Contract Review Checklist: Red Flag Version

Before you sign or approve any contract, it’s helpful to run it through a **red‑flag checklist**. This helps you spot dangerous terms or hidden traps that could cost you later. Below is a checklist of key warning signs to watch for.

🔎 Pre‑Review Notes

• Have the final and all prior drafts available for comparison
• Keep a separate document or margin for notes & comments
• Know your priorities (what clauses matter most to you)

1. Definitions & Interpretation

• Are key terms properly defined and capitalized?
• “Ambiguous” definitions or reused words without clarity
• Cross‑references that refer to definitions inconsistently

2. Scope / Deliverables / Obligations

• Vague or open-ended obligations (“as needed”, “reasonable efforts”)
• Undefined metrics, standards, or performance levels
• Unilateral rights to change scope or deliverables

3. Payment & Fees

• Unclear payment schedule or conditions
• Automatic deductions, escalations, or penalties
• No cap on fees or interest for late payments

4. Term, Renewal & Termination

• Automatic renewals with tight cancellation windows
• No clear termination for convenience or “no fault” exit
• No “cure” period before termination for breach
• Survival terms that last too long (or forever) without reason

5. Liability, Indemnification & Insurance

• Unlimited liability or no caps
• Broad indemnity covering everything, including others’ negligence
• Defense costs included without limit
• No requirement for insurance or proof of coverage

6. Confidentiality & Intellectual Property

• Overbroad definition of “confidential information”
• No exceptions for required disclosures (by law, regulation)
• IP ownership transfers, licensing, or ambiguous rights
• No carve-out for residual knowledge or general skills

7. Change Control & Amendments

• Verbal or informal changes allowed
• No requirement that amendments be in writing and signed
• Amendment rights only for the other party, not you

8. Dispute Resolution & Governing Law

• Unfavorable jurisdiction or venue clause
• No requirement for mediation or negotiation before going to court
• Mandatory arbitration with limited rights of appeal

9. Miscellaneous Provisions

• Severability clauses absent or weak
• Entire agreement / merger clauses that shut out prior promises
• Force majeure clauses too narrow or absent
• No audit or inspection rights
• Unclear notices clause (where/how to send notices)

10. Execution & Formalities

• Missing signatures, dates, or printed names
• Required witnesses, notary, or seals missing
• No counterpart or electronic signature clause

Conclusion

Use this checklist before you finalize or sign any contract. Each red flag is a chance to ask questions, negotiate changes, or request clarifications. If you want, I can run a red-flag review for your specific contract—upload it and I’ll walk you through the risks in plain English.

FAQ