STRIVE LEXClarity. Precision. Resolution.\n \n \n Overlooked terms in vendor and client agreements can create outsized risk. Here's what to check before you sign.
Most commercial disputes we see did not start with a dramatic breach. They started with a clause that was signed without being fully understood, because the deal felt more important than the paperwork at the time. As a business grows and starts signing more contracts — with vendors, clients, landlords, and employees — a handful of clauses do most of the work in determining how much risk you are actually carrying. Here are five worth reviewing closely before you sign anything.
An indemnification clause determines who bears the cost if a third party brings a claim related to the contract. These clauses are often broader than they first appear — some extend to cover the other party's negligence, or apply uncapped liability to your business regardless of the size of the underlying contract. Read the indemnity clause as if you were the one being sued, not just as boilerplate.
A limitation of liability clause caps how much either party can be forced to pay if something goes wrong. Without one, your exposure on a contract can be entirely disproportionate to what you are being paid under it. Pay attention to what is excluded from the cap — clauses for gross negligence, confidentiality breaches, or IP infringement are frequently carved out and left uncapped.
Termination clauses set out when and how either party can exit the agreement. Look closely at whether termination requires "cause," what notice period applies, and whether there are financial penalties attached to early exit. A contract that is easy to enter but difficult to exit can quietly become a liability of its own.
Where a dispute will be heard, and under which law, materially affects your leverage if things go wrong. A dispute resolution clause that routes disagreements to arbitration in an inconvenient jurisdiction, or under an unfamiliar procedural framework, can make even a clearly meritorious claim expensive and slow to pursue.
An assignment clause governs whether either party can transfer its rights and obligations under the contract to someone else — including, in some cases, automatically upon a merger, acquisition, or change of control. If you are raising investment or considering an exit, a counterparty's right to terminate or renegotiate upon a change of control can complicate a transaction significantly if it is discovered late.
None of these clauses are inherently unfair — a well-drafted contract balances risk between both parties deliberately. The problem is signing a one-sided version of any of them without realising it. If you are reviewing a vendor, client, or employment agreement and want a second set of eyes on it, our attorneys regularly advise growing businesses on exactly this kind of review.