Exclusion Clause in Singapore: Will Your Limitation of Liability Survive the Unfair Contract Terms Act?

Short answer: A Singapore court will usually enforce an exclusion or limitation clause that was properly made part of the contract, is clearly worded, and passes the Unfair Contract Terms Act 1977. Under that Act, liability for death or personal injury caused by negligence can never be excluded, and many other exclusions survive only if they are reasonable.

An exclusion clause is a contract term that removes a party’s liability for a breach or for negligence, and a limitation clause caps that liability, for example at the fees paid in the last 12 months. If you are a business owner relying on an exclusion clause in Singapore, whether in your own terms and conditions or in a supplier’s contract you signed, the question that matters is whether it will hold up if the other side sues. This guide covers the statutory limits, incorporation, how the clause is raised in court, and the records you need to prove it.

Raffles Corporate Services works with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice. This article is general information only and is not legal advice.

What is an exclusion or limitation of liability clause?

It is a term that removes or reduces the liability one party would otherwise have for breach of contract or negligence. Courts treat both types the same way: they must be part of the contract, they must cover what happened, and they must survive any statutory control.

Common examples in Singapore business contracts include:

• a total cap (“our aggregate liability shall not exceed the fees paid in the 12 months before the claim”);
• exclusion of indirect or consequential loss, loss of profit or loss of data;
• a disclaimer of implied terms about the quality or fitness of goods;

Section 13(1) of UCTA makes clear that the Act also catches clauses that achieve the same result indirectly, such as making a claim subject to onerous conditions, restricting remedies or changing the rules of evidence. A written agreement to refer disputes to arbitration is not treated as an exclusion (section 13(2)). Exclusion clauses are different from liquidated damages clauses, which fix the amount payable on breach; we covered those in our guide to liquidated damages in Singapore.

Which exclusion clauses does the Unfair Contract Terms Act control?

UCTA controls exclusions of “business liability”, meaning liability arising from things done in the course of a business (section 1(3)). It bans some exclusions outright and makes others subject to a reasonableness test.

Section 2(3) adds that a person’s awareness of, or agreement to, a negligence exclusion is not of itself proof that they voluntarily accepted the risk.

When is an exclusion clause in Singapore “reasonable”?

A clause is reasonable if it was a fair and reasonable term to include, given the circumstances that were known, or ought reasonably to have been known, to the parties when the contract was made (section 11(1)). The burden of proving this falls on the party relying on the clause (section 11(5)).

The Second Schedule to UCTA lists guidelines. Strictly, they apply to the sale and supply of goods under sections 6 and 7, but they are a useful checklist of what a court is likely to weigh for any clause:

1. the relative bargaining strength of the parties, including whether the customer could have met its needs elsewhere;
2. whether the customer received an inducement, such as a lower price, to accept the term, or could have contracted with someone else without a similar term;
3. whether the customer knew, or ought reasonably to have known, of the term and its extent, considering trade custom and any previous course of dealing;
4. where liability is excluded if a condition is not met (for example a notice deadline), whether compliance was practicable when the contract was made;
5. whether the goods were made, processed or adapted to the customer’s special order.

For caps at a fixed amount, section 11(4) directs the court to consider the resources the party could expect to have to meet the liability and how far it could have covered itself by insurance. A cap pitched far below your insurance cover, or below the realistic loss your customer could suffer, is harder to defend.

Does it matter whether the other party is a consumer or a business?

Yes. A party “deals as consumer” if it does not contract in the course of a business, while the other party does (section 12(1)). Consumers get the strongest protection: several exclusions that might be reasonable against a business are void against a consumer.

Under section 12(3), it is for the party claiming that the other side was not dealing as consumer to prove it. A buyer at an auction or competitive tender is never treated as dealing as consumer (section 12(2)). Business contracts negotiated clause by clause, not on either side’s written standard terms, fall outside section 3, though section 2 still controls negligence exclusions.

Some contracts sit outside sections 2 to 4 altogether under the First Schedule, including insurance contracts, contracts creating or transferring interests in land, intellectual property and securities, and contracts relating to the formation or constitution of a company or the rights of its members. Section 26 also takes certain international contracts for the sale or supply of goods out of the Act, and section 27(1) disapplies sections 2 to 7 where Singapore law governs only because the parties chose it.

Was the clause part of the contract, and does it cover the loss?

Before UCTA is reached, the party relying on the clause must show it was incorporated into the contract and that its words cover what happened. Under general contract law, there are three common routes to incorporation, and each depends on evidence.

• Signature: a party who signs a contractual document is generally bound by its terms, whether or not they were read, unless there was misrepresentation or another vitiating factor.
• Reasonable notice: unsigned terms (website terms, quotation footers, delivery notes) bind only if reasonable steps were taken to bring them to the other party’s attention before or when the contract was made. Unusual or onerous terms may need more prominent notice.
• Course of dealing: terms used consistently across many previous transactions between the same parties may be incorporated even if not repeated each time.

