Signing a contract commits you to rights and obligations that can be difficult or costly to change later. Whether you’re a freelancer, small business owner, tenant, or consumer, following a clear checklist helps reduce risk and avoid surprises. Below are practical, actionable steps to follow before putting your name on the dotted line.
Read Everything — Don’t Skim the Boilerplate
Contract language includes critical terms often tucked into boilerplate sections. Read the entire document, including exhibits, schedules, and referenced documents. Pay attention to definitions—many disputes come down to how a key term is defined.
Confirm the Scope of Work and Deliverables
Ensure the contract precisely describes what is expected: who does what, when, where, and to what standard. For services, include milestones, acceptance criteria, and what constitutes completion. For products, specify quantity, quality standards, and delivery conditions.
Check Payment Terms and Penalties
Look for clarity on amounts, payment schedule, invoicing procedures, late fees, and rights to withhold payment.
Confirm whether taxes, expenses, or processing fees are your responsibility. Avoid vague language like “timely payment”—replace with specific due dates.
Understand Term, Termination, and Renewal
Know how long the contract lasts, how it renews (auto-renewal can be risky), and the grounds and notice required for termination.
Identify any early termination fees and the obligations that survive termination (e.g., confidentiality, indemnity).
Review Liability, Indemnities, and Warranties
Limitations on liability and mutual indemnities determine who bears the cost of claims. Seek caps on liability tied to contract value or insurance limits.
Warranties should be narrowly tailored—avoid broad, open-ended promises unless support or insurance is available.
Identify Governing Law and Dispute Resolution
Contracts usually specify governing law and venue for disputes. Consider whether arbitration is required and what rules apply. Choose jurisdictions and dispute mechanisms that are practical and fair for both parties.
Protect Confidential Information and Data
If sensitive information will be shared, include robust confidentiality and data protection clauses.
Ensure compliance with applicable privacy laws and specify security measures, breach notification procedures, and permitted data uses.
Watch for Assignment, Subcontracting, and Third Parties
Clarify whether parties can assign their rights or subcontract duties. Add approval rights or minimum standards for subcontractors if control is important.
Consider whether third-party beneficiaries or related entities are intended recipients.
Seek Clear Modification and Notice Procedures
Agree on how the contract can be changed—ideally in writing and signed by authorized representatives. Define acceptable methods for delivering notices (email, certified mail) and required contact information.
Look for Unfair or One-Sided Terms
Common red flags include onerous non-compete clauses, perpetual liability, unilateral amendment rights, or clauses that shift all risk to one side.
These are negotiable—don’t accept them as-is.
Practical Steps Before Signing
– Compare the final draft to prior versions to ensure agreed edits made it in.
– Keep a copy of everything signed and any related communications.
– Use clear signatory authority: ensure signers have the power to bind their organizations.
– Consider time for professional review for complex or high-value agreements.
When to Consult an Attorney
Seek legal review when potential liability is significant, the deal value is substantial, or the contract affects long-term rights (IP, equity, employment).
A lawyer can spot subtle risks and suggest protective language tailored to your situation.
This checklist is general information and not a substitute for personalized legal advice.
For specific questions about a contract, consider professional counsel to protect your interests before signing.
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