Before You Sign: A Small Business Contract Checklist

If you're a business owner, you've probably found yourself party to many contracts: supplier agreements, client terms, leases, insurance policies, service agreements. Very few are properly reviewed before signing. Usually that's fine. Occasionally, it's the single most expensive decision a business makes that year.

You don't need a lawyer to read every contract that crosses your desk. But you should know what to look for, and when it's worth getting a second opinion.

The clauses that do the most damage

Indemnity clauses. These determine who pays if something goes wrong. Ask: what exactly am I agreeing to cover, and is there a cap on it? An uncapped indemnity in a supplier contract can expose your business to losses completely disproportionate to the value of the deal.

Liability limits. Related to indemnity, but distinct — this is the ceiling on what either party can be made to pay overall. If there's no cap at all, that's worth questioning. If there is a cap, check it's set at a level that makes sense for the size of the contract.

Termination rights. How can each party get out of this agreement, and on what notice? A contract that's easy for the other side to exit and hard for you to exit is a lopsided deal, even if everything else looks fine.

Restraint of trade / non-compete clauses. These restrict what you (or your business) can do after the relationship ends. Courts will only enforce restraints that are reasonable in scope, time, and geography — but "unenforceable" doesn't mean "won't cause you a problem." An overly broad restraint can still create real friction and legal cost even if you'd likely win a challenge to it.

Payment terms. Not just the amount — the timing, the trigger for payment, and what happens if payment is late. Vague payment terms are a common source of disputes that have nothing to do with the substance of the deal.

Consumer law compliance. If your contract deals with consumers rather than other businesses, terms that are unfair or misleading can be unenforceable, or worse, expose you to regulatory action, regardless of what you intended.

A practical way to run through any contract

1. Identify your must-haves before you read a single clause. Usually: a sensible liability cap, workable payment terms, and a fair way out. Knowing your priorities before you start makes the review faster and more focused.

2. Read for what's missing, not just what's there. Contracts that don't address termination, dispute resolution, or what happens to data/IP at the end of the relationship are just as risky as contracts with bad clauses.

3. If something feels one-sided, propose a specific alternative rather than a vague objection. Replacing an unlimited indemnity with a mutual indemnity capped at a defined amount is a concrete, negotiable ask. "This feels unfair" isn't.

4. Know when to stop doing this yourself. Low-value, low-risk, standard-form contracts are usually fine to sign without review. Anything with an ongoing commitment, a personal guarantee, meaningful liability exposure, or unfamiliar terms is worth ten minutes of a lawyer's time before you sign, not after.

Why "just use a template" only gets you halfway

Templates are a reasonable starting point, but they're generic by design; they can't account for your specific industry, risk profile, or the particular deal you're actually doing. A contract that's technically complete can still leave you exposed if it wasn't built around your situation.

Where Pradella Law fits in

Contract review doesn't need to be a large undertaking. Often it's a single, fixed-fee piece of work: you send the contract, we flag what actually matters (not a twelve-page memo you'll never read), and you sign with a clear picture of what you're agreeing to.

If you've got a contract sitting in your inbox that you've been meaning to have looked at, that's exactly what a discovery call is for. Book a free 30-minute discovery call and bring the contract. We'll tell you honestly whether it needs a closer look.

This article is general information current as at the publication date and does not constitute legal advice. Contact Pradella Law for advice tailored to your specific circumstances.