Breach of Contract Damages in Singapore: What Your Company Can Claim When a Supplier or Customer Defaults

Short answer: When a supplier, customer or partner breaks a contract, a Singapore company can usually claim the money needed to put it where it would have been had the contract been performed. The loss must have been caused by the breach, must not be too remote, must be proved with evidence, and must be reduced by reasonable steps to mitigate it.

Breach of contract damages in Singapore are compensation, not punishment. The court asks what the breach cost your company, measured against the position you would have been in if the other side had kept its promise. This guide covers how loss is measured, which losses the law cuts off, when you can terminate, time limits, how a claim starts under the Rules of Court 2021, and what your accounts team should prepare.

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 are breach of contract damages in Singapore, and what is the legal basis?

Breach of contract damages in Singapore are a sum of money the court orders the defaulting party to pay so that the innocent party is compensated for its loss. The rules come mainly from case law (the common law of contract), with statute governing time limits, interest and court procedure.

A breach happens when a party fails to perform a term without lawful excuse: late delivery, defective goods, non-payment or walking away from a supply deal. Whether the contract was validly formed in the first place is a separate question; it depends on the essential elements of offer, acceptance, consideration and intention to create legal relations.

A claim will rely on the contract itself, Court of Appeal decisions on remoteness and termination, the Limitation Act 1959, section 12 of the Civil Law Act 1909 and the Rules of Court 2021. For goods disputes, see also our article on rejecting defective goods from a supplier.

Expectation loss or reliance loss: which should your company claim?

Most companies claim expectation loss, which is the benefit they expected from the contract, such as the profit on a resale. Where that profit is too uncertain to prove, a company can instead claim reliance loss, which is the money it spent relying on the contract and has now wasted.

Expectation loss compares where your company is now with where it would have been had the contract been performed. Typical items include the extra cost of buying replacement goods from another supplier at a higher price, lost profit on onward sales, and the cost of fixing defective work.

Reliance loss covers wasted expenditure: set-up costs, or marketing spend for a launch that never happened. It is useful where a venture was new and has no trading history to prove what it would have earned. A company generally cannot recover both measures for the same loss, because that would compensate it twice.

Which losses are too remote to recover?

A loss is recoverable only if it falls within one of the two limbs of Hadley v Baxendale: loss arising naturally from the breach in the usual course of things, or loss that both parties reasonably contemplated when they made the contract because of special facts known to both. Singapore’s Court of Appeal reaffirmed this test in Robertson Quay Investment Pte Ltd v Steen Consultants Pte Ltd [2008] 2 SLR(R) 623.

In practice:

• First limb (ordinary loss): if a supplier fails to deliver stock, the extra cost of buying the same stock elsewhere is ordinary loss that any supplier would expect.
• Second limb (special loss): if your company would lose an unusually lucrative contract with a third party because of the delay, that loss is recoverable only if the supplier knew of the special circumstances when the contract was made.

If a contract is critical to your business, say so in writing before signing, for example in the purchase order or tender documents. That record often decides whether a large consequential loss is recoverable.

What is the duty to mitigate, how do you prove lost profits, and can you add interest?

The innocent party cannot recover loss it could have avoided by taking reasonable steps after the breach, and it must prove every head of loss with evidence. Damages that are unproven or that the company let grow will be reduced or refused.

Mitigation means acting as a prudent business would. If a supplier fails to deliver, you are expected to look for a replacement supplier at a reasonable price, not to let your production line sit idle for months and claim the whole shutdown. Reasonable mitigation costs, such as urgent courier charges, are themselves claimable.

On proof, the Court of Appeal in Robertson Quay described the process of proving damage as intensely factual and said a claimant must put before the court the most cogent evidence of loss available in the circumstances. Lost-profit claims fail most often on evidence, not on law. The court will want to see:

• historical sales and margin data for the product or customer concerned;
• the contracts, orders or quotations that were lost, and correspondence showing they were lost because of the breach;
• management accounts showing the effect on revenue and costs; and
• where the claim is large or complex, a report from an independent expert, which under Order 12 of the Rules of Court 2021 is subject to the court’s directions on issues and agreed facts.

On interest: if the contract provides for interest on late payment, that rate usually applies as of right. If it does not, the court has a discretion under section 12 of the Civil Law Act 1909 to add interest on the damages for all or part of the period from when the cause of action arose to the date of judgment.

Section 12 does not allow interest on interest, and does not apply where interest is already payable as of right, for example under a contractual late-payment clause. A clear late-payment rate in your standard terms avoids that argument.

Should you terminate the contract or affirm it?

A breach does not automatically end a contract. The innocent party chooses either to terminate (accept the breach as ending future performance and claim damages) or to affirm (keep the contract alive, insist on performance and claim damages for the breach). Terminating without a legal right to do so can itself be a repudiatory breach, turning your company into the defendant.

