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Contract Red Flags To Be Aware Of

Contract Red Flags To Be Aware Of

Contractual agreements and business operations are inseparably connected. It is nearly impossible to accomplish any significant business deals without first entering into a legally binding agreement. In many cases, failure to sign a contract can result in a significant loss of revenue for your company. 

It is expected that said contract is mutually beneficial. However, it’s best to not always assume this. It is imperative to you read an agreement thoroughly before signing. Before signing anything, it’s best to ensure there are no surprises hidden amongst the legal jargon. 

You may know the importance of reading before signing but are you aware of the types of contract red flags you should be looking out for? Reviewing a contract line-by-line is not enough if you don’t know the common pitfalls. 

Continue reading to learn more about five recurrent contractual issues and ways in which to avoid them. 


Never be quick to sign a contract that you don’t fully understand. If you have questions, ask for clarification. If you don’t understand the answers you receive, don’t brush them off because you’re afraid of embarrassment. You should never just assume a contract was written fairly, especially if you do not have experience interpreting legal terminology. 

Contracts should never be ambiguous. Terms must be clearly spelled out to avoid any subsequent legal repercussions. The last thing you want to deal with is wading through obscure terms after a contract has ended poorly. Require clear and concise contractual language to save yourself the headache of any future confusion. If the other party is unwilling to budget on vague terms, walk away. Don’t sign anything until every section is plainly outlined. 

Inequitable Terms

Emotional responses can cause you to make decisions that are not logical. Because of this, it is important that you never let the excitement of entering a contract cloud your otherwise sound judgment. If you find yourself unable to separate emotion from your business dealings, ask for a second set of eyes to review a contract before you move forward with signing it. Better yet, employ the help of a qualified attorney who specializes in contract law. 

If a contract seems too good to be true, it probably is. Read contracts meticulously and be mindful of any biased terms. One-sided agreements are often heavily slanted towards the company providing the contract. Be mindful of this and make certain the contract you are signing is equitable for both parties. 


Misspellings and grammatical errors found within a contract should tip you off to a lack of attention to detail. How can you trust the soundness of an agreement if the providing party hasn’t taken the time to proofread the document? Make certain that your company’s name is spelled accurately and is listed appropriately throughout the contract. 

Automatic Contract Renewal

Be cautious of any agreement that automatically renews. If this type of renewal term isn’t concerning in your situation, you must be diligent in remembering the exact contract continuation date. You rarely anticipate issues at the time of contract signing; however, problems can arise throughout the duration of the agreement. You do not want to be locked into a longer contract simply because you forgot about the automatic renewal deadline. 

Termination Terms

Never sign a contract that you don’t know how to get out of. Expensive termination fees may be hidden within a contract. You must read a contract comprehensively to ensure that you are able to afford any associated fees should you need to end a contract early. 

Expert Advice for Your Next Contract

The experienced attorneys at Flanagan, Lieberman, & Rambo are ready to review your next contract before you sign it. We are the legal expert you need when you want to guarantee that an agreement reflects your best interests

Let our team of respected attorneys search for contract red flags so that you don’t have to. Contact us today to learn how we can help you sign your next agreement with confidence.