How to review a contract the other side sent you

Start with the money and the exit

Read the payment clause and the termination clause before anything else. Together they tell you what the contract costs if it goes well and what it costs if it goes badly. A payment clause that allows the counterparty to withhold or set off amounts, and a termination clause that lets them leave on short notice while locking you in for a year, is the shape of most one-sided agreements. If both are acceptable, the rest is usually negotiable; if either is not, nothing else matters.

Look for automatic renewal. A twelve-month term that renews unless cancelled ninety days before the end is a two-year contract in practice, because nobody remembers the ninety days.

Find the liability cap and the carve-outs

Every commercial contract allocates risk through the liability clause. The questions are simple: is your liability capped, at what, and what is carved out of the cap. A cap at twelve months' fees is normal for services; a cap at the fees of the last month is aggressive; no cap is unacceptable unless you are the stronger party. Carve-outs for confidentiality, IP infringement and data breaches are common and usually fair; a carve-out for "breach of contract" swallows the cap entirely.

Indemnities are where the real exposure sits. An indemnity for third-party IP claims against your product is standard; an indemnity for the counterparty's own losses from your breach is a cap-free liability clause by another name.

Check who owns what you create

Service agreements and development contracts often contain an IP clause that assigns everything created "in connection with" the agreement to the customer. For a company whose product is the thing being used, that clause can transfer the product. The usual fix is a distinction between background IP (yours, licensed to the customer) and deliverables (theirs, excluding your background IP). Read the definitions; the risk is often in a defined term rather than in the clause itself.

Governing law and disputes decide whether anything else is enforceable

A contract governed by the counterparty's home law and heard in their home courts is enforceable against you and expensive for you to enforce against them. For cross-border contracts between Asian and Western parties, arbitration seated in Singapore or Hong Kong is the usual compromise: awards are enforceable in most countries under the New York Convention, which court judgments are not. A clause that also allows interim relief from any court keeps your emergency options open.

Check signature formalities too. Electronic signature is valid for ordinary commercial contracts in all the jurisdictions LegalMatrix covers, with exceptions for deeds, guarantees and some registrable documents; the jurisdiction pages list them.

Non-compete, exclusivity and change of control

Distribution and partnership agreements carry restrictive clauses that outlast the deal: exclusivity in a territory, non-competes against the counterparty's other products, and termination on change of control. Each is enforceable to a different degree in each jurisdiction; Ontario bans most employment non-competes outright, Singapore and Hong Kong enforce only what is reasonable, Japan weighs compensation. The question for the business is whether the clause would stop you doing something you plan to do, including selling the company.

When to involve a lawyer, and what to ask for

If the contract is worth more than a month of revenue, lasts more than a year, or contains an uncapped liability, an IP assignment or a foreign dispute clause, a lawyer's review pays for itself. Ask for three things: a redline against your position, a one-page summary of what to accept, push back on and refuse, and the reply you can send. That is the form LegalMatrix's counterparty review takes, with a lawyer admitted in the jurisdiction signing off within two business days.

If you sign more than a handful of contracts a month, write your positions down once as a playbook and have every contract checked against it; the deviations are the only things a lawyer then needs to see.