Frustration of contract due to abnormal increase of price in Malaysia legal perspective

Abstract

Malaysia construction industry has become challenging in recent years. The intervention of external sources such as politic, social and economy may affected the construction industry in many ways. For the current trend, since the implementation of Government Service Tax, the industry is still trying to adjust and adapt to the policies. However, during this grace period many impacts have been contributed to the industry due the implementation of such policies. One of the impacts is regard to cost implication to the projects. The market price showed vulnerability in the condition, such as the price might get reduce in a day and fluctuate in another day. Lot of projects seem to suffer with this condition especially project that involves with investment. There is also a case where the parties in the contract have to terminate the contract due to cost implication. Since the contract shall be treated as legally binding between the parties, thus it makes contract cannot simply be discharged their obligation due to certain restrictions. However, it is seemed injustice to force the party to perform their obligation when due no default of neither anyone, resulted the contract to become onerous or impossible. Thus this study is carried out to determine whether the contract may be deemed to be frustrated from an economic perspective. In specific to determine either the contract can be discharged due to one of the reason of abnormal increase of price or global economic crisis. To answer the question a court cases being analyzed and the resulted in tabulated in data analysis section.