Force majeure in building contract : a comparative study of Saudi Arabia and Malaysia

Abstract

Force majeure literally means "irresistible compulsion or coercion". Under the contract law, force majeure clauses may exempt a party or both parties of the contract from the obligation to perform the contract. The events or circumstances of force majeure generally arise from unforeseen incidents which are beyond the control of the contractual parties and such events prevent the parties from performing their obligations under the contract. The most common example of force majeure events are "act of God" (such as natural disasters, earthquakes, typhoons, big floods) and "act of man", like wars and changes oflaws. In Saudi Arabia, the law is based upon Shari` ah principles and future circumstances are perceived under Shariah as being neither predictable nor controllable; instead it is God who knows how things will turn out However, this study highlighted that Shariah recognizes the principle of pacta· sunt servanda which facilitates the usage of Force under the Islamic law. This study also highlighted that in Malaysia, force majeure clause is recognized under the contract law .and has been adopted as a standard clause in the Malaysian standard form of building contracts such as the PWD 203.A and PAM. standard form for construction contract. This study looks into the application of force majeure clause in building contracts in two countries, namely Saudi Arabia and Malaysia. This study highlights the similarities and differences between Malaysian and Saudi Arabian laws on force majeure·with special reference to its application in standard form building contracts.