Construction contracts or supply contracts, or any performance bond granted thereto
Important Note: As announced by MND on 29 September 2021, the prescribed period for construction or supply contracts has been extended to 31 December 2021. The construction sector continues to face significant delays due to manpower shortages. The extension of the prescribed period provides contractors with continued support as they adjust to new operating requirements, and also complement the Ministry of National Development’s and Building and Construction Authority’s relief measures for the sector. Please refer to this press release for more information.
- For more information about the relief under the Act for construction and supply contracts, please refer to the FAQs on BCA’s website.
1. What types of construction or supply contracts are covered by the Act?
- Construction and supply contracts within the meaning of section 2 of the Building and Construction Industry Security of Payment Act (Cap. 30B)(“BCISOPA”) are covered. For the avoidance of doubt, the Act covers contracts which are excluded from the application of the BSCISOPA pursuant to section 4 of the BCISOPA (e.g. renovation contracts for private residential property), except contracts to the extent that a party carries out construction work or supply goods or services as an employee (within the meaning of the Employment Act (Cap. 91)).
2. I am a party to a construction or supply contract. What reliefs under the Act are applicable to me?
First, if you are unable to perform your obligations due to COVID-19, the other party to the contract cannot commence or continue court proceedings or insolvency proceedings against you during the prescribed period (i.e. up to 31 December 2021). For the avoidance of doubt, adjudication proceedings under the BCISOPA will remain available to the relevant parties during the prescribed period.
Second, if you are a contractor who is unable to supply goods or services due to Covid-19, the Act gives you a defence against any claims for breach of contract or damages (e.g. liquidated damages) due to that inability to perform the obligation.
- This defence is available to you only after you have served the Notification for Relief during the prescribed period. It may be raised separately in dispute resolution proceedings – in adjudication (under the BCISOPA), arbitration or court proceedings between the relevant parties, separate from the regime under the COVID-19 Act.
For the avoidance of doubt, under the Act, the Assessor’s determination is limited to (a) whether the party to the construction or supply contract is unable to perform an obligation; and (b) whether the inability is to a material extent caused by COVID-19. The Assessor would not assess or determine the extent of delay that is attributable to COVID-19, and the amount of liquidated damages or damages payable.
- In addition, under the Act, if you are unable to perform your contractual obligations due to COVID-19, the other party is also prohibited from calling on a performance bond in relation to that inability earlier than 7 days before the expiry of the performance bond, for the prescribed period (i.e. up till 31 December 2021).
3. What must I do to enjoy the reliefs?
The reliefs under the Act do not take effect automatically.
To qualify for the relief, you need to first serve a Notification for Relief on the other party to the contract, using the form at this link (SingPass) or this link (CorpPass).
Once the Notification for Relief has been served on the other party to the contract, the reliefs in FAQ (2) will apply.
4. I am unable to perform my contract due to COVID-19, and have served a Notification for Relief on my counterparty. Can my counterparty still call on my performance bond?
If you are unable to perform your contractual obligation under the construction contract due to Covid-19, you may serve a Notification for Relief on the other party to the contract and the issues of the the performance bond.
Once you have served the Notification for Relief, the other party to the contract may not make a call on the performance bond in respect of the inability described in the Notification for Relief at any time earlier than:
- The above will cease to apply on the earliest of the following events:
Upon the expiry of the prescribed period (i.e., after 31 December 2021)
The withdrawal of your Notification for Relief
If either party has made an Application for an Assessor’s Determination, the making of the Assessor’s Determination that you do not meet the requirements under the Act.
Additionally, section 6(3) allows you to make an application to extend the term of the bond to the issuer of the bond. This must be done not less than 7 days before the expiry of the bond. A notice of the application (to extend the term of the bond) must also be served on the other parties to the construction contract at the same time.
- Once you have done the above, section 6(3) of the Act provides that the term of the bond will be extended under the Act to a date 7 days after the end of the prescribed period (i.e., extended to 7 October 2021) or such other date agreed between you, the other parties to the construction contract, and the issuer of the bond.