Sometimes you just want a sensible check of a contract before deciding whether it needs professional help. This checklist covers 20 things worth looking at in almost any commercial contract governed by the law of England and Wales. It won’t catch everything, but working through it will help you understand what you are signing and spot the common problems.
The basics
1. Who are the parties? Check the full legal names. Signing personally is very different from signing for a limited company, because a company is a separate legal person and you usually aren’t personally liable for its contracts. If you are dealing with a company, check its name and number on Companies House and make sure it is the entity you think you are contracting with, not a parent or sister company. If you are signing for your own company, sign in that capacity (as a director, for example) and check the document doesn’t also make you a personal guarantor.
2. When does it start? Contracts often say they take effect on a stated date, which may be earlier than the date you sign. If the start date is backdated, check what obligations that date triggers, such as fees or deadlines.
3. How long does it last, and does it renew? Look for a fixed term, a minimum term and any automatic renewal. If it renews unless you give notice, note the notice window and put it in your calendar.
4. What exactly is being provided? The scope should say clearly what is being supplied, licensed or done. Vague scope is one of the most common causes of disputes, because each side remembers the deal differently.
The commercial terms
5. What is the price, and can it change? Is the price fixed, or can it go up? Look for indexation, annual increases or a right for the supplier to change its prices on notice.
6. When and how is payment due? Upfront, on completion, in instalments or a set number of days after invoice? Paying the full amount upfront for something you haven’t received yet is a risk. Paying in stages as work is delivered is safer.
7. What standard does the work have to meet? Look for descriptions, specifications, deadlines and service levels. If something is late or not up to standard, what does the other party have to do about it?
8. How can you get out, and what does it cost? Can you terminate early, on what notice, and do you have to pay anything? A termination payment that bears no relation to any genuine interest the other party is protecting may be challengeable as a penalty, but that is uncertain and depends on the facts. It is far better to agree a fair exit route up front.
Liability and risk
9. Is liability capped, and for whom? Most commercial contracts cap each party’s liability. Check the amount, whether it applies to both of you and what is carved out of it. Liability for death or personal injury caused by negligence can’t be excluded or restricted, and nor can liability for fraud, so a well-drafted cap will say so. If your liability is unlimited but theirs is capped, ask why.
10. Which losses are excluded? Many contracts exclude “indirect or consequential loss”. English courts have traditionally read that phrase narrowly, which is why well-drafted clauses usually list loss of profit, revenue or data separately if those are meant to be excluded too. How a particular clause works depends on its wording, so read the list carefully and ask what you would actually be able to recover if things went wrong.
11. Are you giving an indemnity? An indemnity is a promise to cover the other party’s losses in specified situations, often without the usual limits on claims for breach of contract. Check what triggers it, whether it is capped and whether it could make you pay for problems the other party caused.
12. What warranties are given? Does the supplier promise the goods or services will match their description and be fit for purpose? For how long, and what is the remedy if they aren’t? Watch for clauses excluding all warranties not expressly set out.
Intellectual property and confidentiality
13. Who owns the work? If the supplier is creating something for you, such as software, a design or written content, the copyright usually stays with the person who created it unless it is assigned to you in writing. Check whether you get ownership or only a licence, and whether you can modify or sell what you have paid for.
14. What does confidentiality cover? Check what counts as confidential, how long the obligation lasts and who you can share information with. You should be able to tell your professional advisers, such as your lawyer and accountant.
Conditions and performance
15. Are there conditions that must be met first? Some contracts only take effect, or only oblige a party to perform, once something has happened, such as a payment, a consent or a regulatory approval. Check you can meet those conditions and what happens if they aren’t met.
16. What happens if service levels are missed? For a service contract, look at response and fix times and the consequence of missing them. Service credits are common. Check whether they are your only remedy.
17. How wide is the force majeure clause? This excuses performance when something outside a party’s control happens. A narrow clause lists specific events. A wide one might let the supplier off for events it could reasonably have planned for, such as problems with its own subcontractors.
Clauses people often miss
18. Can the other side change the terms? Some contracts let one party change the terms or the price by giving notice. Where possible, changes to core terms should need both parties’ written agreement, or at least give you the right to leave without penalty.
19. What survives termination? Confidentiality, indemnities, restrictions and payment obligations often continue after the contract ends. Check which clauses survive and for how long.
20. How are disputes resolved? Check the governing law and which courts have jurisdiction, and whether there is an escalation, mediation or arbitration step first. A contract governed by another country’s law can make a dispute much more expensive for you.
A general point on wording: phrases like “best endeavours”, “all reasonable endeavours” and “reasonable endeavours” aren’t meaningless. They are generally read as setting different levels of obligation, with best endeavours the most demanding. The courts don’t always agree on exactly what each requires, so if an obligation matters to you, it is better to spell out the specific steps expected.
Questions to ask yourself before signing
Think about the worst realistic outcome under the contract and whether your business could absorb it. Check that you can actually do everything the contract requires of you, on time, and that you could get out if your circumstances changed. If any wording still doesn’t make sense to you, ask the other side to explain or clarify it in writing before you sign. Commercial contracts don’t have to be perfectly balanced, but a contract that loads almost all of the risk onto you is worth pushing back on, or walking away from.
If you want a second opinion
If you have been through the checklist and are still unsure about some clauses, QuickLegalCheck will review the contract for £49 + VAT and explain the risks, any missing protections and the points you might negotiate, in plain English. For a high-value or complex contract, or where you need advice on your own circumstances, speak to a solicitor.
Related: what the contract review covers, and a complete sample report.