9. What events of force majeure give rise to relief? Must they be unforeseeable and to whom? How far does the express or implied allocation of risk under the contract affect whether an event qualifies? Must the event have a permanent effect? Is impossibility in performing required or does a degree of difficulty suffice? Is relief available where only some obligations (eg, to make a single payment or carry out one aspect of the works) are affected or is a greater impact required? What relief is available and does it apply automatically? Can the rules be excluded by agreement?
Under Malaysian law, there is no generally applicable concept of “force majeure”; however, there is nothing in Malaysian law that prohibits parties from providing for force majeure events (ie, that certain external events may have the effect of suspending performance, or releasing the parties from performance altogether). The question of what events will qualify; whether they must be unforeseeable; whether they must have permanent effect; and the extent of the effect that they must have, will depend on a construction of the force majeure provisions read in light of the contract provisions as a whole.
Separately, section 57(2) of the Contracts Act recognises the concept of frustration of contract, in providing that: “[a] contract to do an act that, after the contract is made, becomes impossible, or by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.” Case law suggests that the concept of impossibility in the sub-section extends to circumstances where performance is radically different from that contracted for (see, eg, APT Associates Sdn Bhd v Adnan Ishak & Ors  4 CLJ 277). It is clear that the fact that the contract has become more difficulty or onerous to perform is insufficient for the doctrine to be invoked (Yee Seng Plantations Sdn Bhd v Kerajaan Negeri Terengganu & Ors  3 CLJ 666).
The doctrine results in the contract being terminated automatically. However, section 15 of the Civil Law Act 1956 provides for the adjustment of the parties’ rights and liabilities upon the frustration of a contract. This extends (but is not limited) to the potential recoverability of monies paid under the contract prior to discharge.
If the risk of the supervening event is contracted for (whether expressly or impliedly), that would preclude the application of the doctrine. Section 57(3) of the Contracts Act provides that “[w]here one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know, to be impossible or unlawful, the promisor must make compensation to the promisee for any loss which the promisee sustains through the non-performance of the promise.” It is not settled whether parties can directly contract out of section 57(2) of the Act (on the question of contracting out, see Ooi Boon Leong & Ors v Citibank NA  1 LNS 26).
Section 58 of the Contracts Act provides that: “[w]here persons reciprocally promise, firstly, to do certain things which are legal, and, secondly, under specified circumstances, to do certain other things which are illegal, the first set of promises is a contract, but the second is a void agreement. for the severability of promises where the frustration arises as a result of supervening illegality.” Section 59 of the Contracts Act provides that “[i]n the case of an alternative promise, one branch of which is legal and the other illegal, the legal branch alone can be enforced.”
Other that as provided, there is no concept of severability of promises in the application of the doctrine of frustration under section 57(2) of the Act.
Answer contributed by
Avinash Vinayak Pradhan
Rajah & Tann Asia