Questions Worth Asking Before You Sign a Commercial Agreement
A practical guide to reviewing scope, payment mechanics, liability allocation, renewal traps, and exit paths before committing your business.
1. Are the deliverables and acceptance criteria unmistakable?
Disputes rarely begin because a party intended to breach from day one; they usually arise because each side held a different assumption about what "completion" or "reasonable support" meant. Check whether specifications, milestones, dependencies, and review windows are written in concrete operational terms rather than aspirational summaries.
2. How do invoicing, expenses, and late-payment remedies work?
Verify not only the headline fee, but when invoices are triggered, whether pre-approval is required for third-party expenses, how tax responsibilities are allocated, and whether either party can suspend performance during a good-faith billing inquiry.
3. What triggers renewal or early termination?
Automatic renewal clauses with narrow notice windows can lock a growing business into outdated arrangements. Confirm the initial term, notice deadlines for non-renewal, termination-for-convenience rights, and the exact wind-down obligations if the relationship ends early.
4. Is the allocation of liability proportionate to the commercial value?
Review limitation-of-liability caps, consequential loss exclusions, and indemnification carve-outs together. An uncapped indemnity or a one-sided carve-out can expose your organization to risks that far exceed the value of the contract.
5. How are disagreements escalated and resolved?
Look closely at the governing law, jurisdiction or arbitration forum, required notice addresses, and any tiered negotiation steps. Knowing where and how a dispute must be heard helps you evaluate the true cost of enforcement.
Key Takeaways
- Define deliverables, dependencies, and acceptance windows in concrete operational language.
- Align liability caps and indemnity carve-outs with the realistic value and risk of the deal.
- Diary automatic renewal notice windows and verify clear termination and transition rights.
