Five Common Mistakes in Commercial Contracts

A commercial contract should clearly allocate rights, obligations, and risk between the parties. When it fails to do that — because it is poorly drafted, copied from a template without adaptation, or rushed through without legal review — it becomes a liability rather than a protection.

1. Vague Scope of Work or Deliverables

The most common source of contract disputes is ambiguity about what was actually agreed. What exactly is the service provider obligated to deliver? By when? To what standard? Contracts that use loose language like "reasonable efforts" or "as agreed" without further specification are invitations to dispute. Be specific and concrete about deliverables, timescales, and quality standards.

2. No Payment Terms or Unclear Invoicing Provisions

When is payment due? From the date of the invoice? From the date the invoice is received? From the date the goods are delivered? In what currency? What is the interest rate on late payments? These details matter, and leaving them vague or absent creates leverage for the other party to delay payment.

3. Missing or Inadequate Limitation of Liability Clauses

Without a limitation of liability clause, your exposure in the event of a breach or failure could be unlimited — including consequential losses that far exceed the value of the contract. South African courts will enforce properly drafted limitation clauses. Make sure they are in your standard agreements.

4. Inadequate Termination and Exit Provisions

How does either party exit the contract if things go wrong? What constitutes a material breach that entitles termination? Is there a cure period? What are the consequences of termination — do obligations survive? Contracts that are silent on termination can trap parties in relationships that are no longer working.

5. Incorrect Governing Law and Dispute Resolution

For South African businesses contracting with foreign parties, specifying governing law and the forum for disputes is critical. But even in domestic contracts, specifying whether disputes go to mediation, arbitration, or court — and in which jurisdiction — avoids arguments about process later. Contact us to review your standard contracts and close the gaps before a dispute arises.