Key Terms of a Contract

Whether you’re signing off on a simple tenancy agreement or a multi-million dollar joint venture agreement, contracts are part and parcel of life and business.

Many disputes and problems can be avoided if you read your contracts properly, with a keen eye for detail and some knowledge of legal terminology. Of course, the best thing to do would be to approach a lawyer to review a contract you are about to enter into. Lawyers are familiar with contract law and have developed a keen understanding of various types of clauses and how to draft them, even challenge them. Lawyers may also negotiate for amendments to terms and conditions in the contract which are not favourable to you.

So, what should you keep an eye out for before you sign on the dotted line? Here are a few suggestions:

Key Terms and Clauses

You should read each and every line of the contract you are about to enter into very carefully. However, some terms are more important for you to scrutinize than others:

  • terms relating to the bargain (what each side is bringing to the table),
  • payment terms,
  • how long the contract is for,
  • indemnity clauses,
  • confidentiality clauses,
  • termination clauses,
  • dispute resolutions clauses, and
  • post-termination obligations.

Termination and Renewal Terms and Clauses

Very often, such terms are very simple to understand. However, such terms are also very often what parties go to court for. It is thus important to look out and plan for termination dates, other important dates, automatic renewal and opt-out or opt-in windows of time so that you are not caught off-guard.

Default Terms

In the ideal scenario, everything goes according to plan. After you sign your contract, you collect your service or money and smile your way to the bank. However, when one party breaches the contract or fails to deliver what he promised, close attention needs to be paid to the whole contract to understand your rights and obligations during default or breach. You might as well do all of this before signing the contract. Doing so would inform you of what you need to prevent, look out for and prepare for in case things go awry during the term of the contract, and would even assist you in securing your rights if you are the non-breaching party.

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Exemption Clauses

Exemption clauses come in 2 forms – exclusion clauses and limitation clauses. Exclusion clauses seek to exclude liability for a party to a contract in case things go wrong, for example, clauses we see daily in car parks and commercial outdoor activity areas – “The management is not liable for any loss, damage or injury to any person or property.” Limitation clauses seek to limit the liability of any breaching party to a maximum dollar amount; for example, “the management shall be liable up to a maximum of $2,000 for any damaged property or loss.”

Even though we sometimes unthinkingly accept such exclusion clauses and limitation clauses, it is good to keep in mind that if challenged, the drafter of such clauses, or the party seeking to rely on such clauses in a dispute, may have to prove that such clauses are reasonable as required by the Unfair Contract Terms Act.

Fine Print

Many contracts include terms printed in small fonts, which are “hidden” at the back of a contract. You should scrutinize these carefully because no matter how small such fine print is and how difficult it is for you to read them, they are part of the contract. Do not hesitate to ask the drafters of such contracts for clearer copies of the contracts or terms in question. And always approach a lawyer when in doubt.


In an ideal world, all contracts should consist of clear and unambiguous terms. However, either due to shoddy drafting or a drafter who is seeking to sneak a term favourable to him into the contract, many contracts include vague terms. Such terms typically allow for several interpretations, allowing either or both parties to the contract to claim that they are not bound by that term or bound in a different way, to the detriment of the other party. A good contract lawyer should be able to redraft such terms to make them clear and unambiguous and should be able to negotiate the inclusion of the newly drafted (clear) terms into the contract for you.

Need Advice ?

Speak to a Lawyer Now

At Lions Chambers LLC, we pride ourselves on being responsive. We understand that some problems need immediate attention, let us assist you.

Blank Spaces

Items left blank can sometimes be filled in by other parties. It is thus always a good idea to cross out all blank spaces. This applies not just to formal contracts but forms you fill in leading up to a contract, for example, insurance intake forms. You absolutely do not want to be taken by surprise and be faced with a term which you are obliged to fulfil due to its inclusion by someone else after the contract has been signed.

Oral Understandings, Email Discussions

Always make sure that everything you agreed upon is captured by the written contract. All verbal agreements, terms discussed and confirmed via stray emails, should be formal written clauses in the contracts you sign off on. This will ensure certainty in the contracts you enter into and avoid the need to prove such terms or clauses should the other party suddenly decide to pull a fast one on you by pretending such terms or clauses did not exist.

Documents Referred To / Incorporated Documents

Many contracts refer to and incorporate other documents into the contract as part of the contract. Very often, for the sake of convenience, parties fail to ask for and read such documents. These documents range from ‘codes of conduct required of vendors/suppliers to simple annexes and schedules. Do not assume you know what such documents contain or that such documents are harmless. Always make sure to ask for such documents and read them carefully before signing on the dotted line.

How can we help you

Contracts or Agreements may be too technical for you to fully understand alone. We understand that figuring out your rights and obligations may be hard. Worry not, at Lions Chambers LLC, and we have experienced lawyers who are well versed in Singapore’s Contract Law. We will be able to guide you through your contract and clarify any issue for you. 

If you are having any concerns on whether you can breach or have potentially breached your contract or agreement, do reach out to us.

Lions Chambers LLC is an established law firm in Singapore. Our team of lawyers specialise in various areas of law and will be able to assist you. Our consultations are free. Please call +65 8777 3677 or click here to WhatsApp us today.