Most people read a contract the way they read a terms-of-service popup: scroll, skim, sign. That works fine - right up until the moment it doesn't. Here are the six places I look first when a client hands me a contract, because they're the six places problems actually come from.
1. How and when you get paid
Payment terms decide your cash flow. Look for the trigger (net 30 from what - invoice, delivery, "acceptance"?), late-payment consequences, and anything that lets the other side withhold payment over vague "defects" or "satisfaction." If the money section is mushy, everything else is decoration.
2. How you get out
Every relationship ends; the contract decides whether it ends cleanly. Check the termination clause: who can end it, how much notice, and what you still owe afterward. A contract you can only leave by breaching is a trap with a logo on it.
3. Auto-renewal
Plenty of contracts renew themselves for a full year unless you cancel inside a narrow window - sometimes 60 or 90 days before expiration. Find that window now, put it on your calendar, and don't assume anyone will remind you.
4. The liability cap
Many contracts cap what the other side owes you if they cause damage - sometimes at the amount you paid them, sometimes less. If a vendor's failure could cost you $100,000 and their liability is capped at your last three invoices, you need to know that before you sign, not after the fire.
5. Indemnification
This is the clause where you agree to pay their legal bills. One-way indemnities (you cover them, they don't cover you) are common and worth pushing back on. At minimum, understand what scenarios you'd be writing a check for.
6. Where and how disputes get decided
Governing law, venue, and arbitration clauses decide where a fight happens and under whose rules. Agreeing to arbitrate in another state under another state's law can make a legitimate claim too expensive to bring - which is exactly why it's in there.
The bottom line
You don't need to become a lawyer to sign a contract safely. You need to know which six sections carry the risk - or hand the document to someone whose job is catching them. A review before you sign is one of the cheapest forms of insurance a business can buy.
This article is general information, not legal advice, and reading it doesn't create an attorney-client relationship. For advice about your situation, contact Jonathan directly or call (239) 839-7089.
Want this applied to your situation?
One conversation with Jonathan is usually enough to know exactly where you stand.