COVID-19 (Temporary Measures) Bill Guide - Help For Individuals and Businesses With Their Contractual Agreements
The unfolding COVID-19 pandemic has hit us all hard, making it tough for businesses and individuals in Singapore to perform their contractual obligations.
If you are an individual or business owner in a contractual agreement and are facing difficulty fulfilling your end of the bargain because of COVID-19 – help is on the way.
As of 7 April 2020, The Ministry of Law, Singapore passed the COVID-19 (Temporary Measures) Bill in Parliament.
The bill seeks to offer temporary relief to businesses and individuals who are unable to perform their contractual obligations.
TL;DR: COVID-19 (Temporary Measures) Bill – Help for Business and Individuals Who Face Difficulties Fulfilling Their Contractual Obligations
This new bill offers up to six months of temporary relief and protection for individuals and businesses from legal action on a just and equitable basis. It will cover contracts like:
- Contracts for Provision of Goods and Services –
- Commercial and Industrial Property Leases
- Construction and Supply Contracts
- Certain Secured Loan Facilities for SMEs
- Hire Purchase and Conditional Sales Agreements
The bill will also provide temporary relief for individuals and businesses from bankruptcy and insolvency.
What Timeframe Does the Bill Cover?
The new bill covers any contractual obligations that are to be met on or after 1 February 2020.
The bill also covers contracts that were entered into or renewed before 25 March 2020 and do not cover any contractual agreements made after this date.
These six months of temporary relief from the bill will be effective six months after the Act commences.
Depending on the situation, the effective time period of this bill might be extended one year from the commencement of the act.
As such, this is a temporary measure that gives you additional time to fulfil your contractual obligations. It does not dissolve the contract or free you from contractual obligations.
What Contracts do the COVID-19 (Temporary Measures) Bill Cover?
The Ministry of Law has announced that the following five categories of contracts will be covered under the COVID-19 (Temporary Measures) Bill.
1) Contracts for Provision of Goods and Services (Events and Tourism)
The bill covers events and tourism-related contracts for the provision of goods and services.
- Events contracts, such as a contract for the booking of venues for business meetings or a contract for catering services.
- Tourism-related contracts, such as contracts for cruises and hotel accommodation bookings.
If you the customer of an event contract or a tourism-related contract, you can give a “Notification for Relief” to the relevant goods or services provider.
They may not forfeit any deposit (or part of any deposit) on the basis that you are unable to proceed to fulfil the contractual obligations because of COVID-19 restrictions and regulations.
In other words, if you are able to prove that you cannot fulfil your end of the bargain due to COVID-19 – your service provider cannot forfeit your deposit automatically.
Instead, your deposit will be treated in a just manner, factoring in the service provider’s expenses.
For example, couples who had to postpone their wedding because of COVID-19 can seek relief with this new bill. Typically with these contracts, your deposit will be forfeited if you did not hold their wedding within a certain time.
With the new bill, the couple can apply for relief and have their wedding postponed without forfeiting the deposit.
2) Commercial and Industrial Property Leases
The bill covers businesses owners who have leases or licences for non-residential immovable property (e.g. leases for factory premises).
If you are unable to pay your rent, the landlord cannot terminate your lease or evict you.
You can also talk to your landlord about deferring rental payment for up to six months.
3) Construction and Supply Contracts
The bill covers the businesses that have entered into construction contracts or supply contracts such as contracts for the supply of materials.
If you as a contractor are unable to meet the construction deadline, you can differ your contractual obligations for the timeframe of the bill.
You will also not be penalised for the non-performance of contract due to COVID-19.
4) Certain Secured Loan Facilities
This bill covers certain loan facilities granted by a bank or a finance company to Small and Medium Enterprises (SME).
If you run an SME and are unable to repay your secured loan due to COVID-19, fret not.
Your landlord will not be allowed to carry out an enforcement of security.
In other words, they will not be able to collect the debt by moving on the assets you have provided as security.
These assets include assets like commercial or industrial property, plants or machinery used for business in Singapore.
In addition, your landlord will not be able to carry out court and insolvency proceedings against you.
5) Hire Purchase and Conditional Sales Agreements
This bill also covers Higher-Purchase and Conditional Sales Agreements.
If you are a hirer/buyer who has procured equipment and are unable to your instalments; here is some good news for you.
The goods used for commercial purposes cannot be repossessed. In addition, court and insolvency proceedings are also disallowed.
Bonus: Temporary Relief for Bankruptcy and Insolvency
If you are an individual or business facing the threat of bankruptcy and insolvency due to the fallout from COVID-19, good news.
The bill will temporarily increase the monetary threshold and time limits for bankruptcy and insolvency.
For individuals, the monetary threshold has been raised from $15,000 to $60,000
For businesses (partnerships and companies), this number has been raised from $10,000 to $100,000.
The statutory period for businesses and individuals to respond to demands from creditors has also been extended.
How to Apply?
As of 20 Apr 2020, you can head over to the Ministry of Law’s website to apply for a Notification for Relief.
This process will be straightforward, quick and simple.
There will be assessors appointed by the Ministry of Law who will be presiding over cases that are related to the new bill.
They will be empowered to determine if your inability to fulfil your contractual obligations was due to COVID-19 and grant reliefs on a just and equitable basis.
Do note that you will not be able to hire a lawyer if you are contending. There will also be no cost orders.
All decisions made by the assessors will be final and cannot be appealed.
There you have it, all you need to know about the COVID-19 (Temporary Measures) Bill.
If you have any further questions about this bill or would like to talk business, our friendly Seedly Community is here to help.
Stay safe everyone!