Terms printed on an invoice sent after the sale was agreed usually come too late. For the basics of formation, see our article on the essential elements of a valid contract in Singapore.

On meaning, courts read the clause in context to find what the parties objectively intended. If real ambiguity remains, it is usually resolved against the party relying on it (the contra proferentem rule). In practice, clear words are needed to exclude liability for negligence or for a serious breach. A cap on “liability under this agreement” may be argued not to cover claims in negligence or misrepresentation. Indemnities need separate care; see our explainer on indemnities.

How is an exclusion clause raised in a court dispute?

The clause is usually raised as a defence once the other side sues for damages. Court proceedings are conducted by a Singapore Advocate and Solicitor, who pleads the clause and argues incorporation, interpretation and reasonableness.

1. Letter of demand: the claimant sets out its loss and demands payment. A reply citing the clause, with a copy of the signed contract, can end the matter early. See our guide to the letter of demand in Singapore.
2. Offer of amicable resolution: Order 5 Rule 1 of the Rules of Court 2021 requires parties to consider amicable resolution and, unless there are reasonable grounds not to, to make an offer of amicable resolution before starting an action.
3. Originating claim: the claimant files and serves its claim and statement of claim.
4. Notice of intention to contest: a defendant served in Singapore must file this within 14 days after service of the statement of claim (Order 6 Rule 6(1)).
5. Defence: filed within 21 days after service of the statement of claim (Order 6 Rule 7(1)), pleading the clause, how it was incorporated, and why it covers the claim.
6. Early applications: a party may apply to strike out a pleading that discloses no reasonable defence (Order 9 Rule 16) or for summary judgment (Order 9 Rule 17).
7. Trial or settlement: the claimant typically argues the clause was not incorporated, does not cover the loss, or is unreasonable, and witnesses give evidence on how the contract was made.

Smaller disputes over goods or services may go to the Small Claims Tribunals, which hear claims up to S$30,000 under their own conditions (see our guide to the Small Claims Tribunal for companies). The Singapore Courts civil claims guide sets out the court process.

Documents a court will want to see

What does a dispute over an exclusion clause cost, and how long does it take?

Costs depend on whether the matter settles after correspondence or runs to trial, and on how much factual evidence is needed on incorporation and reasonableness. We do not quote legal fees; your solicitor will estimate them for your matter.

Assumptions: a claim in a Singapore court between parties served in Singapore, governed by the Rules of Court 2021. Deadlines differ for parties served outside Singapore. Court fees vary by claim value and stage; check the Singapore Courts fee schedules before filing.

What does the company secretary prepare and what does the solicitor do?

The company secretary or corporate service provider (CSP) keeps the corporate records that prove who signed what and when; a solicitor advises on the clause and runs any court case.

A court judgment on a contract claim does not itself require an ACRA lodgement; the board should minute the outcome, and the accountant should consider whether the financial statements need a provision or disclosure. If you need a lawyer, you can speak to a lawyer through our sister site, and our company secretarial service keeps the contract records in order.

Common mistakes and a drafting checklist

Most exclusion clauses fail because the business cannot prove which terms applied, or the clause tries to exclude too much.

• Trying to exclude liability for death or personal injury caused by negligence. Section 2(1) makes this void; carve it out expressly.
• Excluding “all liability whatsoever”. A clause that leaves the customer with no remedy is harder to justify as reasonable than a cap.
• Setting a cap with no link to the contract value or your insurance cover (section 11(4)).
• Sending terms after the deal is done, such as on the invoice or delivery note.
• Not keeping old versions of website terms, so you cannot show what the customer accepted.
• Using an overseas governing law clause to avoid UCTA in a consumer contract; section 27(2) can override it.

Drafting checklist: carve out death and personal injury, cover negligence in clear words if intended, set a cap you can explain, and show the terms before acceptance. Our free tools page has other practical checklists for Singapore companies, and the full text of the Act is on Singapore Statutes Online.

Frequently asked questions

Can my company exclude all liability in its terms and conditions?

No. Liability for death or personal injury caused by negligence can never be excluded (UCTA, section 2(1)), and most other exclusions in standard terms or consumer contracts must pass the reasonableness test. A targeted cap is more likely to be upheld than a blanket exclusion.

Is a limitation of liability clause treated differently from an exclusion clause?

UCTA treats both as excluding or restricting liability, so the same rules apply. For a cap at a specified sum, section 11(4) adds two factors: the resources available to meet the liability and whether insurance was available.

Does UCTA apply to contracts between two companies?

Yes, for business liability. Section 2 controls negligence exclusions in all such contracts, and section 3 applies where one company contracts on the other’s written standard terms of business. Some contract types, such as insurance and land contracts, fall outside sections 2 to 4.

Who has to prove the clause is reasonable?

The party relying on the clause. Section 11(5) places the burden on whoever claims that the term satisfies the reasonableness requirement, so keep evidence of negotiations, pricing options and insurance.

Last reviewed: 20 October 2026. The Editorial Team, Raffles Corporate Services.