Small and micro businesses significantly affected by the Covid-19 pandemic will be able to renegotiate certain types of contracts with their counterparties from Jan 15 next year, the Ministry of Law (MinLaw) said yesterday.

They will have a six-week period to enter into renegotiations by serving notice of negotiation to the other party under the Re-Align Framework. The last day to do so will be Feb 26 next year.

The framework was passed urgently in Parliament last month to help smaller businesses cope with the fallout from the pandemic.

If negotiations are unsuccessful and the parties cannot come to an agreement, the contract will be terminated early without penalty.

A business is eligible for the Re-Align Framework if its annual revenue for financial year 2019 does not exceed $30 million on a global group basis. It must also have experienced at least a 70 per cent fall in monthly average gross income for July to this month, compared with the same period last year.

Only certain commercial contracts apply under the framework. These include leases or licences for commercial property, and hire-purchase and conditional sales agreements for equipment or vehicles.

The contract must be governed by Singapore law, and it must have been entered into before March 25, with at least one party that has a place of business in Singapore.

The framework does not apply to contracts terminated before Nov 2.

A business that wants to invoke the framework will have to serve a notice of negotiation on the other party or parties using designated forms from MinLaw during the specified timeframe, and include supporting documents such as financial statements to prove its eligibility under the framework.

In the four weeks after the date of the notice of negotiation, the business and the other contractual party must renegotiate the terms of the contract.

They are encouraged to make full use of the four weeks to try to reach a compromise, said MinLaw.

To avoid parallel proceedings on the same matter while negotiations are in progress, the other party cannot, during the four weeks, take legal or enforcement actions against the business for not performing its contractual obligations.

If the two sides cannot come to an agreement on new terms, the contractual party may lodge an objection within two weeks after the negotiation period ends.

An assessor appointed by MinLaw will then decide whether the business is eligible for the framework, as well as the parties' obligations upon terminating the contract.

If none of the parties lodges and serves a notice of objection by the end of the two-week objection period, the contract will be deemed terminated after two days.

Small landlords will receive compensation at an amount decided by an assessor if their tenants terminate their leases early under the Re-Align Framework.

To qualify, the landlord must be an individual, a sole proprietor or a holding company of individuals or sole proprietors, and have a monthly average rental income of more than half of the landlord's total monthly average income.

The annual individual income must also not exceed $107,500.

Hirers and renters of commercial equipment or vehicles whose revenues have fallen by 70 per cent or more and are struggling to meet regular payments can opt for a repayment scheme - an instalment plan that will allow them to pay their accrued arrears within 18 months.

• More information on the Re-Align Framework and the application process can be found at www.go.gov.sg/re-align