Kuala Lumpur: The committee tasked with conducting a review of the Contracts Act 1950 (Act 136) has been given 18 months to conduct a comprehensive review and study on the Act.

According to BERNAMA News Agency, Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said stated that the review period began from the date of the committee’s first meeting on January 14. The study will be implemented in three phases: an assessment of current laws and comparative analysis, modernisation and suggested improvements, and compiling recommendations along with drafting new legal provisions.

Three suggestions will be considered by the committee to address the issues in Act 136. The first suggestion involves amending the Act to update it and tackle gaps and outdated provisions. The second suggestion is to abolish Act 136 entirely and replace it with a new, more comprehensive law aimed at modernising and unifying contract law principles. The third suggestion is to amend Act 136 while also introducing new legislation to address current issues in specific fields.

Azalina highlighted that Act 136 has served as the foundation for commercial law in Malaysia for over seventy years and has only undergone three amendments, with the most recent one being 49 years ago. Given these factors, Act 136 is considered outdated and unable to effectively address issues such as digital transactions, economic pressures, modern business models, international trade, and contractual disputes, which leads to an overreliance on judicial interpretation.

Updating contract law is one of the commitments of the MADANI government in its institutional reform agenda. The aim is to enhance laws related to the commercial sector to ensure they remain relevant to current developments and international standards, and to keep Malaysia’s commercial legal sector dynamic and adaptable to changing times, Azalina added.