Legal Red Flags: What to Watch Out for Before Signing a Contract

Contracts are like relationships: they start with high hopes and promises, but things can quickly go south if you don’t pay attention to the fine print. Whether you're leasing office space, hiring a vendor, or partnering with another business, it's crucial to know what you’re agreeing to before you sign on the dotted line. So, before you let the ink dry, here are some red flags to watch out for—and if things seem murky, it’s probably a sign that it’s time to consult a professional. (Spoiler alert: That’s where we come in.)

1. Vague or Ambiguous Language

Let’s face it—legal jargon can sometimes feel like reading a novel written by someone who was paid by the syllable. But if a contract is too toovague, you might find yourself in trouble down the road. Pay close attention to any terms that seem ambiguous. If the wording is unclear, it could be a loophole just waiting to be exploited. You’ll want to make sure every term is spelled out in clear, plain language. If the contract leaves you asking, “Wait, what does this really mean?”—red flag alert!

2. Unilateral Clauses

Ever feel like you’re the only one pulling the weight in a relationship? Well, contracts can be like that, too. Watch out for unilateral clauses—those sneaky little sections that only benefit one party (and spoiler: it’s usually not you). For example, if the other side can change terms or cancel the agreement without consulting you, but you have no such flexibility, that’s a major red flag. Contracts should protect both sides equally, and if it feels too one-sided, it might be time to renegotiate.

3. Auto-Renewal Without Notice

Surprise! You’re still in that contract you thought was long over. Auto-renewal clauses can lock you in indefinitely if you're not careful. If there’s no clear path for cancellation or if the auto-renewal happens without any notice, this could mean trouble. Keep an eye out for these clauses and ensure you have a simple way out if you need one.

4. Lack of Termination Clauses

No one likes to think about breaking up, but in the world of business, it’s essential. A good contract will spell out exactly how either party can terminate the agreement, whether it's for breach, convenience, or at the end of a project. If there’s no mention of how to end the relationship, consider this a bright red flag waving in your face.

5. Dispute Resolution Terms That Favor the Other Party

Imagine this: you're in a contract dispute, but surprise—you have to resolve it in a state that’s 2,000 miles away. Dispute resolution clauses matter. Be on the lookout for any terms that require arbitration or litigation in a far-flung jurisdiction or under laws that are unfamiliar to you. If the terms seem like they overwhelmingly favor the other party, it might be a sign that the contract isn’t in your best interest.

6. Overly Complex Payment Terms

If the payment structure reads more like a Sudoku puzzle than a simple transaction, beware! Contracts with overly complex payment terms could be hiding fees, penalties, or tricky payment schedules that could hurt your bottom line. Make sure you understand exactly when, how, and how much you’ll be paying—or getting paid.

7. No Clear Deliverables or Performance Metrics

Here’s the deal: a contract should clearly define what each party is responsible for and when it’s due. If a contract doesn’t include deadlines, deliverables, or performance metrics, that’s a red flag. Without these details, you could find yourself chasing down the other party for work that’s never completed, or worse, being accused of not holding up your end of the bargain when the terms were too vague to begin with.

So, What Now?

If your head’s spinning with thoughts of tricky contract clauses and confusing terms, don’t worry—you’re not alone! Contracts are a critical part of running a business, but they don’t have to be a nightmare. At Dolev Law, we specialize in making sure you’re protected, whether it’s reviewing contracts, negotiating terms, or helping you draft agreements that work in your favor.

Instead of playing "guess what's wrong with this contract," why not get peace of mind? Schedule a consultation with us, and we’ll help you spot the red flags before they turn into real problems. Remember, it’s always easier (and cheaper) to prevent a problem than to fix one after it’s too late