In Singapore’s commercial and personal landscape, contracts form the backbone of enforceable legal relationships. Whether in employment, tenancy, or service provision, a valid contract outlines the rights and obligations of each party. However, when one party seeks to terminate a contract prematurely, without lawful justification or in breach of the agreed procedure, a termination of contract dispute may arise.
Understanding the legal grounds for termination, the types of contracts, and the remedies available under Singapore law is critical in managing such disputes effectively. This guide provides an overview of key considerations and legal principles, including references to relevant statutory laws and doctrines.
A contract is a legally binding agreement that arises when essential elements such as offer, acceptance, consideration, intention to create legal relations, and certainty of terms are present.
Governed by the Employment Act 1968 (Cap. 91) and common law, these contracts outline terms between employers and employees, including job scope, salary, termination procedures, and notice periods.
Example:
Under Section 13(1) of the Employment Act, if an employee is absent from work for more than two consecutive working days without permission or valid reason, the employer may terminate the contract for misconduct.
Tenancy agreements are regulated under common law and relevant statutory laws such as the Civil Law Act 1909 (Cap. 43). These contracts govern the landlord-tenant relationship, including rent, maintenance, subletting, and termination terms.
Example:
Frequent late rental payments or unauthorised subletting may amount to a repudiatory breach that entitles the landlord to terminate the agreement.
These contracts outline scope, deliverables, and timelines between a client and an independent contractor. They are governed by general principles under the common law.
Example:
A contractor who fails to meet agreed deadlines without justification may be deemed to have breached the contract, allowing the client to terminate and seek remedies.
In Singapore, a contract can only be lawfully terminated under certain legal grounds:
Parties may consensually terminate the contract at any point. This is often facilitated by a termination clause that specifies the procedure and conditions.
When both parties have fully completed their obligations, the contract naturally concludes.
✅ Retain documentation that confirms completion (e.g., invoices, delivery orders, performance reports) to avoid future disputes.
Under the Frustrated Contracts Act (Cap. 115), a contract may be discharged if unforeseen events render its performance impossible, illegal, or radically different from what was originally contemplated.
Examples:
Where a contract is entered into due to a fundamental mistake, misrepresentation (as per the Misrepresentation Act 1967), or fraudulent conduct, it may be voided or rescinded. Such contracts are either void ab initio (from the beginning) or voidable.
If one party breaches a condition or engages in conduct that indicates unwillingness or inability to perform key obligations, the innocent party may terminate the contract and claim damages.
Contracts may include break clauses that permit early termination upon satisfaction of specific conditions, such as notice periods or trigger events.
📜 Ensure such clauses are clearly worded and followed precisely to avoid disputes over their enforceability.
Termination disputes typically arise when there is disagreement over the legal validity, procedure, or fairness of ending a contract. Some of the common scenarios include:
Occurs when a party ends the contract without legal justification or fails to adhere to the procedure outlined in the agreement.
Example: An employer terminates an employee without providing required notice or severance, contrary to the employment contract.
One party alleges breach, while the other denies it or disputes its severity.
Example: A landlord terminates a lease for alleged property damage, but the tenant argues the damage is within normal wear and tear.
Poorly drafted or vague clauses can lead to disputes over when and how termination is allowed.
Example: A service contract allows termination for “unsatisfactory performance” without defining what constitutes such performance.
One party invokes the doctrine of frustration, while the other argues the event was foreseeable or does not meet the legal threshold of frustration.
A party may attempt to terminate early without meeting preconditions or without giving the required notice.
Example: A company invokes a 60-day notice clause but gives only 30 days, potentially invalidating the termination.
Under employment law, an employee may resign due to serious or unreasonable treatment and claim that they were effectively forced out.
Example: Repeated demotions, exclusion from core duties, or a toxic work environment may give rise to a claim of constructive dismissal.
If a contract is terminated unlawfully or without justification, the innocent party may pursue the following remedies:
✔ Damages
Monetary compensation for losses resulting from the breach or wrongful termination. This includes:
✔ Specific Performance
A court order requiring the defaulting party to fulfil their contractual obligations. This is typically available in contracts for land or unique goods.
✔ Restitution
Refund or return of any unjust enrichment, such as deposits, advance payments, or benefits received under a voided contract.
✔ Injunction
A court order preventing the other party from taking further actions that would aggravate the wrongful termination or cause irreparable harm.
Contract disputes often involve complex interpretations of contractual terms, statutory obligations, and procedural rights. Engaging a legal professional ensures that your position is accurately assessed and protected.
A lawyer can:
⚖️ Early legal advice can prevent escalation and reduce legal costs.
If you are facing a contract dispute, whether as an employer, freelancer, landlord, tenant, or business owner, professional legal support can make a critical difference.
At RBN Chambers LLC, we will help you assess your rights, evaluate your options, and take strategic action, whether through negotiation or litigation.
Only if the contract includes a termination clause. Otherwise, termination must be justified under contract law principles such as mutual agreement, breach, or frustration.
Documents such as:
The original signed contract
Written notices or emails
Performance records
Payment invoices
Correspondence showing the timeline of events
Yes—if the contract includes a force majeure clause, or if the event qualifies under the Frustrated Contracts Act by making performance impossible or radically different.
You may claim for:
Loss of income or profits
Costs incurred based on reliance on the contract
Other consequential losses, depending on the foreseeability of those losses
Not necessarily. Many disputes, especially in commercial and cross-border matters, are resolved through mediation, arbitration, or negotiated settlements. The dispute resolution clause in the contract which is agreed between the parties decides how the dispute will resolved.
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