Out-Law News | 11 Nov 2020 | 10:08 am | 1 min. read
Businesses in Singapore that suffered serious disruption because of Covid-19 will be able to renegotiate or terminate some contract types under a new framework.
The proposed Re-Align Framework was introduced in parliament last week and covers smaller and micro businesses that have experienced a significant decline in revenue due to Covid-19.
The framework will only apply for a Singapore law governed contract signed before 25 March 2020 which has at least one party with a place of business in Singapore.
These contracts may be leases or licences for non-residential immovable property; hire purchase and conditional sales agreements for commercial equipment or commercial vehicles; rental agreements for commercial equipment or commercial vehicles; the sale and purchase of goods and service.
Certain contracts will be excluded from the framework such as consumer, employment, insurance and financial service contracts.
If the proposed framework is passed in parliament, it will take effect for only a limited period of six weeks to allow businesses to assess whether they wish to renegotiate their contracts, according to a report. They will have to serve notice on their counterparties when they decide to renegotiate contracts – they will have four weeks to renegotiate the terms. If disagreement arise, they can refer to a panel of assessors to resolve the dispute.
Smaller property owners might have financial problems if the contracts are terminated in advance. In this case, according to the proposed framework, the tenant will have to pay to an eligible small property owner additional compensation for early termination of the lease or licence agreement that is to be determined by an assessor.
Alternatively, under the proposed framework there will be an option for eligible hirers and renters of commercial equipment and vehicles to take up a repayment scheme to pay outstanding arrears in instalments.
The Covid-19 (Temporary Measures) Act was first passed in April. It was amended two months later to require property owners to waive rent for eligible small and medium-sized business tenants who have suffered harsh disruption by Covid-19. The Act was amended for the second time in September.