Reading a Contract Before You Sign It

The organising question

Not what happens if everything goes to plan, but what happens if it does not.

Almost every clause worth attention answers that question: what if they are late, what if the work is inadequate, what if I want to stop, what if they stop.

Clauses that determine outcomes

Term and termination: how long it lasts, how either party ends it, what notice is required, and what survives termination.

Automatic renewal, which is where recurring commitments are quietly extended. Note the notice window and diarise it immediately.

Payment: amounts, timing, what triggers each payment, and the consequences of late payment.

Liability: what each party is responsible for, any cap on that liability, and what is excluded. Consequential loss exclusions remove lost profit from what you can recover.

Indemnities, where one party agrees to cover the other's losses. These can create exposure well beyond the contract value and deserve close reading.

Dispute resolution and governing law, which determine where and under what rules any argument is settled.

What is easy to miss

Terms incorporated by reference — a link to standard terms elsewhere — which are binding and frequently unread.

Schedules and appendices, which often contain the actual specification.

Definitions, which can materially change the meaning of operative clauses. A defined term is not always used in its ordinary sense.

Entire agreement clauses, which state that nothing said during negotiation forms part of the contract. If a verbal assurance matters, it must be written in.

Practical approach

Read it once quickly for structure, then again for the clauses above.

Note anything you do not understand and ask. A party unwilling to explain their own contract is telling you something.

Everything is negotiable in principle, and standard-form contracts are amended more often than people expect when asked reasonably.

Keep a copy of the signed version and any documents referred to, since the terms in force at signature are what govern.

For anything of significant value or duration, have it reviewed professionally. The cost is small against a dispute.