Five clauses to read before you sign a vendor agreement

You are not going to read the whole thing. Nobody does, including the person who sent it. So read these five, in this order, because this is the order in which they cost people money.

1. Term and renewal

Find the initial term, the renewal period and the notice window. Do the subtraction and write the notice date, not the end date, into a shared calendar. If the renewal is longer than twelve months, ask for twelve. This clause is first because it is the one that costs the most when it is missed, and the one that is easiest to fix before signing.

2. Termination

Ask two questions. Can I leave, and does it cost. Then ask the same two about them. Asymmetry here is the tell: if the vendor can walk away on thirty days' notice for any reason and you owe half the remaining term to do the same, that is not a negotiation position, it is an oversight you can name out loud.

3. Limitation of liability

Find the cap and read what it is a multiple of. One month of fees is a rounding error. Twelve months is the usual landing spot. Then check whether gross negligence, willful misconduct and data security breaches are carved out. If the clause is one sentence long, it almost certainly has no carve-outs.

4. Indemnification

Look for the word mutual, or for two paragraphs where each party indemnifies the other. If there is only one paragraph and it starts with your name, you are agreeing to pay their legal bills without a matching promise. Ask to make it mutual. This is a normal request and it is rarely refused outright.

5. The money clauses

Payment terms, price increases, and anything billed at then-current rates. Net 30 is the default; Net 15 is worth pushing back on if your own customers pay you slowly. A price increase clause with no cap is worth a cap, and twelve percent a year is not a cap, it is a ceiling nobody expects to hit until they do.

Eight minutes on these five clauses catches most of what a four hundred dollar review would catch. The lawyer is for the deal that could sink you, not for every subscription renewal.

When to stop and call someone

There are agreements where this checklist is not enough, and it is worth knowing which ones. Anything with a personal guarantee. