Putrajaya extends Covid-19 Act covering contractual reliefs to June 30

Putrajaya has extended the Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 Act 2020. — Bernama pic
Putrajaya has extended the Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 Act 2020. — Bernama pic

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KUALA LUMPUR, March 25 ― The government has extended the Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 Act 2020 that covers key relief measures to protect certain industries from legal action for failing to meet their contractual obligations.

The order was supposed to expire at the end of this month.

The extension of the Temporary Measures for Reducing The Impact of Coronavirus Disease 2019 (Covid-19) (Extension of Operation) Order 2021, will be in force for another three months from April 1 to June 30.

It was issued on March 17 by Minister in the Prime Minister Department, Datuk Seri Takiyuddin Hassan.

The extension covers the second part of the law, also known as the Covid-19 Act.

Section 7 of Part II of the Covid-19 Act gives a party under contract protection from legal action if it fails to meet contractual obligations for any reasons resulting from measures prescribed made or taken under the Prevention and Control of Infectious Diseases Act 1988.

Under the order, counter parties to the contract cannot exercise their contractual rights under the contract to seek redress from the other contracted party’s inability to perform.

The order first came into force March 18, 2020, after public health authorities imposed a partial lockdown to stem the first wave of Covid-19 that brought all economic activities to a near-halt, causing massive supply chain disruptions.

Part II of the Act was to remain until 31 December 2020 but was extended again until March 31 this year as the coronavirus outbreak prolonged.

The contracts covered by Part II of the Covid Act include construction work and supply, performance bonds granted pursuant to a construction contract, professional services, commercial property leases, events and tourism.

Industries have lamented about the ineffectiveness of the Act even as they welcome some of the relief measures provided under the law.

The construction industry, for example, said the Act merely provides temporary relief because firms will still be liable to penalties for late delivery should it fail to obtain a certificate of Extension of Time (EoT).

The EoT is a standard clause in a Sales and Purchase Agreement that allows for developers to extend the scheduled completion date, without any penalty.

However, Master Builders Association Malaysia deputy president Oliver Wee Hiang Chyn was reported saying back in January that contractors do not get the same 160-day EoT accorded to developers from the Housing and Local Government Ministry.

Datuk Soam Heng Choon, president of the Real Estate and Housing Developers' Association (Rehda), said the extension was expected, but still lacked the adequate protection asked by industries.

“Given that we had MCO 2.0 in January and February it's important that the Act be extended to reduce the impact of Covid19 during that period,” he told Malay Mail.

“It's just an extension. Industry players have been asking for improvement and amendments to the Act,” he added.

* A previous version of this story contained an error which has since been corrected.

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