SINGAPORE: Companies that are unable to pay their rent and individuals who have placed deposits for events including weddings will be protected under a new Bill that will be introduced in Parliament next week to provide temporary relief against their contractual obligations amid the COVID-19 outbreak.
The COVID-19 (Temporary Measures) Bill covers five categories of contracts: Non-residential leases, construction or supply contracts, event agreements, tourism-related contracts such as tour packages, and secured loan facilities.
The Bill, which is expected to take effect in mid-April, covers agreements made before Mar 25 when stricter safe distancing measures were introduced.
It will also cover obligations to be performed on or after Feb 1.
READ: COVID-19 temporary measures: Gatherings outside of school and work limited to 10 people, entertainment venues to close
Contractual obligations will be suspended for an initial six months, but the government may extend it for up to one year.
“(The Bill) seek(s) to provide temporary cash-flow relief for these businesses and individuals, who may otherwise have to pay damages or risk having their deposits or assets forfeited,” the Ministry of Law (MinLaw) said in a press release on Wednesday (Apr 1).
The COVID-19 pandemic has caused supply chain disruptions and manpower shortages, the ministry said, undermining the ability of companies and individuals to meet their contractual obligations.
“It would be unfair to hold them strictly liable for their failure to do so,” it added.
“Individuals or companies who are unable to meet their obligations may have to pay damages or forfeit deposits. Otherwise stable businesses may be sued and face lengthy litigation or possible insolvency.”
Companies or people that need to be relieved from their obligations have to inform the other party, which can be as simple as sending a notification that states “I can’t pay my rent due to the COVID-19 situation”, said Senior Minister of State for Law Edwin Tong during a press briefing on Tuesday ahead of the announcement.
Those who wish to dispute the outcome will be able to reach out to the ministry.
READ: Events postponed, restaurants ‘near empty’: F&B industry on the chopping block as COVID-19 measures bite
MinLaw will form eight panels of around 100 assessors made up of professionals including lawyers and accountants who will look into the disputes.
There will be a website set up for people to lodge their disputes. Verdicts will be given within five days.
“The process will be affordable, fast, and simple. Parties will not be allowed to be represented by lawyers, and there will be no costs orders. Assessors’ decisions will be final and not appealable,” the ministry said.
WHO IS COVERED
Under the Bill, non-residential leases cannot be terminated if businesses are unable to pay their rent.
For applicable contracts, contracting parties will also be prohibited from starting court and insolvency proceedings against non-performing parties, or impound business assets.
For example, even though a restaurant was unable to foot their rent in February and March, the landlord cannot evict them, repossess their premises, or sue them.
Specifically for construction companies, they will not be liable for liquidated damages or delays arising from COVID-19.
As for events and tourism-related contracts, venue providers such as hotels are not allowed to forfeit deposits if the cancellation is due to COVID-19, unless an assessor assesses that it is just and reasonable.
Take the example of a couple who decided to postpone a wedding that had been scheduled for March. Under the terms of their deal, their deposit would have been forfeited if they did not hold a wedding within three months.
READ: COVID-19 Budget: Government to announce legal measures involving paid deposits as soon-to-wed couples stuck in limbo
With the new Bill, the couple can apply for relief and the hotel must restore the deposit even if the couple chooses to postpone their wedding beyond June.
The hotel can still get the case assessed. Some of the possible results include being asked to refund the deposit minus any expenses the hotel incurred, or to hold the deposit if the couple decide to conduct the wedding at a later date.
But if the couple chooses to cancel the wedding, the deposit may then be forfeited.
The new Bill will also introduce temporary relief for individuals and businesses in financial distress.
The individual bankruptcy threshold will be increased from S$15,000 to S$60,000, while the limit for company insolvencies will be increased from S$10,000 to S$100,000.
The statutory period to respond to creditors’ demands will be lengthened from 21 days to six months.