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A Practical Contract Review Playbook: 10 Things to Check Before Signing

Reviewing a contract is not simply about reading the document from beginning to end. A good contract review requires a structured process that helps identify obligations, financial exposure, potential risks, and unclear provisions before the parties sign.

Here is a practical framework that can be used as a starting point when reviewing a business contract.

1. Identify the Parties

Confirm the exact legal names of all parties. Make sure the names, business entities, addresses, and signing authority are accurate.

2. Understand the Purpose of the Agreement

Before reviewing individual clauses, identify what the contract is intended to accomplish. What services, products, rights, or obligations are being exchanged?

3. Review the Scope of Work

The scope should clearly describe what each party is expected to provide. Ambiguous descriptions can create disputes later.

4. Examine Payment Terms

Review the price, payment schedule, invoices, late fees, taxes, expenses, and any conditions that could affect when payment becomes due.

5. Check the Term and Renewal Provisions

Determine when the agreement starts, when it ends, and whether it automatically renews. Automatic-renewal clauses should receive particular attention.

6. Analyze Termination Rights

Ask who can terminate the agreement, under what circumstances, whether notice is required, and what happens after termination.

7. Review Liability and Indemnification

These provisions can significantly affect the financial risk of the parties. Look for indemnification obligations, liability caps, exclusions, and circumstances where one party may become responsible for another party’s losses.

8. Identify Confidentiality and Intellectual Property Issues

Determine what information is considered confidential and who owns work product, intellectual property, documents, data, or other materials created during the relationship.

9. Review Dispute Resolution and Governing Law

Check which state’s law applies and how disputes must be handled. The agreement may require negotiation, mediation, arbitration, or litigation.

10. Look for Ambiguity and Missing Provisions

A contract review should not focus only on what the contract says. It should also consider what the contract fails to address. Undefined terms, inconsistent provisions, missing deadlines, and unclear responsibilities can create significant problems.

Final Review Checklist

Before signing, ask:

• Do I clearly understand my obligations?

• Are the payment terms clear?

• Can either party terminate the agreement?

• What happens if one party breaches the contract?

• Are liability and indemnification provisions reasonable?

• Who owns the work product or intellectual property?

• What law governs the agreement?

• How will disputes be resolved?

• Are there any important terms that are missing or unclear?

A structured contract-review process does not eliminate risk, but it can make potential issues easier to identify and discuss before an agreement becomes binding.

Note: This article is provided for general educational and informational purposes and is not legal advice. Contract requirements and legal consequences may vary depending on the applicable jurisdiction and circumstances.