Checklist for Contract Review
When you’re entering into an agreement—whether for business, real estate, employment, or personal transactions—understanding every clause before you sign is essential. A skilled contract lawyer can help you spot issues that might otherwise go unnoticed, but even if you’re doing a preliminary review yourself, having a structured approach is key. This checklist will walk you through the major areas to focus on when reviewing any contract, so you can protect your interests and avoid costly disputes.
Confirming the Parties Involved
The first step is ensuring the contract accurately identifies all parties. Names should be spelled correctly, and any business entities should be listed with their full legal names, not abbreviations or trade names. If a business is a corporation, LLC, or partnership, the contract should specify that status. It’s also worth checking addresses and contact details for accuracy, as they may be needed for notices or future correspondence. A mismatch or missing legal designation can lead to confusion—or worse, make enforcement more difficult.
Clarifying the Purpose and Scope
A well-written contract should state exactly what the agreement is for and the scope of obligations for each party. If it’s a service contract, it should outline what work will be performed, how it will be delivered, and within what timeframe. For product sales, it should describe the goods in detail. Avoid vague language that leaves room for interpretation. If terms like “reasonable” or “as needed” appear, make sure they are defined or clarified to your satisfaction. This section is the backbone of the contract—if it’s unclear, disputes are almost inevitable.
Defining the Payment Terms
Money is often the most contentious part of any agreement, so payment terms need to be crystal clear. Check the amount to be paid, the due dates, the method of payment, and any conditions for payment. If partial payments, deposits, or milestones are involved, ensure they’re spelled out along with what triggers them. Also note any penalties for late payment or bonuses for early completion. Ambiguities in payment terms can cause friction, especially if work is completed but payment expectations differ.
Specifying the Deadlines and Timeframes
Deadlines aren’t just about the completion date—they also include interim milestones, delivery schedules, and the timing for approvals or feedback. Look for specific calendar dates rather than vague phrases like “within a reasonable time.” If a contract allows for extensions, check who decides and how they’re granted. Timeframes should work for both parties, and you should understand the consequences of missing a deadline—whether that’s penalties, termination rights, or a renegotiation of terms.
Outlining the Performance Standards
Performance standards set the quality benchmark for work or goods delivered. If you’re hiring a contractor, there should be measurable criteria for evaluating whether the work is acceptable. If you’re providing services, you want these standards to be realistic and achievable. Watch out for clauses that set overly broad or subjective performance expectations, as these can be used to challenge your work later. If the industry has recognized standards, reference them in the contract to make performance measurable and fair.
Addressing the Confidentiality Obligations
Many contracts contain confidentiality or non-disclosure clauses, especially when sensitive information is involved. Make sure you understand what information is considered confidential, how long the obligation lasts, and whether there are exceptions. Some agreements may try to make all information confidential, which can be impractical. You’ll also want to verify whether there are penalties for breaches and if those penalties are reasonable. Confidentiality provisions should protect both parties, not just one side.
Determining the Dispute Resolution Process
Even the best contracts can run into disagreements. A clear dispute resolution process can save time, money, and relationships. Check whether the agreement requires mediation, arbitration, or litigation, and in what jurisdiction. If arbitration is required, confirm whether it’s binding and who selects the arbitrator. Also, note if there’s a requirement to pay the other party’s legal fees in certain situations. Understanding this section is crucial before you sign—once you agree, you’re bound to that process.
Reviewing the Termination Conditions
Termination clauses spell out when and how the contract can be ended before the work is complete. Look for details about termination for cause (such as a breach) versus termination for convenience (ending without cause). Check if there are notice requirements and whether penalties or refunds apply. Termination terms should be fair and balanced, ensuring neither party can walk away without reasonable justification or proper notice.
Examining the Liability and Indemnity Provisions
Liability and indemnity clauses determine who is responsible if something goes wrong. You’ll want to ensure you’re not taking on unreasonable liability for issues beyond your control. Watch for “hold harmless” or “indemnify” language that could make you financially responsible for the other party’s mistakes. If these clauses exist, make sure they’re mutual or limited to situations you can actually control. A contract lawyer can help you evaluate whether these provisions are too broad.
Verifying the Signatures and Execution
A contract isn’t enforceable without proper execution. Confirm that signature blocks are correctly formatted with names, titles, and dates. If signing on behalf of a company, ensure you have the authority to do so. Some contracts require witnesses or notarization—if that’s the case, follow those requirements exactly. Digital signatures are often acceptable, but both parties should agree in writing that electronic signing is valid.
Contract review is not just about scanning for obvious errors—it’s about reading carefully, understanding the implications of each clause, and making sure every term aligns with your goals. While you can perform an initial review yourself using this checklist, the safest route is to work with an experienced contract lawyer who can identify hidden risks and negotiate better terms on your behalf. Contracts are legally binding documents, and even small oversights can have big consequences. A thorough, methodical review ensures you’re entering into agreements with your eyes open and your interests protected.
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