How to Review a Contract Before Signing

Start with the business terms

Before reading legal clauses, confirm the commercial terms match what was negotiated: parties, scope, pricing, payment schedule, term length, and deliverables. Discrepancies between the proposal and the contract are common — especially in order forms attached to MSAs. If the business terms are wrong, the legal review is wasted.

The clauses that carry the most risk

Every commercial contract should be reviewed for these sections, in roughly this priority:

• Indemnification — who covers whose losses
• Limitation of liability — caps and exclusions on damages
• Termination — how and when each party can exit
• Term and renewal — auto-renewal and notice requirements
• Governing law and dispute resolution — which state's laws apply
• Intellectual property — who owns what is created
• Confidentiality and data handling — especially for PII or PHI

Check for incorporation by reference

Many vendor contracts incorporate terms from a website, a click-through agreement, or a separate policy document. Those incorporated terms are binding even if you never read them. Follow the links, or ask the vendor for the current version of every referenced document before signing.

Use a consistent checklist

Review quality drops under deadline pressure. A standard checklist — the same fields for every contract — prevents skipped sections and creates a record of what was reviewed. Note pass, flag, or escalate for each clause. Contracts that fail multiple checks go to legal before signature.

Know when to escalate to counsel

Escalate when: liability is uncapped or indemnification is one-sided; the contract involves regulated data (HIPAA, PCI, GDPR); IP assignment is broader than expected; termination rights are asymmetric; governing law is unfavorable and non-negotiable; or the contract value exceeds your organization's signing authority threshold.

Document the review

Store the checklist, flagged clauses, and any legal sign-off with the executed contract. If a dispute arises later, you need to show what was reviewed and what was accepted knowingly. A review record is also how you improve your template terms over time — recurring flags indicate clauses to push back on in future negotiations.