Retailers seek relief from contract obligations

The Malaysia Retailers Association says a declaration of ‘force majeure’ will provide temporary cash flow relief for businesses.

PETALING JAYA: A retailers’ group has urged Putrajaya to declare the Covid-19 outbreak a “force majeure” and to introduce legislation to offer temporary relief to businesses unable to fulfil their contractual obligations.

The Malaysia Retailers Association said such an action would be in line with the World Health Organization’s declaration that the pandemic was a public health emergency of international concern.

It said the Covid-19 outbreak and the government’s restrictions under the movement control order had led to “unforeseeable economic impact” which undermined the ability of businesses to fulfil their contractual obligations.

“It would be unfair to hold businesses strictly liable for their failure to meet their obligations, and companies may have to pay damages or forfeit all their deposits besides facing the possibility of being sued and face lengthy litigation or possible insolvency,” it said in a statement.

Declaration of force majeure would provide temporary cash flow relief for businesses which may otherwise have to pay damages or risk having their deposits or assets forfeited.

Force majeure, similar to a declaration of an act of God, is a legal clause recognising that a party to a contract has been prevented from fulfilling his or her obligations due to unforeseeable circumstances.

The association said the Singapore government had implemented a similar move, when the republic’s law ministry said earlier this month it would introduce a new law protecting those unable to fulfil their contractual obligations because of the pandemic. - FMT