with a guarantee issued by Maybank Bhd ('MBB') for the design of the works ('the guarantee'). The guarantee was to remain in force for 5 years and 6 months from the date of completion of the works on 22 February 1999. So, the guarantee was to expire on August 2004. On June 2003, Konajaya was notified by MBB that the Perbadanan had made a call on the guarantee which Konajaya had not given other party any prior notice of any claim on the guarantee. Konajaya applied for an injunction to restrain Perbadanan from demanding and accepting any moneys under the guarantee pending Konajayas application for a declaration that the defendant had no right to call on the guarantee. After that, the Perbadanan who was the defendant, failed to make any attempt to preserve the guarantee and it expired. In support of its application, the plaintiff requested the guarantee to be required by the defendant to state the defects or damage to the works when making a demand to MBB. If the defendant had failed to do so in its demand, it will be assumed that the defendant's demand to MBB for payment under the guarantee was invalid and ineffective. The defendant however countered and said that the guarantee was a performance bond, which did not require anything more that a demand in writing to call on the guarantee. Part 2: Fortunately, after several appeals from the plaintiff, the court finds that the defendant's letter of demand dated 27 June 2003, calling for the bank guarantee, failed to comply with the conditions set out in the bank guarantee, and thus the defendant was not entitled to call on the said bank guarantee. The plaintiff's originating summons was allowed with costs. Source of reference : http://www.lawteacher.net/free-law-essays/contract-law/disputes-canhave-serious-implication-in-construction-project-contract-law-essay.php#ixzz3YTuB9H7L
Identify the key issue of dispute. Analyze the situation in Part 1 is favourable to the plaintiff or the defendant. 1