10 Common Contract Mistakes That Could Cost Your Business Thousands

In South Africa, one poorly drafted contract can sink a business deal or worse, lead to years of legal battles. From vague payment terms to missing dispute resolution clauses, these small mistakes add up to massive losses.

At Legal Drafters, we’ve reviewed hundreds of contracts for entrepreneurs and SMEs — and we see the same issues pop up again and again. Here are the 10 most common contract mistakes we spot (and how you can avoid them).

1. Using Generic Templates (Instead of Tailored Contracts)

   Online templates may be free — but they’re often drafted for other countries or outdated laws. That means they don’t protect you against South African-specific risks like POPIA compliance or VAT terms.

   
   

   Fix it: Always use a template created for South African law and customised for your business. Consult a legal professional to ensure your contract aligns with local regulations like the Consumer Protection Act or the Protection of Personal Information Act (POPIA).

   
   

2. Leaving Out Key Clauses

   Every contract should include core clauses (payment terms, breach clauses, dispute resolution). Missing just one could leave you exposed. For example, without a clear payment schedule, you might struggle to enforce timely payments.

   
   

   Fix it: Request a Contract Essentials Checklist (we’ll include one free at the end of this article). Ensure your contract covers critical elements like scope of work, deliverables, timelines, and penalties for non-compliance.

   
   

3. Using Confusing or Vague Language

   Words like “as soon as possible” or “when convenient” sound harmless — until someone argues about what they mean. Ambiguity can lead to disputes that cost time and money to resolve.

   
   

   Fix it: Use clear timelines and obligations (e.g., “within 14 days” or “payment due by the 5th of each month”). Define key terms explicitly to avoid misinterpretation.

   
   

4. Forgetting to Include Exit or Termination Terms

   Without an exit clause, you could be stuck in an agreement forever or forced to pay big to leave it. Termination clauses clarify how and when either party can end the contract.

   
   

   Fix it: Include clear termination terms, such as notice periods (e.g., “30 days’ written notice”) or conditions for termination (e.g., breach of contract or insolvency). Specify any penalties or obligations upon termination

   
   

5. Ignoring South African Law Requirements

   Did you know some contracts must comply with the Consumer Protection Act or POPIA? Miss these, and you might be breaking the law, leading to fines or unenforceable contracts.

   
   

   Fix it: Ensure your contract complies with relevant South African laws, such as the Consumer Protection Act (for consumer-facing agreements) or POPIA (for data protection). For example, include a clause on how personal data will be processed and protected.

   
   

6. Not Updating Contracts as Your Business Changes

   Businesses evolve — but old contracts often don’t. An outdated agreement can cause major headaches, such as failing to account for new services, pricing, or regulatory requirements.

   
   

   Fix it: Review and update contracts regularly, especially when your business expands, changes its offerings, or encounters new legal requirements. Schedule an annual contract audit to keep agreements current.

   
   

7. Missing Signatures or Witnessing

   Sounds simple, but unsigned contracts or those missing witnesses (where required) may not hold up in court. In South Africa, certain agreements (e.g., property sales) legally require witnessing.

   
   

   Fix it: Ensure all parties sign the contract and, where necessary, have it witnessed or notarised. Verify if your contract type requires specific formalities under South African law.

   
   

8. No Dispute Resolution Clause

   If you don’t set out how disputes will be handled, you may end up in an expensive court case instead of a cheaper mediation. Litigation in South Africa can be costly and time-consuming.

   
   

   Fix it: Include a dispute resolution clause specifying mediation or arbitration as the first step. For example: “Any dispute arising from this contract will be resolved through mediation before proceeding to arbitration under the Arbitration Act, 1965.”

   
   

9. Assuming Verbal Agreements Are Enough

   “Don’t worry, we agreed on it verbally.” Famous last words. Verbal agreements are difficult to enforce in South Africa, especially without written evidence.

   
   

   Fix it: Always get agreements in writing, even for small deals. A written contract provides clarity and serves as evidence in case of disputes. Use email confirmations or simple written agreements for minor arrangements.

   
   

10. Overlooking Small Print

    Many people sign contracts without reading the fine print. Hidden clauses can lead to massive financial obligations, such as unexpected penalties or automatic renewals.

    
    

    Fix it: Read every clause carefully before signing. If you don’t understand something, consult a legal professional. Pay special attention to clauses on liability, indemnities, and automatic renewals.

    
    

Conclusion

Protecting your business starts with solid contracts. By avoiding these 10 common mistakes, you can save thousands in potential losses and ensure your agreements are watertight. Don’t let a poorly drafted contract derail your success — invest in professional legal drafting or review to secure your business’s future. Reach out to Legal Drafters today to get started on contracts that work for you.

Need help drafting or reviewing a contract? Contact Legal Drafters at info@legaldrafters.co.za for expert advice tailored to your business.