Whether you're a freelancer, small business owner, or signing a lease, reviewing a contract properly can save you thousands of dollars and months of headaches. Here's how to do it.

Step 1: Read the Entire Contract

This sounds obvious, but most people skim. Read every word, including the fine print, appendices, and any referenced documents. If the contract mentions "Schedule A" or "Exhibit B," make sure you have those documents and read them too.

Step 2: Check the Payment Terms

Payment is where most disputes start. Look for: the total amount or rate, when payment is due (NET 15, NET 30, on delivery, etc.), what triggers payment (milestone, approval, invoice date), and whether there are late payment penalties or interest clauses. The best contracts include a kill fee — payment for work completed if the project is cancelled.

Step 3: Understand IP and Ownership

Who owns the work product? When does ownership transfer? Does the client get exclusive rights or a license? Can you use the work in your portfolio? These questions matter enormously. IP clauses that are too broad can prevent you from using your own techniques or tools on future projects.

Step 4: Review Scope and Deliverables

The scope section should be the most specific part of the contract. List every deliverable, deadline, and acceptance criteria. If something is ambiguous, clarify it before signing. A vague scope is an invitation for scope creep.

Step 5: Check Liability and Indemnification

Liability clauses determine what happens when things go wrong. Look for: liability caps (ideally 1-2x the contract value), mutual indemnification (not one-sided), and exclusions for consequential damages. Never agree to unlimited liability.

Step 6: Review Termination Terms

How can either party end the contract? Look for: notice period (14-30 days is standard), payment for work completed, what happens to IP and deliverables on termination, and whether there are termination fees. Both sides should have the right to terminate.

Step 7: Look for Non-Competes and Exclusivity

Non-compete and exclusivity clauses can limit your ability to work with other clients. If they exist, make sure they're narrowly scoped: limited in time (3-6 months max), geography, and the definition of competing work.

Step 8: Negotiate — Everything Is Negotiable

Most people treat contracts as take-it-or-leave-it. They're not. The first version is a starting point. Mark up anything unfair, draft alternative language, and send it back. Professional clients expect negotiation.

Or let AI review it for you in 30 seconds

ShieldSign analyzes your contract against industry benchmarks and flags every issue automatically. You get a Fairness Score, plain-English explanations of every red flag, and counter-language you can copy and send back.

Check Your Contract — Free

How to Review a Contract Before Signing: A Step-by-Step Guide