How to Review a Contract Before Signing
A step-by-step framework to review any contract like a professional—spot hidden risks, understand what actually matters, and negotiate better terms with confidence.
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Start With the Commercial Reality
Before getting lost in legal wording, focus on the commercial deal. What are you actually agreeing to in real-world terms?
Check pricing, payment timing, deliverables, contract length, and renewal structure. These drive most of the risk and value.
Make sure the contract matches what was agreed in emails, proposals, or calls. Misalignment here is one of the most common (and costly) mistakes.
If something feels unclear at a business level, don’t assume the legal wording fixes it — it usually doesn’t.
Understand How You Can Exit
Every contract should clearly explain how you get out — and under what conditions.
Look for termination for convenience (can you leave for any reason?) and termination for breach (what happens if something goes wrong?).
Pay close attention to notice periods. A 30–90 day notice requirement can delay your ability to exit significantly.
Also check for any penalties, minimum commitments, or conditions that make termination harder in practice.
If you can’t easily explain how to exit the contract in one sentence, that’s a red flag.
Quantify Your Financial Risk
Liability clauses define your worst-case scenario — how much you could lose if things go wrong.
Look for a liability cap. A common standard is a cap equal to the total contract value or 12 months of fees.
Watch for uncapped liabilities (especially for indemnities, IP issues, or data breaches). These can create unlimited risk.
Check whether indirect or consequential damages are excluded — this is usually favourable and standard.
If the downside risk feels disproportionate to the deal size, it’s something to negotiate.
Watch for Auto-Renewals and Lock-Ins
Many contracts renew automatically unless you cancel within a specific window.
This window is often easy to miss — especially if it requires notice 30–60 days before renewal.
Missing it can lock you into another full term, even if you no longer need the service.
Check how renewal pricing works too. Some contracts allow price increases at renewal without clear limits.
Set a reminder as soon as you sign — future you will thank you.
Clarify Ownership and Control
Make sure it’s clear who owns any work, data, or content created under the contract.
If you're paying for something to be created, you’ll usually want ownership — or at least a broad, perpetual licence.
Watch for clauses that allow the other party to reuse, resell, or restrict access to your own data.
Ambiguity around intellectual property is one of the most common causes of disputes later.
If ownership isn’t obvious, assume it could become a problem.
Check What Happens When Things Go Wrong
Most contracts look fine when everything goes right — the real test is what happens when it doesn’t.
Look at service levels, remedies, and dispute resolution processes.
Are there clear obligations if deadlines are missed or performance drops?
Check governing law and jurisdiction — especially for international agreements.
A good contract doesn’t just define success, it defines failure clearly and fairly.
Spot Hidden Restrictions
Look for clauses that limit what you can do during or after the contract.
This can include exclusivity, non-compete clauses, or restrictions on working with competitors.
Some contracts also limit how you can use deliverables, even after paying for them.
These clauses are often buried and easy to overlook — but can have major business impact.
If a restriction affects your future flexibility, it’s worth pushing back on.
Sanity Check the Entire Agreement
Before signing, take a step back and sense-check the contract as a whole.
Does it feel balanced, or heavily one-sided?
Are key risks clear and acceptable — or vague and open-ended?
If something feels off, trust that instinct. Contracts are rarely perfect, but they shouldn’t feel uncomfortable.
When in doubt, get a second opinion — even a quick review can catch major issues.
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