A Practical Contract-Review Checklist for Growing Businesses

Sep 1

A commercial agreement should do more than describe a promising business relationship. It should establish what each party must do, allocate the risks the parties can reasonably anticipate, and provide a workable exit when the relationship changes or fails.

For a growing business, the most expensive contract problems often come from ordinary provisions that received too little attention at the beginning. This checklist offers leadership teams a practical way to identify the issues that deserve closer review before signing.

1. Confirm the parties and the business objective

Start with the basics:

Is the correct legal entity named for each party?
Does the signer have authority to bind that entity?
Does the agreement accurately describe the product, service, relationship, or transaction?
Are proposals, statements of work, order forms, and online terms properly incorporated?
If several documents conflict, does the contract clearly establish which one controls?

A contract can be carefully negotiated and still create problems if the wrong affiliate signs it or if a sales proposal promises something different from the operative agreement.

2. Make the scope measurable

Ambiguous scope is a frequent source of disputes. The agreement should identify:

Deliverables and responsibilities
Deadlines, milestones, and dependencies
Acceptance or rejection procedures
Service levels or performance standards
Change-order procedures
Customer cooperation and access obligations
Remedies for delay or deficient performance

Avoid relying on phrases such as “industry standard,” “as needed,” or “commercially reasonable” when the parties can define an objective requirement.

3. Trace the entire payment process

Leadership should be able to determine from the contract exactly how much the relationship can cost and when payment becomes due. Review:

Pricing, expenses, taxes, and potential price increases
Invoice requirements and payment deadlines
Deposits, retainers, or minimum commitments
Disputed-invoice procedures
Credits, refunds, late fees, and collection costs
Renewal pricing and automatic-renewal mechanics

The economic terms should also match the operational reality. A long payment period may be manageable for a large company but destabilizing for a smaller vendor.

4. Understand risk allocation

Several provisions determine who bears the cost when something goes wrong:

Representations and warranties: What facts or performance standards is each party promising?
Indemnification: Which third-party claims must one party defend or pay?
Limitation of liability: Is there a dollar cap, and what claims are excluded from it?
Consequential-damages waiver: Does it exclude lost profits, lost data, or other categories of loss?
Insurance: Are the required types and limits appropriate for the actual risk?

These clauses should be read together. A favorable liability cap may provide little protection if broad indemnity obligations are excluded from the cap.

5. Protect information, data, and intellectual property

Identify what each party will receive, create, store, or access. The contract may need to address:

Confidential information and permitted disclosures
Cybersecurity and incident-notification requirements
Personal or regulated data
Ownership of preexisting intellectual property
Ownership or licensing of newly created work
Use of names, trademarks, testimonials, and publicity
Return or destruction of information at termination

Do not assume that paying for work automatically transfers all intellectual-property rights. The agreement should say what is owned, what is licensed, and what each party may use after the relationship ends.

6. Plan for termination before it becomes necessary

Review both the term and the exit:

Initial term and automatic renewals
Termination for cause and applicable cure periods
Termination for convenience
Obligations that survive termination
Transition assistance and return of company property
Final payment, refunds, and wind-down costs
Data export and deletion

An agreement that is easy to enter but difficult to leave can become a significant operational constraint.

7. Evaluate dispute and enforcement terms

Choice-of-law, venue, arbitration, jury-waiver, notice, and attorneys’ fee provisions can materially affect the cost and leverage of a dispute. Ask:

Where must a claim be brought?
Is arbitration mandatory, and under which rules?
Is emergency injunctive relief available?
Must the parties escalate or mediate before filing a claim?
Does the prevailing party recover attorneys’ fees?
Are notice methods and addresses practical?

Federal law generally recognizes written arbitration provisions in contracts involving commerce, subject to applicable grounds for revocation. Electronic form alone also generally does not deprive a contract or signature of legal effect in a transaction affecting interstate commerce. Those rules do not eliminate the need to confirm assent, authority, applicable exceptions, and state-law requirements.

8. Check the provisions people often skip

Finally, review assignment, subcontracting, force majeure, amendment, waiver, severability, relationship-of-the-parties, publicity, audit, compliance-with-laws, and entire-agreement clauses. “Boilerplate” provisions can control important issues such as whether a contract may be transferred in an acquisition or whether an email can modify the agreement.

A practical approval process

For repeat contracting, businesses benefit from a defined approval process: an accountable business owner, financial review, security or privacy review when applicable, and legal review based on risk thresholds. A short intake form and contract playbook can make review faster and more consistent without treating every agreement as equally complex.

The goal is not to eliminate every risk. It is to understand the deal, decide which risks the business can accept, and document the relationship clearly enough that both sides can perform.

Primary legal sources

This article provides general information and is not legal advice. Reading it does not create an attorney-client relationship. Laws and their application depend on the facts, contract language, and jurisdiction. Businesses should consult qualified counsel about their specific circumstances.

Need practical help reviewing, negotiating, or standardizing business agreements? Learn more about Business Contracts or request a consultation.

Seth Jewell