A review of the related concepts of Force Majeure, Impossibility/Frustration and Extension of Time, and claims of Loss & Expense and differing costs due to Price Fluctuation.
The Restriction of Movement Order (Order) announced by the Malaysian Prime Minister on 16 March 2020 and as extended on 25 March 2020 imposes a state of partial lockdown for four (4) weeks from 18 March 2020 to 14 April 2020 (Period). This necessitates the closure of all businesses except essential services to curb the outbreak of the global coronavirus (COVID-19) in Malaysia.
The inevitability of projects being hit with disruptions makes it crucial, and timely, for businesses to make a proper assessment of one's contractual rights and entitlement in the context of the related concepts of Force Majeure, Impossibility/Frustration and Extension of Time (EOT), and claims of Loss & Expense (L&E) and differing costs due to Price Fluctuation.
In short, the impossibility of performance may result in a total discharge of liability from a contract. A Force Majeure clause may only justify an entitlement for time but not money, as it is generally considered to be a neutral event for an entitlement to EOT only. Yet some contracts may contain terms allowing an entitlement for both time by way of an EOT and an L&E claim. Differing costs due to Price Fluctuations may or may not be allowable. Much will depend on the nature of the contract and surrounding circumstances.
The concepts of Force Majeure and Impossibility/Frustration have been dealt with in our Client Alert dated 13 February 2020, with a focus on construction and infrastructure contracts in our Client Alert dated 20 March 2020. You can also read a summary of the measures implemented under the Order with our Client Alert dated 17 March 2020.
This Alert summarises the effect of regulatory updates and examines the entitlement of EOT, L&E and increased costs due to Price Fluctuations. of RM 1,000 for every day during which the offence is continued after conviction.