Frus­trated con­tract

The Star Malaysia - Star2 - - INSIGHT -

MANY fam­i­lies are caught in a dilemma fol­low­ing re­ports that RM20mil has been paid out and Cam­bo­dia has de­cided to stop the sup­ply of maids to Malaysia.

Whilst the amount in­volved is huge, it is made up of smaller sums which have been paid by those who needed the ser­vices of a maid.

For those who have paid up­front, the sum is by no means small to them.

Where ad­vances have been made by the em­ploy­ment agents to se­cure the maids, the loss would fall on them un­less they have pro­vided for them­selves to be in­dem­ni­fied by their clients in such a sit­u­a­tion.

Other­wise it will be that they have been paid ini­tial or en­tire amounts by in­di­vid­u­als seek­ing the ser­vices of a maid.

No doubt the play­ers in­volved in se­cur­ing maids will en­deav­our to en­sure that at least those who have com­mit­ted them­selves to the trans­ac­tion, would carry the ar­range­ment through.

How­ever, this may not ma­te­ri­alise de­pend­ing on the sit­u­a­tion at hand and the po­si­tion taken by the au­thor­i­ties of the coun­try in­volved.

It is Cam­bo­dia now but it could be an­other coun­try on an­other oc­ca­sion.

How­ever, on the ba­sis that the maid for whom pay­ment has been made, does not ar­rive or can­not come in such cir­cum­stances, the prospec­tive em­ployer will ask the em­ploy­ment agent for a re­fund. This gives rise to the ques­tion as to whom the money has been paid.

Pay­ment in re­spect of se­cur­ing a maid is in­vari­ably made to the em­ploy­ment agent who of­fers such ser­vices. Can the prospec­tive em­ployer then hold the agent re­spon­si­ble for When a con­tract to en­gage a for­eign maid is pre-empted by a change in govern­ment pol­icy, who bears the loss? the re­fund?

Of course, this is what the prospec­tive em­ploy­ers would like but the sit­u­a­tion may not be as sim­ple as it ap­pears. Much would de­pend on the ar­range­ments made and the agree­ment en­tered into with the em­ploy­ment agent.

One would need to ex­am­ine the con­tract that has been en­tered into be­tween the prospec­tive em­ployer and the em­ploy­ment agent with re­gard to the obli­ga­tions of the agent and the man­ner of deal­ing with the en­tire pay­ment made to the agent.

For­eign agent

Was the sum paid, the fee for the ser­vices of the agent for mak­ing the ar­range­ment? Or could it be that part of the pay­ment was for the em­ploy­ment agent to pay the for­eign agent in the other coun­try or partly for pay­ment of stip­u­lated fees or other statu­tory pay­ments?

It could be that part of the pay­ment is meant for the agent and an­other part of it is to be dis­bursed to third par­ties.

On this note, it would be rel­e­vant to con­sider that what has hap­pened is the act of a for­eign govern­ment which pre­vented the trans­ac­tion from be­ing en­tered into or im­ple­mented.

If such a sit­u­a­tion were an­tic­i­pated, then it will de­pend again on what the con­tract pro­vides for, fol­low­ing the oc­cur­rence of such an event.

If no ref­er­ence is made, it would be the po­si­tion that if the con­tract says that the agent will be re­spon­si­ble for the re­fund of all amounts paid, then that will be the con­se­quences.

How­ever, on the ba­sis that the par­ties have not pro­vided and stip­u­lated in a de­tailed man­ner what the con­se­quences would be in the case of each and ev­ery con­tin­gency aris­ing, the gen­eral sit­u­a­tion would be as out­lined here.

If a part of the amount de­posited with the em­ploy­ment agent is meant to be paid to a for­eign agent or as a statu­tory pay­ment, then the ques­tion that arises is whether this sum has been dis­bursed.

If such a sum has been dis­bursed, it would have been done with the au­tho­ri­sa­tion of the prospec­tive em­ployer. In such a case, the lo­cal em­ploy­ment agent could not be held li­able and be asked to re­fund such amount.

How­ever, if such sums in­tended to be dis­bursed to third par­ties are still with the agent, then in view of the fact that the trans­ac­tion could not pro­ceed, the prospec­tive em­ployer would be en­ti­tled to the re­fund of such amount as has not been dis­bursed.

This would leave the amount that is paid as fees to the em­ploy­ment agent. The ques­tion that then arises is whether the amount is for the agent’s ser­vices. In the ab­sence of any spe­cific obli­ga­tion, the agent is re­quired to do the need­ful to get the maid.

Here it would ap­pear that the agent has done all that needs to be done to get the maid. It is the in­ter­ven­ing act of a third party that has pre­vented the im­ple­men­ta­tion and per­for­mance of the con­tract. This is a case of what is re­ferred to as frus­tra­tion.

Un­less the agent has un­der­taken that the fee is payable only upon bring­ing over the maid to the prospec­tive em­ployer, it would not be pos­si­ble to deny the em­ploy­ment agent his fee or part of it, if it has al­ready been paid.

This cre­ates an un­safe sit­u­a­tion for ev­ery­one. Both the agent and prospec­tive em­ployer may ask them­selves how their re­spec­tive sit­u­a­tions could be safe­guarded.

Ex­emp­tion clause

The agent could, for ex­am­ple, pro­tect him­self by in­clud­ing an ex­emp­tion clause. This clause could be to­tal or par­tial.

On the other hand, the prospec­tive em­ployer could seek a guar­an­tee of the maid be­ing made avail­able for work as a con­di­tion of pay­ment.

How­ever, this is more a mat­ter of ne­go­ti­a­tion and the pos­si­ble in­clu­sion of an ap­pro­pri­ate pro­vi­sion to safe­guard the agent or em­ployer as the case may be. Its in­clu­sion would de­pend on which party is in a stronger ne­go­ti­at­ing po­si­tion to have in­cluded its de­sired po­si­tion.

Of course, in­sur­ance would be an­other op­tion in sit­u­a­tions like this. How­ever, the terms of an in­sur­ance cover to pro­tect the prospec­tive em­ployer or the em­ploy­ment agent as the case may be, would have to be care­fully con­sid­ered in the light of pos­si­ble ex­clu­sions.

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