KUALA LUMPUR: The government plans to overhaul the Contracts Act 1950 (Act 136), which has undergone only limited amendments since it came into force, as part of efforts to modernise the country's commercial legal framework, says Datuk Seri Azalina Othman Said.
During a ministerial briefing on contract law reform in the Dewan Rakyat on Tuesday (June 30), the Minister in the Prime Minister's Department (Law and Institutional Reform) said the Act had undergone only three major amendments since its enforcement, in 1967, 1974 and 1976.
She said some of the statutory illustrations in the Act still use outdated terms that have long fallen out of use in Malaysia.
"This includes the use of words such as ‘gantang’, which is merely a small indication of how an Act that is more than 75 years old requires a comprehensive review to ensure it remains aligned with today's business realities.
"The reforms are expected to strengthen legal certainty, reduce transaction and commercial dispute costs, boost investor confidence, and align Malaysia's commercial legal framework with Asean and global standards in the digital economy.
"This initiative is a strategic step by the Madani government to strengthen the country's commercial legal ecosystem," she said.
Azalina said the government established a Contract Law Reform and Review Committee in January last year, chaired by Federal Court Judge Datuk Seri Vazir Alam Mydin Mirah and comprising 20 members from the judiciary, local and international academia, the legal profession, industry and the public sector, including representatives from Sabah and Sarawak.
She said eight working groups were formed to examine all provisions of the Act in detail.
Azalina said the committee's report consolidates three major reform proposals, including a comprehensive review of the Contracts Act 1950, a proposed Third Party Rights Bill to allow third parties to enforce contractual terms made for their benefit, and a proposed Agency Bill to replace Part X of the Act.
"The proposed Agency Bill will introduce a modernised legal framework for agency law, including addressing emerging issues such as the use of artificial intelligence (AI) in commercial transactions.
"Although the reviews were conducted separately, the three studies are interlinked and have been compiled into a single comprehensive report to provide a complete overview of the direction of Malaysia's contract law reform," she said.
She added that, subject to Cabinet approval, the proposed Bills are expected to be tabled at the next Dewan Rakyat sitting.
