Many legal problems do not begin with dramatic disputes.
They begin with a document signed too quickly, an assumption that was never checked, an important conversation that was never recorded, or a legal step postponed until it became urgent.
Here are five common mistakes worth avoiding.
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Mistake 1: Signing Important Agreements Without Understanding Them
A contract can affect your rights long after the signing appointment is over.
Examples include:
- Sale and Purchase Agreements;
- tenancy agreements;
- settlement agreements;
- shareholder agreements;
- loan documents;
- guarantees; and
- commercial contracts.
The risk is not that every agreement is unfair.
The risk is signing without understanding matters such as:
- payment obligations;
- termination rights;
- default provisions;
- late-payment consequences;
- indemnities;
- warranties;
- dispute-resolution clauses; and
- conditions that must be fulfilled before completion.
How to Reduce the Risk
Before signing a significant agreement:
- read the entire document;
- identify provisions you do not understand;
- check that the commercial terms match what was actually agreed;
- keep copies of supporting correspondence; and
- obtain legal advice where the consequences are substantial or unclear.
The fact that a document is described as “standard” does not mean every clause is irrelevant to you.
Mistake 2: Postponing a Will Until “Later”
Many people associate wills only with old age or large estates.
In reality, a will can be relevant once a person has assets, dependants or particular wishes about estate administration.
Without a valid will, an estate may pass under the applicable intestacy rules rather than according to the deceased’s personal preferences.
A will can also address:
- appointment of an executor;
- beneficiaries;
- specific gifts;
- residue;
- trustees;
- minor beneficiaries; and
- guardianship provisions where appropriate.
How to Reduce the Risk
Prepare a will while you have capacity and review it after major changes such as:
- marriage;
- divorce;
- birth of a child;
- acquisition or disposal of significant property; or
- death of an executor or beneficiary.
Mistake 3: Buying or Transferring Property Without Checking the Title and Transaction Structure
Property transactions involve more than signing an SPA and paying stamp duty.
Depending on the transaction, relevant issues may include:
- registered ownership;
- individual, strata or master title status;
- existing charges;
- private caveats;
- restrictions in interest;
- state-authority consent;
- quit rent or assessment;
- redemption of existing financing;
- foreign purchaser requirements; and
- timing of transfer and loan documentation.
A defect or restriction discovered late can delay completion or change the practical risk of the transaction.
How to Reduce the Risk
Where appropriate, ensure that proper searches and document checks are carried out before important payment or completion milestones.
Your solicitor should understand the transaction structure and advise on issues relevant to that particular property.
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Mistake 4: Relying Entirely on Verbal Promises
A verbal agreement is not automatically meaningless.
However, proving exactly what was agreed can become difficult when recollections differ.
The same problem can arise where important terms are scattered across:
- WhatsApp messages;
- voice notes;
- emails;
- informal invoices; or
- conversations.
How to Reduce the Risk
For important transactions, record the agreed terms clearly.
Depending on the arrangement, consider documenting:
- parties;
- subject matter;
- price;
- payment schedule;
- obligations;
- deadlines;
- termination rights;
- consequences of default; and
- dispute-resolution provisions.
Written evidence is particularly useful when a later disagreement concerns what was actually promised.
Mistake 5: Using Templates or DIY Legal Documents Without Checking Whether They Fit the Situation
Templates can be useful starting points.
The problem arises when a template is treated as though it automatically fits every transaction.
Examples include:
- tenancy agreements copied from the internet;
- wills that omit a residuary clause;
- settlement agreements that do not address all claims;
- powers of attorney drafted too broadly; or
- property documents copied from a different transaction.
How to Reduce the Risk
Ask:
- What law applies?
- Does this document match the transaction?
- Are any mandatory formalities involved?
- Are the parties and assets described correctly?
- What happens if someone defaults?
- What happens if circumstances change?
For important matters, a short review before signing may be more efficient than trying to repair an unsuitable document later.
Other Common Practical Mistakes
Failing to Keep Originals
Keep important originals or certified copies where relevant, including:
- title documents;
- signed agreements;
- wills;
- court orders;
- loan documents; and
- receipts for significant payments.
Ignoring Deadlines
Legal rights can be affected by contractual deadlines, statutory limitation periods or procedural time limits.
Do not assume that a problem can always be dealt with later.
Paying Money Without a Clear Record
For substantial payments, keep evidence showing:
- amount;
- date;
- recipient;
- purpose; and
- transaction reference.
Assuming an Agent or Friend Is Giving Legal Advice
Agents, accountants, bankers and friends may provide useful information within their own areas, but their role is not necessarily the same as that of your solicitor.
Frequently Asked Questions
Are online legal templates invalid in Malaysia?
Not automatically. Their usefulness depends on the document, the applicable law and whether the template has been properly adapted and executed.
If I already signed an agreement, is it too late to get legal advice?
No. A lawyer can review the document and advise on your existing rights and obligations.
Can I write my own will?
A will does not necessarily have to be drafted by a lawyer, but it must satisfy the applicable legal requirements and should clearly express the testator’s intentions.
Is every verbal agreement unenforceable?
No. The legal effect depends on the type of agreement, evidence and any statutory formalities that apply.
Do I always need a lawyer for a property transaction?
The appropriate professional involvement depends on the transaction. For significant property transfers, financing and title matters, legal advice is commonly important because registration and contractual requirements can be technical.
A Simple Rule Before Making a Major Legal Commitment
If a document or transaction affects your home, family, business, estate or a significant amount of money, understand the consequences before committing.
Early advice is usually easier than dealing with an avoidable dispute later.
This article is provided for general informational purposes only and does not constitute legal advice.