Contract Review Checklist: 6 Common Contract Clauses To Look Out For

Contracts and agreements are integral to any business or startup. From an employment contract to signing with a new vendor to creating a commercial partnership, startups and business owners are repeatedly tasked with reviewing and signing several documents.

One of the most common mistakes owners make is failing to review contracts extensively, which can lead to costly legal consequences in the future. This can easily be avoided by looking out for some of the most common contract clauses and having a contract review process in place to ensure parties involved come to a clear, collaborative agreement with acceptable terms for all.

What is a Contract?

A contract is a written or spoken agreement between two or more parties creating mutual obligations that are enforceable by law. Anyone, including individuals, companies, organisations, and corporations, can enter a contract.

What is a Contract Review?

A contract review is a thorough examination of a legal agreement before it is signed by the parties involved. This ensures that the document is clear and accurate and that all parties agree with the terms and conditions stated therein.

Conducting a contract review is crucial as it helps startups and businesses reduce organisational risks. It also increases the chances of the agreement making a positive business impact for all parties involved. Foregoing a contract review means opening up your company to several risks if you fail to fulfil the committed obligations, including damaging your company’s brand and reputation and wasting valuable time and financial resources.

What to Look Out For in a Contract

Reviewing a contract can feel intimidating for anyone without a law degree. As a lawyer, here are key contract clauses I look for whenever I am asked to look over an agreement.

IP ownership

Intellectual property is among a company’s most valuable assets and can be vulnerable to theft, misuse, or infringement by other parties in your contract. You should ensure an ownership clause in your contract that establishes that your company owns all the IP rights to whatever product or service the other party (your vendor, for example) creates or delivers for you. It should also specify that the other party has no right to use, copy, modify, sell or disclose your IP to anyone else without your written consent.

Termination rights

Despite coming to an agreement, there is always a possibility that your terms do not work out as expected. A termination rights clause allows the parties to dissolve the obligation if it no longer benefits them. It specifies who in the party can terminate the contract, whether just one or both and how long the notice period is. It also identifies the consequences for any breach or serious misconduct in the contract.

Dispute resolution

It is also possible that conflicts arise while parties strive to fulfil the contract’s obligations. In this case, a dispute resolution clause is needed in the contract. This specifies how the parties plan to resolve these conflicts and helps parties maintain a positive and mutual relationship while avoiding litigation. Some conflict resolution methods include negotiation, mediation, or arbitration. 

Privacy & confidentiality

A confidentiality clause is critical in any contract, especially when the parties involved must share valuable information to carry out the terms of the agreement. Within this clause, each party should include strongly worded language addressing trade secrets, confidential information, sales strategies, and any other sensitive business detail they wish to keep private from the general public. Some contracts that would benefit from a confidentiality clause include partnerships, joint ventures, and business negotiations.

Sometimes, a non-disclosure agreement is warranted when a simple confidentiality clause is not enough for your needs. Consider creating this additional document to ensure your startup or business is fully protected.

Warranties

A warranty clause can protect your party from being held liable if the other party has a negative experience with what you have provided to fulfil your contractual obligations. Similar to the limit of liability clause, this clause limits how much the other party can claim if they are dissatisfied with your deliverables.

Payment terms

Payment terms are another key provision to look out for in a contract. This clause specifies the amount one or all parties must pay when the contract is due. The payment terms also detail whether there is a minimum or limit on the amount a party has to pay, if parties can receive a refund given certain conditions, or if instalment payments are allowed.

Who Should Review Contracts?

All parties involved in the contract should undergo the process. For startups and businesses, it might begin with the individual who drafts the initial contract using a standard template. Afterwards, it is highly encouraged to employ the help of a startup lawyer to review the document. 

A startup lawyer not only reviews contracts but can also draft agreements that ensure terms and conditions are clear, enforceable and, most importantly, protect the startup’s interests. They can also keep track of important dates and deadlines in each contract, including contract duration, end period, and renewal. Lastly, they can review contracts periodically, whether for existing agreements or new documents. This is essential as it is an opportunity to improve contracts, fix previously overlooked clauses, or change the wording due to changes in industry regulations or guidelines that did not exist when the original contract was initially drafted. 

