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Company Law Q&A
Justice
 Area of Law: Company Law
Q:
I own a company in KL. One of my salesmen has collected a sum of money from my client. However, he did not hand over the payment to the company and now he has disappeared. Can I refuse to provide service to this client since the company has never received money from this client? What are my rights?
Mr Kong from KL
A:
Firstly, it is advisable to lodge a police report against the salesman concerned immediately for criminal breach of trust as there are criminal elements here.



Secondly, you may institute a civil suit against the salesman concern to recover the payment allegedly paid by your client. Since the salesman has disappeared, your chances of recovery may come to a naught, however, it is advisable to do so; as your auditor may want to see some actions being taken before he could write-off the sum in your accounts.



The question of whether you should continue to provide services to this particular client would depend on the previous course of dealings between you and the client, i.e. whether the salesman concern is authorized to collect payments from clients. You client may argue that the agency rules is applicable here, if there are previous consistent dealings that the salesman had consistently collected payments from him/her and services are continuously provided bearing in mind that authorization can be expressed or implied. In such situation, any refusal to provide services to this client may expose you to the risk of breaching the contract. It is, therefore, necessary to consider the previous course of dealings and the nature of contract between you and your client before conclusive advice can be given.



It is also a little unusual that the salesman is able to abscond with the proceeds of payment unless it is cash payment. As a matter of prudence, it is advisable to state clearly in your invoices that all payments made in cheque shall be made to the company directly.
Ivan Chen
Advocate & Solicitor


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