The risk is rarely on the signature page
Most businesses review a contract by checking the price, scope, and signature block. The real risk usually hides in an unclear acceptance standard, a one-sided indemnity, an automatic renewal, or a liability cap. A contract is the operating manual for what happens when the relationship works, changes, or breaks down — and these five clusters cover the clauses that matter most.
1. Who's signing, and what's actually promised
Confirm the correct legal entities are named and the signatory is authorised — if an affiliate will deliver services or own IP but isn't a party, the contract may not give you the protection you expect.
Then check the definitions. Terms like “confidential information,” “deliverables,” and “losses” quietly shape the commercial outcome — a narrow definition of confidential information can exclude oral disclosures entirely. Finally, look at representations and warranties: are the promises realistic, and is each one backed by a remedy?
2. Scope, price, and change
The scope should describe the actual output, not a general intention — specifications, milestones, acceptance criteria, and who tests what. “Implementation support” is not enforceable; a defined list of modules and testing responsibilities is.
Match price to payment mechanics: what triggers each payment, what's included in the fee, and how disputed invoices are handled. And build in a change-control clause — scope changes handled informally over email are where cost and timeline disputes usually start.
3. Who carries the risk
Indemnity and liability clauses often matter more than price in a high-risk contract. Don't accept an indemnity as a standard paragraph — identify the trigger, the protected persons, and the exclusions. A clause covering third-party IP infringement is very different from one covering “any loss arising from the agreement.”
For liability caps, check the overall cap, the carve-outs (fraud, confidentiality breach, data breach, and unpaid fees are common), and whether those carve-outs quietly swallow the cap.
4. Protecting information and IP
Confidentiality terms should say what's protected, who can receive it, and what happens on termination. IP clauses should answer a sharper question: who owns new deliverables, and can you actually modify, sublicense, or transfer what you paid for?
If personal data is involved, the contract needs more than a promise of confidentiality — it needs processing roles, security measures, and breach notification, consistent with the Digital Personal Data Protection Act, 2023 and its 2025 Rules.
5. How the relationship ends
Check the notice window for termination and automatic renewal — a 90-day notice requirement before auto-renewal can lock a business in for another year if the calendar is missed. Termination consequences should cover payment, data return, and transition assistance.
For disputes, decide the escalation path and be precise about arbitration seat versus venue — “courts at Mumbai” is not the same as specifying Mumbai as the seat of arbitration, and that difference alone can create an expensive preliminary dispute.
| Clause | Ask | Warning sign |
|---|---|---|
| Scope | Can two people interpret the deliverable the same way? | Broad promise, no acceptance criteria |
| Payment | What event triggers each payment? | Full payment before meaningful delivery |
| Indemnity | Which specific risk is being shifted? | Unlimited indemnity for every loss |
| Liability | Does the cap reflect the risk and insurance? | Cap is removed by broad carve-outs |
| IP | Do we own or receive the rights we need? | Supplier retains all deliverables |
| Termination | Can we exit if it stops working? | Auto-renewal with a narrow notice window |
Six things to confirm before signing
- The legal parties and signatory authority are correct.
- Scope, specifications, and rates are attached, not implied.
- Every indemnity and liability carve-out is identified.
- IP ownership and licence rights are clear.
- Termination notice, cure periods, and exit assistance are workable.
- Governing law, jurisdiction, and arbitration seat are consistent.
Frequently Asked Questions
Should every contract be reviewed by a lawyer?
Routine low-value purchases can run on an approved template. Review becomes important once material value, exclusivity, IP, personal data, or significant liability is involved.
Is a limitation-of-liability clause always enforceable?
It depends on the wording, the facts, and applicable law — treat it as part of the broader risk allocation, not an automatic shield.
Is a template contract safe to use without changes?
Templates are a useful starting point, but they can't know your data flows, bargaining position, or regulatory context. Adapt and approve each template for the specific deal.
Call to Action
Lindait & Associates assists founders, SMEs, and established businesses with contract drafting, review, and negotiation. Contact the firm before signing an agreement that will shape the business.