New law proposed to protect individuals, firms whose contracts have been affected by Covid-19

SINGAPORE – A new Bill aimed at protecting individuals and companies unable to fulfil their contractual obligations because of the Covid-19 pandemic will be introduced in Parliament next week, the Ministry of Law (MinLaw) said on Wednesday (April 1).

The Covid-19 (Temporary Measures) Bill will, for instance, seek to prevent a hotel or catering firm from forfeiting a deposit when a wedding or business function has been postponed because of the coronavirus outbreak.

The ministry said it intends to have the process of passing the new Law expedited through a Certificate of Urgency signed by the President, which would allow all three readings of the Bill to be taken in one Parliament sitting.

Minister for Home Affairs and Law K. Shanmugam said the Bill was a whole-of-government effort involving agencies such as the Ministry of Finance and the Ministry of Trade and Industry, as well as committee members from the private sector, such as law practice Drew & Napier, DBS and Capitaland.

“The Bill was put together very quickly, in a matter of days, as we saw the situation deteriorating,” he said.

When passed next week, the law will also prevent landlords from terminating commercial leases due to non-payment of rent if this is due to Covid-19, such as a restaurant whose footfall has fallen because of the virus outbreak.

Although rent will continue to accumulate and be payable, they will be due only six months later.

In this way, the law will provide temporary cash-flow relief for both businesses and individuals who may otherwise have to pay damages or risk having their deposits or assets forfeited from failing to meet their contractual obligations, said the ministry.

Explaining the need for the temporary law, the Ministry of Law said the pandemic, and the resulting public health measures imposed by governments around the world, have caused “unprecedented and unforeseeable social and economic impact and led to supply chain disruptions and manpower shortages”.

“In many cases, this has undermined the ability of individuals and businesses to fulfil contractual obligations,” it said.

“It would be unfair to hold them strictly liable for their failure to do so.”

The proposed law will apply retroactively, and cover contractual obligations to be performed on or after Feb 1 this year, which the ministry said was the approximate date when Covid-19 started to significantly impact Singapore.

It will cover contracts entered into or renewed on or before March 24, which is the day the multi-ministry task force set up to deal with the outbreak announced stricter measures to minimise the virus’ spread, such as the closure of entertainment venues, and deferment or cancellation of all events and mass gatherings.

The ministry said the proposed law will not absolve or remove parties’ contractual obligations, but suspend them for a prescribed period, which is six months from when it becomes law.

For instance, it provides that a hotel cannot forfeit a deposit for a wedding dinner if it is postponed to a later date – and must restore the deposit if it was forfeited earlier – but this protection does not apply if the wedding couple cancels the event or switches hotels.

To guard against unfair outcomes, MinLaw said it will employ about 100 assessors to resolve disputes arising from application of measures under the law.

An assessor, who will be a professional such as an accountant or a lawyer, will decide if the inability to perform contractual obligations was due to Covid-19, and will have the power to grant relief that is “just and equitable in the circumstances”.

“Parties will not be allowed to be represented by lawyers, and there will be no costs orders,” said the ministry.

“Assessors’ decisions will be final and not appealable.”

The Minister for Law may also extend the prescribed period of relief for up to six more months, but the law will cease to have effect after one year, said the ministry.


Source: Read Full Article