Key Takeaways

  • A contract checklist ensures all legal, financial, and operational details are addressed before signing.
  • It minimizes risks by clarifying rights, obligations, and remedies for both parties.
  • Essential items include parties, scope of work, payment terms, warranties, indemnification, dispute resolution, and termination clauses.
  • Avoid vague language, one-sided obligations, or unenforceable provisions.
  • Specialized checklists may be needed for employment, service, real estate, or vendor agreements.
  • Regular reviews and updates keep contracts enforceable and compliant with changing laws.

What Is a Contract Checklist?

A contract checklist is a step-by-step list that helps you organize a contract's key parts before finalizing it. This helps reduce miscommunication, set expectations, and make sure both parties are on the same page.

Types of Contract Checklists

Not every agreement requires the same level of review. Depending on the contract type, a tailored contract checklist can help you focus on unique risks and obligations:

  • Employment Agreements – Confirm job duties, compensation, benefits, noncompete clauses, and termination conditions.
  • Vendor/Supplier Contracts – Verify delivery schedules, pricing, quality standards, and liability for defective goods.
  • Service Agreements – Ensure clear scope of work, milestones, performance standards, and intellectual property ownership.
  • Real Estate Contracts – Review property descriptions, financing terms, inspection rights, and closing procedures.
  • Partnership or Joint Venture Agreements – Address ownership shares, profit distribution, governance, and exit strategies.

Adapting a checklist to the contract type ensures you capture industry-specific issues and avoid relying solely on a generic template.

Why Is a Contract Checklist Important?

Contract disputes are common issues that require legal action to resolve. If one party doesn't hold up its end of a bargain, it might face a breach of contract lawsuit. A contract checklist tries to reduce the chance of this happening. It covers every aspect of the contract to make sure it's airtight. It removes vagueness and focuses on concrete terms that describe every aspect of the contract. Without a contract checklist, contracts might become problematic for one or both parties.

Because there are many types of contracts, a checklist becomes even more important. Many people don't realize that even a warranty, consulting agreements, noncompete clauses, or a bill of sale are all types of contracts. 

What Should I Include on My Contract Checklist?

Checklists should contain several items, including:

  • Offer
  • Acceptance
  • Parties Involved
  • Lawful Subject Matter
  • Mutuality of Obligation
  • Mutuality of Agreement
  • Valuable Consideration

A comprehensive breakdown of the contract checklist should include:

  • Identifying the Parties
    • Name of each business or individual.
    • The type of businesses (sole proprietorship, partnership, corporation, limited liability corporation).
    • Names of persons signing for each business.
    • Official title of signer that designates his or her authority to sign a contract.
  • Addresses of Each Party
  • Underlying Assumptions
    • This is what is expected of each party within the contract.
  • Purpose of Contract
  • Terms
    • General terms. This is also known as an entirety clause.
    • Force Majeure considerations. This outlines what would happen if something out of each party's control causes delays.
    • Rights of each party.
      • Parties should have the right to inspect the other's work for quality. If the work isn't up to a certain level, a clause should outline the timeframe to bring the work up to that level.
      • Quality levels that aren't met might result in termination. It might also allow for a replacement of the supplier.
      • Who covers the cost of delays and remedies of work.
    • Duties of each party.
      • This is either an absolute or assumed obligation to use reasonable skill and care.
    • Enforceability clause. This gives each party the right to enforce terms of the contract when they see fit.
    • Assignment provisions. This forbids one party from outsourcing part or all of the contract without the other party's permission.
    • Notice clauses, which specify how notice should be given under the contract.
    • Relevant quantities, dates, and prices. Dates should include a start and end, as well as a term. This should also include a detailed list of all the materials each party needs.
    • Payment terms.
      • Lump sum, installments, cash on delivery in the relevant type of currency.
      • Payment terms should also consider whether one party can deduct payments for flawed work.
    • Payment Dates.
      • A payment schedule should come attached to the contract. Common payment dates include a specific day or number of days after receiving an invoice. The time period should be reasonable. It should also include any payment based on contingency.
    • Taxes.
      • Details who is responsible for paying taxes at federal, state, and local levels.
    • Late fees.
      • A late fee for underpayment or lack of payment agreed on by both parties.
    • Interest.
      • Determines if late payments are subject to interest.
  • Disclaimers
  • Applicable state law considerations
  • Warranties
  • Venue of any lawsuits involving the contract
  • Liquidated Damages
    • Here you should mention any party's right to intellectual property.
    • This should also include how damages are calculated.
  • Liability Limitations
    • This caps the amount of damages one type can sue for in case of bankruptcy.
  • Indemnification Agreement
    • A statement of who is held accountable if there's damage to any goods during the contract.
    • The indemnification agreement also details that each party is responsible for claims, liabilities, injuries, suits, demands, and expenses that occur due to oversight or neglect.
    • If another entity sues both parties, this agreement might help with their legal defense as long as it's in the best interest of each side.
  • Arbitration Clause
    • This should note if disputes automatically go to arbitration.
    • It should appoint an authority that both parties agree upon.
    • Location of the arbitration hearings.
  • Governing Law
    • This determines what state law governs the contract.
  • Confidentiality Provisions
    • If one party gives the other sensitive documents, the confidentiality provisions protect the giving party against the receiving party selling or leaking the documents.
  • Statement that assures that the contract constitutes an agreement
  • Individual provision severability clause
  • Signatures of authorized persons
  • Notarization
  • Checking for inconsistencies between the contract and supporting documents
  • Statement that outlines terms regarding termination of contract
    • If possible, it should also discuss if either party can suspend the contract permanently or temporarily.
    • Common reasons for contract termination include:
      • Prolonged delay
      • Prolonged Force Majeure
      • Insolvency by one party
      • Convenience
      • Contractor's breach of satisfactory products
  • Specification of who owns certain equipment or other assets at the end of the contract
  • Any other documents of significance to the contract
  • Renewability provisions
  • Insurance
    • Making sure the deductibles and coverage are appropriate for both parties.
  • Criminal background checks
  • Performance criteria and test to check for expertise and completion.
    • If performance is not met, this should outline whether it results in a remedy or termination of contract.
  • Responsibility of Licenses and Permits
  • Mechanics Lien
    • This protects your party if the supplier doesn't pay its raw materials provider.
  • Evergreen Clause
    • This clause automatically renews the contract after the specified terms end. This only applies if the supplier receives no notice of the contract's termination.
  • Alternative Dispute Resolution (ADR)
    • These are helpful provisions that speed up any disputes during the contract.

