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PLC entered into a project contract with RST Pte Ltd, the contractors. One of the contract terms is as follows: [RST] shall not be liable

PLC entered into a project contract with RST Pte Ltd, the contractors. One of the contract terms is as follows:

[RST] shall not be liable for delay in performing or for failure to perform its obligations if the delay or failure results from any of the following: (i) Acts of God, (ii) outbreak of hostilities, riot, civil disturbance, acts of terrorism, (iii) the act of any government or authority (including refusal or revocation of any licence or consent), (iv) fire, explosion, flood, fog or bad weather, (v) power failure, failure of telecommunications lines, failure or breakdown of plant, machinery or vehicles, (vi) default of suppliers or sub-contractors, (vii) theft, malicious damage, strike, lock-out or industrial action of any kind, and (viii) any cause or circumstance whatsoever beyond [RST's] reasonable control.

At the time of entering into the contract, RST was aware of its short term liquidity problems which it expected to overcome with the relevant financing. However, as things turned out, this was not forthcoming and RST was unable to carry on with the project.

Questions:

  • Advise RST of its potential liability to PLC for breach of contract, if any
  • Would it make a difference if RST had obtained the relevantfinancing but it then became uneconomical to perform the contract due to a substantial pricing increase?
  • Is there any other contract clause that can deal with economic hardships and if so, what is its effect?

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