How to Review a Contract Before Signing

Step 1: Confirm the basics

Start with the easy stuff. Verify that the party names, addresses, and dates are correct. Check that the contract describes the right project, product, or relationship. Obvious errors in the header sometimes signal a template that wasn't customized — which means other sections may not fit your deal either.

• Legal names of all parties (not just brand names)
• Effective date and contract term length
• Description of goods, services, or relationship
• Signatory authority — is the person signing allowed to bind the company?

Step 2: Follow the money

Payment terms are where most disputes start. Find every section about fees, invoicing, late payments, expenses, and refunds. Make sure the numbers match what you agreed verbally. Watch for automatic price increases, hidden fees, and payment triggers you can't control.

• Total price and payment schedule
• Late payment penalties and interest
• Expense reimbursement rules
• Refund or cancellation fee treatment
• Currency and tax responsibility

Step 3: Map the exit

Every contract should answer: how do I get out of this? Read termination sections carefully — notice periods, fees for early exit, and what happens to work-in-progress or prepaid fees. One-sided termination (they can leave easily, you can't) is a common red flag.

• Initial term and renewal mechanism
• Notice period required to terminate
• Termination for cause vs. convenience
• Fees or penalties for early exit
• Survival of obligations after termination

Step 4: Check who owns what

Intellectual property clauses determine who owns work product, data, and deliverables. In employment and freelance contexts, this is often the most financially significant section. Look for work-for-hire language, license grants, and carve-outs for your pre-existing tools or personal projects.

Step 5: Read the liability sections

Limitation of liability and indemnification clauses define who pays when something goes wrong. These sections are written in dense legalese but the concept is simple: who bears the financial risk? Missing liability caps, one-sided indemnification, and broad consequential damage exclusions deserve extra scrutiny.

Step 6: Flag the red flags

After reading the major sections, scan for patterns that consistently cause problems: auto-renewal with short cancellation windows, unlimited obligations, unilateral amendment rights, and vague acceptance criteria. Our contract red flags checklist covers the most common issues in detail.

Step 7: Get a second pass

Even experienced reviewers miss things. Run your contract through an AI analyzer to catch clauses you skimmed over, then consult a licensed attorney for high-stakes agreements — fundraising, employment, major vendor deals, or anything involving significant money or personal liability.