Conducting a contract review and analysing key provisions will undoubtedly take time, especially for lengthy and complex agreements, but it is a necessary step to lessen the risks for your business as well as increase your chances of executing a contract and delivering it as intended. When in doubt, consult a lawyer, as one misplaced comma or ambiguous wording can lead to a costly mistake for your business. 

For all your contract and startup needs, Lazarus Legal offers a flexible fee structure and options to suit your budget and needs. Try our “Start Up Meet,” a free 15-minute consultation with one of our legal advisors so we can discuss, assess, and advise you on the right legal support package for your business. 

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Mark Lazarus

Mark Lazarus, the visionary behind the business and the fresh blood of the Lazarus Legal team, Mark (or Laz as he is often known) owes much of his success to his past experiences. And he’s made it his personal goal to bring that wisdom and formula to the firm.

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Barry Lazarus

CEO & Notary Public

barry@lazaruslegal.com.au 

We’d be lying if we told you that this bloke isn’t the big honcho of our team, but his name is a dead give-away. The founder of Lazarus Legal, Barry is an old school, tough as nails lawyer. They don’t forge litigators like this anymore.

With decades of experience in both Australia and South Africa, his wisdom is as renowned as his name. Back in the days when Schwarzenegger and Van Damme were kicking ass on VHS, Barry was kicking ass in the courtroom. And after all these years, he still has a reputation for refusing to back down.Barry is definitely the badass you’d want in a fight – in court or otherwise. But really, he’s a big softie. Just don’t let him know you know that (although he probably won’t read this anyway – navigating the Internet is not his strong point).

Aside from putting other lawyers in their place, taking long walks on the beach and spending time with his family, Barry enjoys seeing others succeed. Not only is Barry a staunch and unmoving litigator, he has sharp business and commercial acumen having started up ventures from scratch and growing them into full-blown franchises – from real estate to creating ice cream, to making pasta. With his experience on both sides of the commercial and legal equation, you want this guy to be on your side, whether you’re the next Zuckerberg realising your genius, or the next Zuckerberg taking on your opponents in court.

When Barry is not busy lawyering about, he is a part-time lawn bowler and a wannabe comedian, but never took both as a day job, because let’s face it, he’s a lot better at his day job.

If someone ever threatens you to lawyer up…relax, call Barry and he’ll handle the rest. 

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Mark Lazarus Director

Mark Lazarus

Director

mark@lazaruslegal.com.au 

The visionary behind the business and the fresh blood of the Lazarus Legal team, Mark (or Laz as he is often known) owes much of his success to his past stories and experiences. And he’s made it his personal goal to bring that wisdom and formula to the firm.

He’s a bit of jet setter, splitting his time between Australia and the UK, maximising every hour of his professional life. He thrives on this adrenalin. It allowed him to work in private practice in Sydney, act for a host of famous celebrities in London, do a two year stint as a NSW barrister (and not the pretentious coffee type in the Melbourne laneways) and more recently did a gig as the Legal Director covering Europe, the Middle East and Africa for one of the world’s coolest fast-moving consumer good brands!  

As an Aussie and UK lawyer and former barrister, Mark not only has the gift of the gab but he’ll walk the walk to prove it too. He likes to think he’s a bit like Harvey Specter or Michael Corleone, the main difference is you can actually retain him as your lawyer and consigliere. He’ll tell you how it really is and will take on any challenge head on. Although litigation and court advocacy comes naturally to him, commercial and IP is what gets his blood pumping! 

When Mark is not out there doing his thing, you will probably catch him chilling at home with his family, on the sidelines of the soccer (football) pitch cheering on his two boys, crawling through mud obstacles, or training hard at the gym. Passion and commitment is what drives Mark to succeed, along with his burning desire to disrupt the legal profession by finding new ways to change the game.

He has sights on the future. So if you’re breaking new ground, ahead of the times, and on the verge of something big, but you need someone who’s got your back and who can give you straight up advice, this is the guy you will want on speed dial.

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