MinLaw further extends relief periods for specified contracts under Covid-19 (Temporary Measures) Act 2020

25 November 2020

The Ministry of Law (“MinLaw”) has further extended the relief periods for certain contracts under Part 2 of the Covid-19 (Temporary Measures) Act 2020 (“Act”), which allows parties in prescribed categories of contracts to obtain temporary relief from certain legal and enforcement actions if their inability to perform their contractual obligations is due to Covid-19.

MinLaw had announced on 12 October 2020 that the relief periods under Part 2 of the Act would be extended to 19 November 2020 or later. On 16 November 2020, MinLaw announced a further extension of the relief periods for the following categories of contracts:

MinLaw stated that this further extension would ensure that businesses continue to obtain temporary relief from legal and enforcement actions until the implementation of the recently announced Re-Align Framework (“Framework”) and the relief for delay in the delivery of possession of property under Part 8C of the Act. The extension of the relief periods was implemented by way of the Covid-19 (Temporary Measures) (Extension of Prescribed Period) (No. 2) Order 2020.

The relief periods for other categories of contracts under Part 2 of the Act remain unchanged. These are as follows:

Extension of relief periods for hire-purchase and rental agreements for commercial equipment or commercial vehicles

The Framework allows eligible hirers or renters of commercial equipment or commercial vehicles to take up a repayment scheme to pay outstanding arrears in instalments. To be eligible, the agreement must still be in force and the hirer or renter must serve notice on all parties to the contract within six weeks of the Framework coming into force.

The extension of the relief periods for these contracts to 31 January 2021 will provide relief from termination or legal and enforcement actions on these contracts before the commencement of the Framework. This will give hirers and renters, who have served or need to serve a notification for relief under the Act, the opportunity to take up the repayment scheme.

For hire-purchase agreements, only agreements that are not entered into with banks or finance companies regulated by MAS are covered by the extension of the relief period to 31 January 2021. The relief period for agreements with entities regulated by MAS expired on 19 November 2020.

Extension of relief periods for options to purchase and sale and purchase agreements

The Ministry of National Development announced on 3 November 2020 additional relief measures under the Act to support stakeholders in the built environment sector affected by disruptions to construction timelines resulting from the Covid-19 pandemic. These include the relief for delay in the delivery of possession in agreements for the sale and purchase of residential, commercial and industrial properties under Part 8C of the Act.

The extension of the relief periods under Part 2 of the Act for options to purchase and sale and purchase agreements between developers and purchasers for residential, commercial and industrial properties to 31 March 2021 will assist purchasers of such properties who require more time to make their payments, particularly those who pay developers directly without taking a bank loan, with minimal impact to developers’ cash flow. It will also allow developers and purchasers to seek temporary protection from being sued during the relief period, if they are unable to perform any contractual obligations due to Covid-19.

MinLaw will announce further details on Part 8C of the Act and when it will be brought into force in due course.

No further extension of relief periods for other contracts

The relief periods for other contracts under the Act remain unchanged. In particular, the relief periods for secured loans to SMEs and leases and licences of non-residential property ended on 19 November 2020. Parties to such contracts may now commence or resume legal and enforcement action, as provided for in their contracts and in general law, even if they were served a notification for relief before that date. Parties can no longer serve notifications for relief or applications for an assessor’s determination.

Tenants of non-residential properties who are eligible under the Framework will still be able to use the Framework when it comes into effect, even if their lease or licence of non-residential property is terminated after the expiry of the relief period on 19 November 2020. This is because the Framework provides for eligible parties to seek adjustment of obligations for contracts terminated on or after 2 November 2020.

Reference materials

The following are available from the MinLaw website www.mlaw.gov.sg and Singapore Statutes Online website sso.agc.gov.sg:

• MinLaw press release
• Annex - Summary of the relief periods
• Covid-19 (Temporary Measures) (Extension of Prescribed Period) (No. 2) Order 2020

Further information

Allen & Gledhill has a Covid-19 Resource Centre on our website www.allenandgledhill.com that contains knowhow and materials on legal and regulatory aspects of the Covid-19 crisis.

In addition, we have a cross-disciplinary Covid-19 Legal Task Force consisting of Partners across various practice areas to provide rapid assistance. Should you have any queries, please do not hesitate to get in touch with us at covid19taskforce@allenandgledhill.com.