Rental Agreements for Commercial Equipment and Commercial Vehicles to be Covered under COVID-19 (Temporary Measures) Act

19 JUN 2020

19 Jun 2020 Posted in Press releases

  1. From 20 June 2020, leases or rental agreements for commercial equipment or commercial vehicles will be covered under the COVID-19 (Temporary Measures) Act ("the Act"). Renters in such agreements who are unable to fulfil their contractual obligations as a result of COVID-19 will be able to obtain temporary relief from stipulated types of legal action. Relief will be applicable for the prescribed period under the Act, i.e. until 19 October 2020. These changes will be implemented by new subsidiary legislation that takes effect on 20 June 2020.
  1. Rental agreements for the following commercial equipment and commercial vehicles will be covered under the Act:

    a. Plant, machinery or fixed asset in Singapore that is used for manufacturing, production, or other business purposes

    b. Commercial vehicles (e.g. goods vehicles, excursion buses, forklifts), excluding taxis and private hire cars1
  1. Like other contracts covered by the Act, these rental agreements for commercial equipment or commercial vehicles must have been entered into before 25 March 2020, with contractual performance (e.g. payment of rental) due on or after 1 February 2020.
  1. We encourage renters who are unable to fulfil their contractual obligations due to COVID-19 to first discuss with the rental company and try to reach a mutual agreement. If this is not possible, the renter may serve a Notification for Relief (NFR) on the rental company. After the NFR is served, the rental company will be prohibited from taking certain legal actions against the renter, including:

    a. Repossessing the commercial equipment or commercial vehicle

    b. Unilaterally imposing new charges, increasing charges or interest rates beyond what is provided for in the agreement, unless certain conditions are met2

    c. Starting or continuing court proceedings or insolvency proceedings
  1. The conditions and framework for how disputes are to be resolved under the Act will apply. If the parties are unable to reach a compromise even after the NFR is served, either party to the rental agreement for commercial equipment or commercial vehicles may make an Application for an Assessor's Determination. The Assessor will consider both parties' arguments, and will seek to achieve an outcome that is just and equitable in the circumstances.
  1. A number of clarificatory amendments to the Act will also come into force on 20 June 2020. These include amendments which clarify that all proceedings before an Assessor are confidential.
  1. Further details on the processes under the Act can be found at http://www.mlaw.gov.sg/covid19-relief.

MINISTRY OF LAW
19 JUNE 2020

1. The Government has worked closely with the industry and relevant associations to provide targeted relief to help taxi and private hire drivers tide over this challenging period. For example, through the Special Relief Fund, eligible active drivers can receive relief of $300 per vehicle per month to defray business costs (details can be found at http://www.go.gov.sg/ppsp2). Drivers may deliver food and groceries using their vehicles, to supplement their income. Drivers may also be eligible for the Self-Employed Person Income Relief Scheme (details can be found at http://www.ntuc.com.sg/sirs) and enhanced support for selected training programmes. ↩

2. These conditions include, amongst others: (a) the increase in charges or interest rate is specified in the contract; or (b) the increase in charges or interest rate is calculated by reference to a formula (e.g. a reference rate) in the contract. Increases other than those set out in the legislation are not allowed without the further agreement of the non-performing party. ↩

Last updated on 19 Jun 2020