Small and medium enterprises (SMEs) are the backbone of Cambodia’s economy. But for many SMEs — especially young businesses or those working with foreign partners — commercial contracts can be tricky.

Well-drafted contracts not only protect your business but also build trust with partners, clients, and customers. A poorly drafted or misunderstood contract may lead to uncertainty, financial loss, or even legal disputes.

Here’s a practical guide to common mistakes SMEs should avoid when signing contracts in Cambodia.

Mistake #1: Vague or Incomplete Contract Terms

One frequent problem is poorly drafted contracts: vague descriptions of obligations, unclear definitions of parties, subjects, or goods/services, missing key clauses (payment, delivery, responsibilities, deadlines, warranties, dispute resolution, etc.). Such gaps create major risks when interpreting obligations or in case of disagreement.

A robust contract should clearly set out who does what — by when — under what conditions.

Mistake #2: Over-relying on Foreign-Law or Foreign-language Contracts without Local Review

Many SMEs in Cambodia work with foreign partners, and contracts may be drafted in English or other languages, governed by foreign law. While private contracting parties can choose a foreign substantive law, in practice local courts may still apply Cambodian law when interpreting or enforcing contracts.

Hence, SMEs should ensure that contracts are valid under Cambodian law, perhaps include a Khmer version, and seek legal counsel familiar with local regulations.

Mistake #3: Overlooking Unfair or Standard-Form Contract Risks (for B2C or Consumer-Facing SMEs)

For SMEs that use standard-form contracts or general terms & conditions (e.g. in retail, services, leasing, sales), there is a risk of including “unfair contract terms.” Under recent regulations in Cambodia, certain clauses may be considered unfair if they grant one party excessive unilateral power — for example, allowing the business to change the price or quality without the customer’s consent, or to arbitrarily terminate the contract.

For SMEs which use standard contracts in dealing with consumers, it’s important to use clear, comprehensible wording (preferably in Khmer), and to avoid clauses that might be seen as unfair or exploitative.

Mistake #4: Ignoring Legal Formalities (Language, Signature, Parties’ Details)

SMEs sometimes underestimate formalities such as accurate identification of parties (full legal names, addresses, capacities), dates, precise description of subject matter (quantity, quality, delivery terms), and signatures. These details matter: contracts lacking clear party identity, subject matter, or agreement by capable parties risk being void or voidable under the law.

Also, there is a common question about whether the form of signature (wet-ink vs. electronic signature or blue-ink vs. black-ink) matters. Consulting the right professionals to guide you through the requirements of your specific type of contract is crucial.

Practical Checklist for SMEs Before Signing Any Contract

Before signing, make sure your contract:

• Clearly identifies all parties, with correct legal names and addresses.
• Describes in detail the subject matter (goods/services), quantity, quality, delivery or performance terms, payment terms.
• Specifies rights and obligations, warranties, liabilities, and what happens in case of breach, delay, or dispute.
• States the governing law clearly; if foreign law is chosen, be aware of potential enforceability issues under Cambodian courts.
• Is in written form— especially for high-value or longer-term deals — and signed by all parties.
• Uses language understandable to all parties; if different languages are used, consider a bilingual contract and specify which version prevails.
• For consumer-facing SMEs: avoids unfair terms (e.g. no unilateral changes, hidden liability waivers, ambiguous cancellation/refund terms).

If you are preparing to sign a business contract — or want to review an existing one — our team at Din & Co. would be happy to help.

Contact us for a free initial consultation on:

• Contract drafting or review; or
• Legal translation of contracts (bilingual or multi-lingual in Khmer-English or other languages).