Kleinwort Benson Ltd v Malaysian Mining Corporation (1989) is a significant English contract law case that dealt with the issue of whether an undertaking given by a bank can give rise to a cause of action in the absence of a separate contract between the bank and the other party.
In this case, Malaysian Mining Corporation (MMC) issued a prospectus inviting subscriptions for new shares in the company. The prospectus included a statement by Kleinwort Benson Ltd (KB), a merchant bank, that it had undertaken to subscribe for any shares not taken up by the public.
The public did not take up all the shares, and KB subscribed for the remaining shares as per the undertaking. However, KB later claimed that the undertaking was only given subject to certain conditions, which MMC had not fulfilled. KB claimed that it was entitled to damages for MMC’s breach of contract.
The court held that the undertaking given by KB was a legally binding promise, which gave rise to a cause of action against KB in the absence of a separate contract. The court also held that the conditions that KB had claimed were attached to the undertaking were not supported by the evidence.
The case of Kleinwort Benson Ltd v Malaysian Mining Corporation is an important case in the law of contract as it established the principle that an undertaking given by a bank can give rise to a cause of action in the absence of a separate contract. The case confirmed that banks can be held liable for making promises that are not supported by a separate contract, and that the courts will enforce such promises as binding commitments.