What to Do Before Signing Any Contract
Read the Entire Document
This sounds obvious, but most people skim or skip straight to the signature page. Every clause matters. Pay special attention to sections that are dense or buried at the end, as these often contain the most consequential terms like arbitration requirements, liability caps, and automatic renewals.
Identify the Key Terms
Before anything else, make sure you understand:
- What you are agreeing to do (your obligations)
- What the other party is agreeing to do (their obligations)
- How long the agreement lasts and how it can be terminated
- What happens if something goes wrong (dispute resolution, damages, liability)
- What you are giving up (intellectual property, right to sue, ability to work elsewhere)
Look for These Red Flags
- Vague language: Terms like "reasonable efforts" or "at the company's discretion" without clear definitions
- One-sided indemnification: You cover their losses but they do not cover yours
- Broad non-compete clauses: Geographic scope, time period, and restricted activities that go far beyond what is necessary
- Automatic renewal with penalties: The contract rolls over unless you cancel by an exact date
- Unilateral amendment rights: The other party can change terms without your consent
Ask Questions
Do not be afraid to ask the other party to explain terms you do not understand. If they are reluctant to clarify, that itself is a red flag. Legitimate businesses expect questions about their contracts.
Negotiate Before You Sign
Contracts are proposals, not take-it-or-leave-it documents. You can request changes to timelines, payment terms, non-compete scope, liability limits, and termination provisions. Get any agreed changes in writing as formal amendments to the contract.
Keep a Copy
Always keep a signed copy for your records. If the contract is modified after signing without your agreement, your copy is your proof of the original terms.
When to Consult a Lawyer
Consider professional review for any contract involving significant money, long-term commitments, restrictions on your future employment, or personal liability. An attorney can spot issues that are easy to miss in unfamiliar legal language.
This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.