This post is a scholarly foresight in regards to contractual management discrepancies in two regions (no longer states) in Malaysia, which are Sabah and Sarawak. I will not discuss or vindicate any political issue in regards to both state based on Malaysia Agreement 1963 and Petroleum Act 1974. In this discussion, I will speak about the articulation of a scenario when these two states have their agencies as Superintending Officer or Representative (hereafter known as SOR) and the Client is the Federal Government of Malaysia. Nevertheless, these two acts have very strong impact in JKR Standard Form, 203 and its variants.

What happened if SOR is from the state entity is using their own understanding in legal interpretation to instruct or coerce a certain order for a project under the Federal Government funding (hereafter known as Client)? It would be a deplorable situation to see SOR get subpoenaed as first defendant and implore for leniency in High Court due to negligence or laxity in contractual correspondence. Lackluster in contractual management will be set as punitive for all is not the way forward to establish semi-autonomous regional government bilateral relationship with the Federal Government.

The provisions are made in Form PWD203 and its variants is extremely lopsided and yet to be tailored to fit in a conducive legal application and constitutional where the only acknowledge Federal Law as applicable and reign supreme law for contractual interpretation and a mere compliance of law for state laws and by-laws which allows for notices and fees to be transacted as well as to keep Client indemnified from legal complication.

Imagine if a contractual instruction issued by SOR is not legal as it does not comply with any gazette and somehow against the law of Malaysia? First, this will frustrate the true intent of the contract for all involved parties. This construed the limit of power and authority for SOR which do not cover the legal right to establish a condition by their own interpretation based on SOR’s right to take action or worst, to take legal a standing or libel through correspondence which is not even a writ with legal essences. Second, the event of force majeure which has been established should provide options for both parties to avoid severity of contract breaching or default during this particular period of time. In this case, the Law of Malaysia should take precedence before other laws after an event is notified without prejudice.

There are many existing conditions in the contract form which need to be ironed out in order to ensure applicable law and compliance of law to coexist in federal level and state level. At this moment, this is loosely translated and I see possible lawsuit to be won by contractors. The problem with legal implications in a contractual frustration is that this will not allow for any other resolvent mechanism such as adjudication, mediation and arbitration. This is the basic of constitution we are talking about, not tort.