You don’t need to be a lawyer to spot a dodgy contract. But you do need to know what to look for.
Whether you’re signing a service agreement, supplier terms, or a partnership contract, knowing exactly what you’re signing up to and know how to spot contract red flags, will reduce risk and increase your confidence.
So if you’re about to enter into a new agreement, take a minute to scan for these five common contract red flags. Spotting them early could save you stress, time, and money down the line.
1. Vague or missing deliverables
If the contract doesn’t clearly set out who’s doing what and by when that’s your first red flag.
Vague language like “provide services as agreed” or “subject to availability” gives too much room for interpretation. And that can lead to disappointment, disputes, or even breach of contract claims.
What to check for:
- Are the deliverables clearly listed and defined?
- Are deadlines, milestones, or timeframes included?
- Are both parties’ responsibilities outlined?
What to do:
Ask for specifics. A good contract spells out exactly what’s being delivered, when, and how it will be reviewed or approved.
2. Unlimited liability clauses
Unlimited liability is exactly what it sounds like and it’s rarely fair in a commercial agreement.
If a contract holds you liable for any and all damages, losses, or costs without a cap, you could be on the hook for a lot more than you bargained for even if the contract’s value is relatively small.
What to check for:
- Phrases like “indemnify for all losses”, “unlimited liability”, or “without limitation”
- Lack of a clear liability cap
What to do:
Negotiate a reasonable liability cap, typically linked to the value of the contract or insurance coverage. Caps should exclude things like fraud or wilful misconduct, but cover most operational risks.
3. Unilateral termination or renewal clauses
Some contracts quietly include auto-renewals, long notice periods, or give the other party the power to walk away at any time without giving you the same right.
That’s a power imbalance, and it can leave you stuck in a deal that no longer works for your business.
What to check for:
- Auto-renewal clauses that don’t require notice
- One-sided termination rights
- Excessive notice periods (e.g. 6+ months)
What to do:
Make sure you have the right to terminate too, ideally with mutual notice periods and break clauses. And flag auto-renewals early so you’re not caught off guard later.
4. Intellectual property confusion
If your business creates anything, content, branding, tech, training materials etc, make sure you know who owns the IP after the contract ends.
Too many business owners assume they retain ownership, only to find the other party claiming rights they weren’t expecting to give away.
What to check for:
- Who owns what during and after the agreement
- Whether licences are exclusive or non-exclusive
- Whether IP created during the relationship stays with you
What to do:
Be crystal clear about IP ownership from the outset. If you want to retain ownership of materials you’ve developed, make sure that’s stated in black and white.
5. Dispute resolution clauses that work against you
Hope for the best but plan for the worst – that’s the purpose of your dispute resolution clause. This should enable both parties to reach a mutually agreeable conclusions should it all go wrong but some contracts may try to include expensive, inconvenient or intimidating routes like litigation in a foreign jurisdiction.
What to check for:
- Jurisdiction clauses that name a foreign court
- Mandatory arbitration with no right of appeal
- Lack of a clear escalation process
What to do:
Look for a fair process. Many UK-based businesses opt for mediation or negotiation first, then legal action if needed. Make sure the jurisdiction suits you, not just the other side.
Bonus tip: Always read the contract in full (or get it reviewed)
It’s tempting to skim and assume the terms are ‘standard’. But there’s no such thing as a truly standard contract and every word is there for a reason.
If anything seems off, unclear or too good to be true, it’s worth a second look. A short contract review from a commercial lawyer can flag risks early and help you renegotiate terms on solid legal footing.
Final thoughts: Contracts are meant to protect both parties
A well-drafted contract sets clear expectations and balances risk. If it feels one-sided, overly vague, or heavily weighted in someone else’s favour, that’s your sign to pause and ask questions.
At Jamieson Law, we help businesses across the UK negotiate fairer, safer contracts that reflect the way they actually work not just what’s hidden in the fine print.
Need a second set of eyes on a contract? We’re happy to help you make sense of it before you sign. CLICK HERE to book your free discovery call.
