The size of claims that people can take to the Small Claims Tribunals has been doubled from the current default limit of $10,000 to $20,000, and can be raised further to $30,000 if the parties involved agree.
The duration for making a claim will be extended as well, from one to two years.
People can also take their hire-purchase claims to the tribunals.
These key measures are set out in the Small Claims Tribunals (Amendment) Bill, which was passed in Parliament yesterday. They are the first changes to the law since 2005.
In presenting the Bill for debate, Senior Minister of State for Law Edwin Tong said the increase in claim limit is in line with countries such as Britain, Australia and Canada, and "will allow more parties to resolve their claims before the tribunals at less cost".
Mr Tong also said the two-year period will give people more time to negotiate and settle their disputes amicably while ensuring they have enough time to file their claim.
In reviewing the need for improvements and amendments to the law with stakeholders over the years, his ministry sought to strike a balance between improving access to justice while ensuring the tribunals "stay true to the purpose of providing effective and swift redress for small claims", he added.
The tribunals, set up in 1985, hear cases on contracts for the sale of goods or the provision of services, claims in tort for damage caused to property as well as certain tenancy disputes.
The legislation will make it easier for court users to determine if their claim is within the scope of the Act and clarifies how the value of a claim should be calculated.
It also empowers the tribunals in several ways. For instance, a registrar or tribunal can order parties to attend mandatory mediation at any stage of the proceedings.
Tribunals will get an expanded scope to order costs against parties; order a tenant to deliver vacant possession of rented premises for not paying rent; and dismiss a claim if the person making the claim is absent without reasonable excuse.
Tribunals will also be required to identify the central issues of a case and guide parties to cite relevant evidence during the adjudication stage with the intention of helping them focus on key issues to save time and costs.
When the new law takes effect, "outsiders" such as mediators, industry experts and law students from the University Court Friends scheme, who may be helping the parties on a pro bono basis, can help and observe the usually private proceedings.
The final change is to allow the District Court to remit a matter to the tribunal for reconsideration or order a re-hearing by a different tribunal under certain limited circumstances.
MPs welcomed the new measures, saying they are timely. The higher claim limit acknowledges the rising cost of living and inflation, they noted. Ms Joan Pereira (Tanjong Pagar GRC), however, wanted an even higher default limit of $50,000 in the absence of mutual consent, to take into account the cost of high-value purchases such as home renovations, interior design packages and high-end sound systems.
MPs also urged the Law Ministry to consider a wider range of consumer claims to reflect the digital economy and new buying behaviours. For instance, Mr Lim Biow Chuan (Mountbatten), president of the Consumers Association of Singapore, said the law should take into account claims against errant online retailers and service providers like bike-sharing company oBike.
Mr Tong replied that his ministry will monitor closely the new developments to see if they are suitable for inclusion in the tribunals' coverage at a later stage.
The Law Ministry would study the suggestion from Mr Louis Ng (Nee Soon GRC) that the ministry carves out a separate enforcement process for low-value claims, he added.
The tribunals handled an average of more than 10,000 cases annually from 2015 to last year.