The Court of Appeal in RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd [2007] 4 SLR(R) 413 set out the situations in which the innocent party may terminate:

1. Situation 1: the contract clearly and unambiguously states that, if a certain event occurs, the innocent party may terminate.
2. Situation 2: the other party renounces the contract, clearly conveying by words or conduct that it will not perform.
3. Situation 3(a): the term breached is a condition, meaning the parties intended that any breach of it, whatever the actual consequences, would entitle termination. Less important terms are called warranties and give only a right to damages.
4. Situation 3(b): the breach of an intermediate or innominate term (a term that is neither clearly a condition nor a warranty) deprives the innocent party of substantially the whole benefit it was intended to obtain from the contract.

Before terminating, follow any notice and cure procedure in the contract exactly, record the decision in writing, and keep evidence of the breach. Conduct consistent with continuing the contract, such as accepting late deliveries without protest, can be treated as affirmation.

Do exclusion, limitation and liquidated damages clauses change what you can claim?

Often, yes. A valid limitation clause can cap damages at, say, the contract price, and a valid liquidated damages clause usually replaces the general damages calculation for the breach it covers, such as late completion.

Exclusion and limitation clauses are tested against the Unfair Contract Terms Act, explained in our guide on whether your limitation of liability will survive. Liquidated damages clauses are tested against the penalty rule, covered in our article on liquidated damages in Singapore. Read both before calculating a claim: a cap or fixed daily rate may make a large lost-profit claim irrelevant.

How is a claim started, and which court hears it?

A breach of contract claim is started by an originating claim filed in the court that matches the amount in dispute, after the company has made a written offer of amicable resolution under Order 5 of the Rules of Court 2021. Court proceedings, including filing the originating claim, are conducted by a Singapore Advocate and Solicitor acting for the company.

The usual sequence is:

1. Check the limitation date: 6 years from the date of breach for most contract claims under section 6(1)(a) of the Limitation Act 1959.
2. Preserve documents. Issue an internal litigation hold so emails, orders and accounting records are not deleted.
3. Prepare the loss computation and supporting schedule (see the next section).
4. Send a letter of demand and a written offer of amicable resolution, open for at least 14 days unless the parties agree otherwise (Order 5 rules 1 and 2). An offer can be to settle or to resolve the dispute by mediation or other means. A later formal offer to settle can also affect costs.
5. If the dispute is not resolved, the solicitor files an originating claim and statement of claim, and serves them on the defendant company.
6. The court manages the case through case conferences; parties must state in the pre-case conference questionnaire whether amicable resolution has been attempted.
7. The claim ends in settlement or judgment, followed by enforcement if the debtor does not pay.

Limits are as stated by the Singapore Courts in October 2026 for general civil claims (higher District Court limits apply to road traffic and certain industrial accident personal injury claims). Check the contract for an arbitration or jurisdiction clause; if one applies, it may take the dispute out of the Singapore courts altogether.

Cost drivers: legal fees vary widely. They depend on the forum, the number of witnesses, whether expert evidence on lost profits is needed, the volume of documents and whether the case settles before trial. Court filing fees are published on the Singapore Courts website, and the successful party usually recovers part, not all, of its legal costs.

What does the accountant or company secretary prepare, and what does the solicitor file?

The finance and corporate secretarial side builds the evidence of loss and authority to sue; the solicitor turns it into pleadings, files it in court and argues the case.

To see how the figures might look, here is an illustrative damages table. The numbers are hypothetical and only show the method.

After judgment, if the defendant does not pay, the company can enforce the judgment through the court, for example against the debtor’s assets or bank accounts. Amounts recovered and legal costs must be recorded correctly in the books. No ACRA lodgement is usually needed for a contract claim, but the company secretary should file the directors’ resolutions and settlement documents with the company’s records.

What are the common mistakes companies make?

• Terminating too fast, without a contractual or legal right, and becoming liable for repudiation.
• Accepting late or defective performance for months without protest, which can amount to affirmation.
• Claiming every loss without checking remoteness, caps and liquidated damages clauses, or failing to mitigate.
• Presenting lost profits as a single round number without ledgers, margins or lost orders behind it.
• Missing the 6-year limitation period on old breaches, especially where a long-term contract had several breaches over time.
• Skipping the Order 5 offer of amicable resolution, which can lead to adverse costs orders.

If you are unsure whether you have a claim worth pursuing, speak to a lawyer early, before sending anything that could be read as affirming or terminating the contract.

Frequently asked questions

Can my company claim damages for a breach that caused no real loss?

A breach always gives a right to sue, but without proven loss the court will generally award only nominal damages, a token sum. It is rarely worth litigating for that alone.

How long do we have to sue for breach of contract in Singapore?

Generally 6 years from the date the cause of action accrued, which for contract is usually the date of breach, under section 6(1)(a) of the Limitation Act 1959. Special rules can apply in some cases, so check early.

Do we have to try to settle before going to court?

Yes. Under Order 5 rule 1 of the Rules of Court 2021, a party must consider amicable resolution and make a written offer of amicable resolution before starting the action, unless it has reasonable grounds not to.

Can the company act for itself in a breach of contract claim?

The Small Claims Tribunals are designed for parties to appear without lawyers. Claims in the Magistrate’s Court, District Court and High Court are normally conducted by a Singapore Advocate and Solicitor instructed by the company, and a solicitor can confirm whether any exception applies to your case.

Last reviewed: 22 October 2026. The Editorial Team, Raffles Corporate Services.