{"id":122232,"date":"2021-09-27T05:12:17","date_gmt":"2021-09-26T22:12:17","guid":{"rendered":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/lawsuits-brewing-for-contractors-as-covid-19-legal-relief-ends\/"},"modified":"2021-09-27T14:02:43","modified_gmt":"2021-09-27T07:02:43","slug":"lawsuits-brewing-for-contractors-as-covid-19-legal-relief-ends","status":"publish","type":"post","link":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/lawsuits-brewing-for-contractors-as-covid-19-legal-relief-ends\/","title":{"rendered":"Lawsuits brewing for contractors as COVID-19 legal relief ends"},"content":{"rendered":"


\nOn 30 September 2021, the relief period under the Covid-19 (Temporary Measures) Act will end, which may lead to many SMEs facing financial distress and affecting the sector at large.
\nContractors in Singapore may face contractual disputes next month as the temporary relief provided under the Covid-19 (Temporary Measures) Act is set to end on 30 September, reported The Straits Times (ST).
\nThe Act, among others, provided relief should contractors be unable to perform their obligations under contracts entered into before 25 March 2020 due to the pandemic.
\nIt also placed a temporary pause on the calling of performance bonds, which is a type of security generally used in building and construction contracts. These bonds are issued by a bank or insurance company to a developer to guarantee the project\u2019s timely completion by a contractor.
\n\u201cThese performance bonds typically secure up to the value of the project, so a call on the bonds will typically be financially deleterious for the contractors and sub-contractors,\u201d said lawyer Keith Han, Partner and Co-head of the Restructuring and Insolvency Practice at Oon & Bazul, as quoted by ST.
\nHan expects claims and legal proceedings brought by, as well as against, construction firms to significantly increase if the relief period is not extended. He also sees more calls on performance bonds.
\nLawyer Daniel Tay, Partner at Chan Neo, expects more developers and contractors to file claims against each other in the event disputes are not resolved privately.
\n\u201cI would not call it a \u2018legal tsunami\u2019, but there are already signs that some litigation is coming with contractors preparing for contract disputes when reliefs end,\u201d he said as quoted by ST.
\n\u201cPayments may perhaps already have been held back (by developers) from contractors in anticipation of such disputes. The same applies to a main contractor and its downstream sub-contractors,\u201d he added.
\nThe deluge of contractual disputes may see many small and medium-sized enterprises (SMEs) facing financial distress.
\nThis may affect major construction projects as well as the construction sector at large, with the extent of the impact depending on the degree of forbearance extended by creditors like financial institutions and banks.
\n\u201cAt the very least, though, we may see some delays in projects caused by key sub-contractors going bust,\u201d said Han.
\nThe COVID-19 pandemic has significantly affected the construction industry, with many firms struggling with reduced cash flow, acute manpower shortages and increasing construction costs, which include rising salaries of workers, foreign workers levies and building material prices.
\nSalaries of workers, for instance, has increased by 10% to 50% as firms compete with a shrinking pool of manpower, while the foreign worker levy increased from $90 per month before May to $250 for the period between May and end-December.
\nPrices for key building materials like copper, steel and aluminium have also increased since March 2020, with steel prices surging by almost 40% per tonne.
\nMeanwhile, Minister in the Prime Minister\u2019s Office Indranee Rajah described the Act as a temporary legislative measure aimed at addressing an immediate problem. As such, future contracts should address uncertainties within risk allocation arising from pandemic events, she said.
\nIndranee, who also serves as Second Minister for Finance and National Development, revealed that a workgroup that is being led by the Building and Construction Authority (BCA) has been looking into the standard construction and consultancy procurement contract provisions and would be announcing recommendations as well as new contracting practices for public sector construction tenders.
\nLooking for a property in Singapore? Visit PropertyGuru\u2019s\u00a0Listings,\u00a0Project Reviews\u00a0and\u00a0Guides.
\nCheryl Chiew, Digital Content Specialist at PropertyGuru, edited this story. To contact her about this story, email:\u00a0cheryl@propertyguru.com.sg.\u00a0
\n
\nSource : proppertyguru.com.sg\/Property Market
\nRead more…Lawsuits brewing for contractors as COVID-19 legal relief ends<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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