The commercial importance of a clause has nothing to do with its length or its heading.
A short definition, a schedule entry or an incorporated online policy can change the parties’ rights materially. Which is why a contract review that only reads the main agreement is not really a review.
Start by writing down what each party believes it is buying, selling or promising. Then test the wording against that. If the two do not match, you have found the issue before it becomes a dispute.
Signing a SaaS or technology agreement? Use our SaaS and Technology Agreement Checklist instead. Construction contract? Use the Construction Contract Review Checklist.
Confirm full legal names, ACNs or ABNs and addresses. Identify any trustee, guarantor, agent or related entity properly.
Then deal with the document stack. Schedules, proposals, policies, purchase orders and online terms overlap and conflict routinely. Are they all attached or accessible? And does the contract say which one prevails when they are inconsistent? If it does not, that ambiguity will surface at the worst possible moment.
Unclear scope creates arguments about what must be supplied, when it is complete, and whether extra work is included.
Make deliverables, specifications, milestones and responsibilities measurable. Record assumptions, dependencies and exclusions explicitly. The word “reasonable” in a scope clause is an invitation to disagree.
Auto-renewal and minimum commitments change the commercial effect significantly.
Check the start date, initial term and renewal process. Then check how much advance notice is required to prevent automatic renewal, and put that date in a calendar the day you sign. Missing a 90-day non-renewal window is a genuinely common and entirely avoidable cost.
An indemnity can transfer losses well beyond ordinary damages for breach. It may also operate independently of the liability cap you negotiated so carefully.
So look at what losses, claims and people are covered. Then check whether liability is reduced where the indemnified party contributed to the loss. An uncapped indemnity sitting under a capped liability clause is one of the most common mismatches in commercial contracts.
Is the aggregate cap commercially realistic against the value of the deal and the risk you are taking? Which losses sit outside it?
Then check the insurance obligations against the contractual risks and the cover you can actually obtain. Agreeing to insurance you cannot buy is a breach waiting to be discovered.
Fifteen issues across the commercial deal, performance and operations, and risk, exit and disputes. Includes a 15-point review page you can mark as acceptable, unclear or requiring discussion before signing.
Consumer guarantees and unfair contract terms laws can apply despite what the contract says, including to qualifying small business standard form contracts.
Does the agreement avoid excluding rights that cannot lawfully be excluded? Are unilateral, broad or one-sided rights reasonably necessary and transparent? If you are the party issuing standard terms, this is worth taking seriously. The consequences of getting it wrong have grown.
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Exit rights should identify breach events, cure periods, consequences of termination and any continuing restrictions. Can either party terminate without cause, and on what notice? What happens to accrued fees, data return, transition assistance and surviving clauses?
Finally, the dispute clause. Are the negotiation, mediation, expert determination or arbitration steps suitable for the size of deal? Which State’s law and courts apply? And must performance continue while a dispute runs? That last question decides who has leverage.
Work through it before you sign. If several answers come back unclear, or the contract is significant, call us on (02) 8201 0051. Leo Lawyers advises businesses on commercial contracts and contract disputes in New South Wales and Victoria.
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