Malaysia’s Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (COVID-19) Act 2020 provided, among others, a blanket relief for the inability to perform contractual obligations under specified categories of contracts due to the government’s Covid-19 measures during the period from 18 March 2020 until 31 December 2020.

The operation of this blanket relief was due to expire on 31 December 2020 but has now been extended until 31 March 2021, and two new categories of contracts will be added effective from 1 January 2021.

The blanket contractual relief initially covered the following contracts:

• Construction work contract or construction consultancy contract and any other contract related to the supply of construction material, equipment or workers in connection with a construction contract.
• Performance bond or equivalent that is granted pursuant to a construction contract or supply contract.
• Professional services contract.
• Lease or tenancy of non-residential immovable property.
• Event contract for the provision of any venue, accommodation, amenity, transport, entertainment, catering or other goods or services including, for any business meeting, incentive travel, conference, exhibition, sales event, concert, show, wedding party or other social gathering or sporting event, for the participants, attendees, guests, patrons or spectators of such gathering or event.
• Contract by a tourism enterprise as defined under the Tourism Industry Act 1992 and a contract for the promotion of tourism in Malaysia.
• Religious pilgrimage-related contract.

The two new categories of contracts which will come under the blanket relief starting from 1 January 2021 are as follows:

• Hire-purchase agreements or leasing contracts entered into by micro enterprises, B40 or M40 class of persons (as specified in the Inland Revenue Board of Malaysia database) for motor vehicles, goods or public service vehicles and tourism vehicles.
• Credit sales contracts.

Previously, hire-purchase agreements and credit sales contracts enjoyed the following relief under the Covid-19 Act:

• In relation to hire-purchase agreements, no owner of goods shall exercise any power of taking possession of goods that are subjects of hire-purchase agreements for any default of payment of instalment during the period from 1 April 2020 to 30 September 2020.
• In relation to credit sale agreements, no credit facility provider shall commence any legal proceedings against any purchaser to recover the total outstanding amount payable under a credit sale agreement. The purchaser no longer has to pay late payment charges if he or she elects to pay the overdue installments following the receipt of the notice from the credit facility provider. Even if the purchaser fails to make the election of either of the above, the credit facility provider is not entitled to commence any legal proceedings to recover the total outstanding amount payable by the purchaser under the credit sale agreement.

By adding these two categories of contracts directly under the blanket contractual relief, these contracts now enjoy the similar blanket relief as other specified contracts stated above until 31 March 2021.