Not all contract clauses are created equal. Some provisions are routinely one-sided, unusually broad, or missing entirely — and these are the clauses that create the most risk for your clients. Here are the 10 clauses every attorney should flag during contract review, with explanations of what makes each one dangerous and how to negotiate better terms.
What to look for: One party must indemnify the other, but the obligation doesn't go both ways. For example: "Provider shall indemnify Client from all claims arising from breach. Client shall have no indemnification obligation."
Why it's dangerous: The indemnifying party bears all the legal and financial risk. If the non-indemnifying party causes a breach that results in a third-party claim, the indemnifying party may have to pay for both sides' defense and damages.
How to fix it: Negotiate mutual indemnification where each party indemnifies the other for claims arising from their own breach or negligence. If mutual isn't possible, cap the indemnification obligation and add a defense cost limit.
What to look for: Liability caps that differ significantly between parties. For example: "Party A's total liability shall not exceed $100. Party B's total liability shall not exceed $50,000."
Why it's dangerous: If the lower-capped party causes significant damage, the other party has no meaningful recourse. A 500:1 ratio is a red flag.
How to fix it: Equalize the caps or at least bring them within a reasonable ratio (e.g., 1:1 or 2:1). Also check for carve-outs that nullify the cap entirely.
What to look for: One party can change the agreement terms without the other's consent. For example: "Party A may amend this Agreement at any time by written notice."
Why it's dangerous: The other party can wake up to entirely different terms — new pricing, new obligations, new restrictions — with no ability to object or exit.
How to fix it: Require mutual written consent for any amendment. At minimum, require notice and a reasonable opt-out period for material changes.
What to look for: One party can assign the contract freely while the other needs consent. For example: "Party A may assign without consent. Party B may not assign without prior written consent."
Why it's dangerous: Your client could end up contracted to a completely different entity — potentially a competitor or a company with different operational standards — with no say in the matter.
How to fix it: Make assignment rights mutual — both parties either need consent, or both can assign to qualified successors. Add a change-of-control provision if assignment is permitted.
What to look for: Non-compete restrictions that are broad in scope, duration, or geography. For example: "Provider shall not serve any competitor worldwide for two years after termination."
Why it's dangerous: Broad non-competes may be unenforceable in many jurisdictions (California largely prohibits them), but they still create chilling effects and potential litigation. They also severely limit the provider's ability to do business.
How to fix it: Narrow the scope to specific, named competitors or a defined market segment. Reduce duration to 6-12 months. Limit geography to where the client actually operates.
What to look for: Extended payment timelines (90+ days), high late fees, or service suspension rights. For example: "Client shall pay within 90 days. Provider may suspend services after 15 days past due."
Why it's dangerous: 90-day payment terms create significant cash flow pressure on the provider. Short suspension windows (15 days) combined with long payment terms (90 days) create an impossible situation.
How to fix it: Standardize to net-30 payment terms. Require at least 30 days past due before suspension. Cap late fees at 1-1.5% per month.
What to look for: A contract that only allows termination for material breach, with no option to exit without cause.
Why it's dangerous: Without a termination-for-convenience clause, your client is locked into the agreement until the other party breaches or the term expires. This is especially dangerous in long-term agreements where business needs change.
How to fix it: Add a termination-for-convenience clause with 30-60 days notice. Include a transition period and ensure work-in-progress is addressed.
What to look for: Mandatory arbitration combined with a class action waiver. For example: "All disputes shall be resolved through binding arbitration. Each party waives any right to participate in a class action."
Why it's dangerous: This combination prevents your client from joining collective claims and may make small-value disputes impractical to pursue (since individual arbitration costs can exceed the claim value).
How to fix it: If arbitration is required, remove the class action waiver or add a carve-out for small claims. Alternatively, allow litigation in a mutually agreed jurisdiction instead of arbitration.
What to look for: Work-for-hire language that claims all IP, including pre-existing tools, frameworks, and methodologies. For example: "All work product and all intellectual property shall vest in Client upon creation."
Why it's dangerous: If the provider uses proprietary tools or frameworks to deliver the work, this language could be interpreted as transferring ownership of those pre-existing assets to the client.
How to fix it: Distinguish between work product created specifically for the client (transferred) and pre-existing IP used in delivery (licensed, not transferred). Add a license-back for pre-existing IP.
What to look for: Either no force majeure clause, or one with an exhaustive list that doesn't cover modern disruptions (pandemics, cyberattacks, supply chain failures).
Why it's dangerous: Without force majeure protection, a party affected by circumstances beyond their control is still liable for breach. A narrow list may not cover the specific disruption your client faces.
How to fix it: Include a force majeure clause with both a non-exhaustive list and a catch-all ("and other events beyond the reasonable control of the affected party"). Add notice and mitigation requirements.
Checking for these 10 clauses on every contract is difficult to do consistently — especially under time pressure. That's where AI contract review tools like ContractPeer help. When you upload a contract, the AI automatically checks for all 10 of these risk categories (and 5+ more) and returns a structured report with:
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Note: This article is for informational purposes only and does not constitute legal advice. Always have a qualified attorney review contracts before making decisions.