Key Takeaways

  • A robust contract review process mitigates risk, ensures clarity, and protects your client’s interests.
  • Essential clauses like indemnification, termination, assignment, and renewal terms should be carefully scrutinized.
  • Attention to confidentiality, liability caps, governing law, and dispute resolution can prevent costly legal disputes.
  • Modern tools and AI-driven software can improve contract accuracy and speed of review.
  • Seek legal expertise for high-stakes contracts or complex commercial agreements.

Updated June 30th, 2021:

A Contract Review Checklist

Following a contract review checklist can ensure that everything is properly described and outlined leaving little room for interpretation. We highly recommend you to hire a contract review lawyer to help. Some of the actions that should be included in your contract review checklist include:

  • Identifying all parties properly
  • Making sure all terms are defined
  • Including necessary signature blocks
  • Referencing any exhibits, schedules, etc. and making sure they are included
  • Double checking all mathematical formulations
  • Ensuring that the term expiration is explained
  • Including instructions for early termination if applicable
  • Identifying the rights of all parties in regards to the terms of the contract
  • Checking that all of the performance obligations are accurate
  • Verifying the accuracy of payment terms
  • Clarifying any expenses that are reimbursable and how to go about it
  • Verifying the accuracy of warranties and representations
  • Checking for a well-drafted NDA provision
  • Verifying the presence of a non-compete and non-solicitation
  • Checking who will own intellectual property
  • Verifying for indemnification
  • Checking to see if insurance is required or should be
  • Checking for boilerplate provisions
  • Agreeing to governing law and legal jurisdiction
  • Verifying provisions for attorney fees

Making Sure You Client Can Get Out of the Contract

It is important to plan for the event that a customer wants to get out of the contract and make sure there is appropriate language in their defining the terms and process for breaking the contract. Most often the only time a party will look at a contract after they have signed it is when they are looking to assign it to someone else or to get out of it.

Renewal Terms

It is also vital to review the renewal terms of the contract and do your best to watch for what is referred to as forever contracts. In forever contracts, renewals will occur automatically unless notice is given within a narrow time frame, usually a length of time before the contract expires. In the event the cancelation has not been received, the contract will be renewed for another period.

The benefit of these type of renewal terms is that if the business relationship is going well, then neither party will have to take action in order to renew the contract. Auto-renewals aren't always bad, but it is important to allow a customer to have a way out if they are not satisfied.

Termination

One of the essential areas to look at in a contract is the terms of termination. It is always important to make sure that a client can get out of a contract if they are displeased with the performance of it. You should always verify that your client is able to terminate in the event of a breach of contract as well as have a short cure period in which they have to wait to cancel the contract.

Assignment

You will always want to make sure that the contract your client is signing allows assignment without the consent of the other signing party if the assignment is the result of a corporate reorganization. This can eliminate a significant amount of wasted time and resources.

Indemnification

If you notice that only one party is indemnifying, then it is best to have it removed from the contract unless it can be made to be mutual. Even if it is a situation where one party could never be the cause of liability, it is still vital to include mutual language.

Collections Expenses

You should make sure that the non-paying party listed in the contract is responsible for legal expenses and fees in terms of collections. By making this party responsible for the legal expenses they are more likely to pay to avoid going into collections actions.

Confidentiality and Non-Disclosure Provisions

Confidentiality clauses are vital in protecting proprietary or sensitive business information shared during a business relationship. These clauses should define:

  • What constitutes confidential information
  • How long the confidentiality obligation lasts
  • Permitted disclosures (e.g., legal requirements or affiliates)
  • Remedies in the event of a breach

Ensure that non-disclosure agreements (NDAs) are mutual when appropriate and that obligations continue beyond termination when necessary. The contract review process must ensure these terms are not overly broad or impractical to enforce.

Limitations of Liability

Limitations of liability clauses cap the financial exposure of a party in the event of a dispute or breach. These provisions should be:

  • Reasonable in scope and amount
  • Tailored to the type of contract and the level of risk involved
  • Clear about exclusions (e.g., gross negligence, fraud, willful misconduct)

Examine whether the cap includes or excludes consequential damages, and verify that it aligns with your client’s risk tolerance. Avoid overly one-sided caps that disproportionately protect the other party.

Governing Law and Dispute Resolution

It’s essential that the contract specifies which jurisdiction’s laws govern the agreement and how disputes will be handled. Review for:

  • Governing Law: Choose a jurisdiction familiar to your client to reduce complexity and potential legal costs.
  • Dispute Resolution Methods: Identify whether disputes will be resolved via litigation, arbitration, or mediation.
  • Venue and Forum: Make sure the forum for disputes is not unreasonably inconvenient or costly for your client.

Some contracts contain clauses that mandate arbitration in specific jurisdictions—this may impact enforceability or limit remedies. Clarify these terms early in the review process.

Service Level Agreements (SLAs)

In contracts involving services (especially SaaS or other ongoing service models), Service Level Agreements outline performance standards and expectations. A thorough review should include:

  • Uptime guarantees or availability thresholds
  • Response and resolution times for support requests
  • Penalties or service credits for unmet SLAs
  • Escalation procedures for unresolved issues

Ensure SLA metrics are measurable and enforceable. Ambiguous terms like "reasonable effort" or "as soon as possible" can lead to disputes.

Use of Contract Review Software and Technology

Leveraging modern contract review software can significantly accelerate and improve the accuracy of the contract review process. Key advantages include:

  • AI-powered risk flagging and clause comparison
  • Customizable checklists and playbooks
  • Version control and collaboration tools
  • Integration with CRM or document management systems

While these tools improve efficiency, human legal oversight remains crucial. Automated solutions should support—not replace—legal judgment.

When to Involve a Contract Review Lawyer

While templates and software can streamline the process, certain situations demand legal expertise:

  • High-value transactions
  • Cross-border agreements
  • Intellectual property ownership
  • Complex indemnity or liability terms
  • Regulatory compliance (e.g., healthcare, finance, data protection)

Attorneys can help negotiate better terms, assess legal risk, and ensure enforceability. You can find an experienced attorney on UpCounsel to assist with any aspect of your contract review process.

Frequently Asked Questions

1. What is the contract review process? The contract review process involves examining an agreement for accuracy, fairness, legal risk, and clarity before signing. It ensures the contract protects your interests and aligns with your objectives.

2. Who should review a contract? Simple contracts can be reviewed by business stakeholders, but complex or high-value agreements should be reviewed by a qualified attorney.

3. How long does it take to review a contract? Depending on the complexity, a contract review can take from a few hours to several days. Using software tools can expedite the process.

4. What are common red flags in a contract? Watch for one-sided indemnity clauses, unclear termination rights, ambiguous payment terms, and unreasonable liability caps.

5. Can AI replace a lawyer in reviewing contracts? AI tools can assist with efficiency and risk detection, but they cannot replace legal expertise—especially in complex negotiations or regulatory contexts.

If you need help with how to review contracts, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.