After going through your checklist, it's still important to have your legal departments or an attorney review the contract. Once you sign, keep several copies of the agreement for your records.

Best Practices for Using a Contract Checklist

A contract checklist is most effective when it is used systematically:

  1. Start Early – Use the checklist during the drafting phase, not just before signing.
  2. Collaborate Across Departments – Legal, finance, operations, and compliance teams may all have different concerns.
  3. Prioritize Risk Areas – Pay extra attention to liability, indemnification, and termination provisions.
  4. Update Frequently – Laws, business practices, and regulations evolve; make sure the checklist reflects current standards.
  5. Maintain Version Control – Store updated checklists and track changes to ensure consistency across contracts.

By embedding checklists into routine contract processes, businesses can streamline negotiations and reduce overlooked issues.

Provision and Language to Avoid Checklist

On top of all the main information, it's also important to strike down damaging provisions and language by including:

  • Vague words and descriptions.
  • Attorney's fees.
  • Using the word "agrees" instead of "warrants."
  • An agreement for a state entity to provide insurance or become the agent for one of the parties.
  • Exclusivity agreements, unless wanted.
  • Statement of assumption for personal liability.

Common Pitfalls When Reviewing Contracts

Even with a checklist, some issues frequently create problems:

  • Ambiguity in Key Terms – Words like “reasonable” or “as necessary” can cause disputes.
  • Overly Favorable Terms to One Party – Exclusivity clauses, automatic renewals, or unlimited liability may create imbalance.
  • Missing Compliance Requirements – Contracts should address data privacy (e.g., GDPR, HIPAA), tax obligations, or licensing where applicable.
  • Failure to Define Remedies – If performance fails, the remedies should be spelled out, not left open-ended.
  • Ignoring Renewal and Exit Provisions – Evergreen clauses or vague termination rights can lock businesses into unfavorable terms.

Careful review helps avoid unenforceable or one-sided provisions that may otherwise slip through.

Questions About Contract Checklists

  • How do I document payments?

Pay by check, and get a receipt. This gives you a paper trail proving you paid the right amount on time. Thirty percent is a reasonable down payment if required.

  • How do I protect myself from bad contracts?

Always have a professional review the contract before signing. You should also do your own research on the other party in the contract. If they must have permits and licenses, ask to see them. You should also look for an Escalator Clause. These clauses automatically raise your payments to vendors each year. Always sign and put contract changes in writing, but do not sign an incomplete contract.

How to Keep Your Checklist Effective Over Time

A contract checklist is not static. To keep it valuable:

  • Review Annually – Update the checklist to reflect new legal requirements or changes in business operations.
  • Benchmark Against Industry Standards – Compare your checklist with trade associations or regulatory bodies’ recommendations.
  • Train Staff – Ensure employees who handle contracts understand how to apply the checklist.
  • Leverage Technology – Contract management software can automate checklist items, flag missing provisions, and reduce human error.

Ongoing review ensures that your contract checklist remains a reliable risk management tool rather than an outdated document.

Frequently Asked Questions

1. What is the main purpose of a contract checklist?

A contract checklist ensures that no critical terms, clauses, or compliance requirements are overlooked before signing an agreement.

2. How often should I update my contract checklist?

At least annually, or whenever major regulatory, industry, or company policy changes occur.

3. Can I use the same checklist for all contracts?

No. Tailor your checklist for different contract types—employment, vendor, real estate, or service agreements all raise unique issues.

4. What is the biggest risk of skipping a checklist?

Without one, contracts may contain vague terms, missing remedies, or one-sided clauses that lead to disputes or unenforceability.

5. Should I still consult a lawyer if I use a checklist?

Yes. A checklist is a helpful tool, but legal review ensures enforceability and compliance with state and federal laws.

Contracts are confusing parts of your business. That's why it's important to trust the right attorney to review your contract and offer advice. If you need help or you have concerns about a contract, post your legal need for one of the lawyers at UpCounsel to address.