The Doctrine of Hardship: Extension to the Doctrine of Frustration in Malaysia

Abstract

The happening of unforeseen events may disrupt parties’ contractual performance. Under Malaysian contract law, the doctrine of frustration relieves parties from their further performance if their obligations have become impossible or when the change of circumstances will warrant a performance so radically different from what was contracted for. However, it may not be sufficient because, at times, such unforeseen circumstances may render parties’ performance, though not impossible, more onerous than what was initially agreed. Thus, the hardship doctrine may supplement the doctrine of frustration by offering remedies to the aggrieved party via, amongst others, renegotiation and alteration of contractual terms, something that the frustration doctrine could not offer.

This article will briefly illustrate how the Malaysian doctrine of frustration operates and how the hardship principle may supplement it as an alternative recourse. Further, analysis on the hardship doctrine will be conducted upon the Italian, German, French and American laws. Reference will also be made to the Principles of European Contract Law 2002 (“PECL”), UNIDROIT Principles of International Commercial Contracts 2016 (“UNIDROIT Principles”) and the Draft Common Frame of Reference (“DCFR”). Such analysis will focus on the requirements and remedies provided under the hardship doctrine as well as challenges in incorporating the same into Malaysian contract law.