Do’s and Don’ts: Contract Terms

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A contract makes an official agreement between two parties. So, both sides need to check the fine print carefully before signing to ensure they agree with everything. The terms outline what each party must do, can do, and might be responsible for. Attention to the times is crucial since precise and fair language helps avoid fights. Managing the contract properly from start to finish – called contract lifecycle management – is vital in keeping the terms transparent and honest. When looking at a new contract, you need to know the main do’s and don’ts of the times.

Key Contract Do’s

This section will explore essential actions you should take to set your contracts up for success.

  1. Read Carefully

When presented with a contract, the number one rule is to read it thoroughly. Too often, people skim contracts or rely on verbal summaries. However, the written terms are what counts legally. Read the fine print and only assume something written is enforceable. Watch for surprising, complex or contradictory clauses. Ask for clarification if you need help assessing something. 

  1. Clarify Ambiguities

Many contract disputes arise from ambiguous language that leaves room for multiple interpretations. If you notice vague or subjective terms like “reasonable efforts” or “regular intervals”, ask for specifics. Define essential terms upfront to prevent arguments over their meaning later on.

  1. Negotiate Key Points

Few contracts are perfect right off the bat. Therefore, it is wise to plan to negotiate with the other party rather than just signing whatever arrangement you’re handed initially. When reviewing the contract, prioritize clauses relating to payment, performance guarantees, intellectual property rights, liability, dispute resolution and termination. Push back on unfair terms and seek mutually beneficial compromises that meet both parties’ essential needs and interests.

  1. Use Precise Language

Using vague language in contracts can backfire, while specific, concrete terms create clarity. To maximize clarity, define performance needs, quality standards, acceptance criteria, timelines, oversight processes and money expectations in detail. Also, list particular metrics and milestones to track progress. Instead of loose phrases like “on time,” use clear language like “within five business days.” The more details you nail down, the less room for misunderstanding.

  1. Allocate Ownership Rights

Let’s be clear upfront about who owns what. It would help if you spelt out who will retain ownership of intellectual property assets like inventions, software, creative works, data, trademarks and website names. Also, lay out applicable licensing terms and usage rights for each member. Importantly, it addresses protecting proprietary information during and after working together. Have your lawyer carefully review the ownership terms to protect you.

Key Contract Don’ts

Here are some pitfalls to be mindful of so you can approach contract terms with appropriate care and diligence.

  1. Don’t Ignore Red Flags

If a contract raises many questions or concerns during your review, pause before signing and proceed cautiously. In particular, term sheets presented on a non-negotiable “take-it-or-leave-it” basis merit extra scrutiny, as this may be an unfair tactic.

Furthermore, refusal by the other party to explain or negotiate provisions may signal unreasonable or one-sided clauses. Therefore, don’t ignore your instincts – walking away from a problematic contract is perfectly acceptable.

  1. Don’t Skip Review Periods 

Don’t just sign it right off the bat. Insist on taking sufficient time to thoroughly review everything, even if it temporarily slows down momentum. Walking through the contract carefully helps identify and avoid potential oversights and surface areas you may need to negotiate. Be sure to mark up any questions or concerns so you can discuss and resolve those before you sign.

  1. Don’t Use Casual Language 

It is unwise to rely only on casually spoken promises when finalizing the official contract terms. Using vague summaries or assurances when settling the terms is risky. Ambiguous language often leads the parties to have different expectations later if disagreements arise. So, write down all the details in the signed contract, even with someone you trust. Use precise formal wording phrases that everyone could interpret differently. 

  1. Don’t Forget Termination Rights

Ensure appropriate “off-ramps” are available in the contract terms if the engagement stops working. Outline conditions where parties can rightfully end the contract if major breaches or defaults happen. Also, consider building flexibly to complete it without cause under defined circumstances. Address related needs like required notice periods, transition of duties, and any obligations after ending it.

  1. Don’t Ignore Dispute Resolution

No contract can prevent every disagreement. Accordingly, include targeted dispute resolution procedures like arbitration, mediation and jurisdiction selection clauses. Well-structured resolution processes facilitate satisfactory outcomes without terminating the entire relationship.


A contract is only words on paper. What truly matters is the spirit behind it – two parties coming together in good faith to negotiate an agreement. More than binding partners to duties, thoughtful contracts empower partnerships to thrive.

Author Bio:

Qurat-ul-Ain Ghazali, aka Annie, is the growth manager at Contractbook and looks after all the organic channels. She has been with tech startups and scaleups for a couple of years with a B2B focus. You can find her socializing, traveling, indulging in extreme sports, and enjoying the local desserts when she is not working.