Rental agreements for commercial equipment and commercial vehicles covered under Covid-19 (Temporary Measures) Act 2020 from 20 June 2020

23 June 2020

With effect from 20 June 2020, leases or rental agreements for commercial equipment or commercial vehicles are now covered under the Covid-19 (Temporary Measures) Act 2020 (“Act”). Renters in such agreements who are unable to fulfil their contractual obligations due to 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 were implemented by the Covid-19 (Temporary Measures) Act 2020 (Amendment of Schedule) (No. 3) Order 2020.

A number of clarificatory changes to the Act made by the Covid-19 (Temporary Measures) (Amendment) Act 2020 also entered into force on 20 June 2020.

Rental agreements for commercial equipment and commercial vehicles

The Act provides temporary relief from legal action in respect of specific classes of contracts, including certain hire-purchase agreements and construction or supply contracts. With the latest amendments, rental agreements for the following commercial equipment and commercial vehicles are now covered under the Act:

• Plant, machinery or fixed assets in Singapore used for manufacturing, production or other business purposes.
• Commercial vehicles (e.g. goods vehicles, excursion buses and forklifts), excluding taxis and private hire cars.

Like other contracts covered by the Act, these rental agreements must have been entered into before 25 March 2020, with contractual performance (e.g. payment of rental) due on or after 1 February 2020.

MinLaw encourages renters who are unable to fulfil their contractual obligations due to Covid-19 to first hold discussions with the rental company and try to reach a mutual agreement. If they are unable to do so, 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. These include the following:

• Repossessing the commercial equipment or commercial vehicle.
• Unilaterally imposing new charges, increasing charges or interest rates beyond what is provided for in the agreement, unless certain conditions are met.
• Starting or continuing court proceedings or insolvency proceedings.

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.

Clarificatory amendments

A number of clarificatory amendments to the Act also came into force on 20 June 2020. These amendments were made by the Covid-19 (Temporary Measures) (Amendment) Act 2020 and include the following:

• Clarifying that information and matters disclosed in the course of proceedings before an Assessor are to be kept confidential.
• Setting out certain further determinations that an Assessor may make, e.g. discharging certain contracts and releasing and discharging parties from their obligations, requiring an amount of deposit to be offset against money owed under the contract, and requiring a party to pay reasonable costs incurred by another in performing the contract.
• Enabling an assessor to make subsequent determinations after an initial determination has been made.

Reference materials

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

• MinLaw press release: Rental agreements for commercial equipment and commercial vehicles to be covered under Covid-19 (Temporary Measures) Act
  
• Covid-19 (Temporary Measures) Act 2020 (Amendment of Schedule) (No. 3) Order 2020
  
• Covid-19 (Temporary Measures) (Amendment) Act 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.