Proposed law will help small businesses end certain contracts
Move made to help smaller players hit by pandemic, but businesses will still be liable for outstanding debts
With the business landscape completely altered by the Covid-19 pandemic, badly hit smaller players are being offered a chance to terminate certain unviable contracts as painlessly as possible.
These small and micro enterprises will be able to renegotiate certain types of commercial contracts with their business partners, in line with the current economic conditions, under a proposed law introduced in Parliament yesterday.
If an agreement cannot be reached, the proposed framework will allow for the contract to be terminated without any penalties. The businesses will still be liable for any outstanding debts and obligations.
The sanctity of contracts remains an important feature of Singapore's attractiveness as an international commercial centre and a fundamental pillar of legal policy, said the Ministry of Law in a statement yesterday.
"The Government therefore does not intervene in contracts lightly.
"When it is necessary to do so, under exceptional circumstances, and for the greater public good, this will be done in a targeted, conservative manner," it added.
The wide-ranging impact that the pandemic has had on the business environment prompted the intervention.
CHANGE
"The fundamental assumptions upon which businesses entered into their contracts may have changed significantly and no longer be valid in a new Covid-19 normal," the ministry said.
This prompted the framework, which was part of the latest set of amendments to the Covid-19 (Temporary Measures) Act, to be tabled in Parliament on an urgent basis, said Second Minister for Law Edwin Tong during a media briefing yesterday. It will be debated today.
The proposed laws will allow small businesses to adapt for the long term, or exit. Only commercial contracts, including those with the Government, would be covered by the framework, said Mr Tong.
The businesses involved must be small - below a specified annual revenue - and have been badly hit by Covid-19. The contracts should have been entered into before March 25, before the impact of Covid-19.
The contracts the framework will cover include commercial property leases, sale and purchase of goods and services, and rental or hire-purchase deals for commercial equipment and vehicles, among others. It does not cover consumer, employment and insurance contracts.
FOR MORE PARLIAMENT REPORTS, READ THE STRAITS TIMES
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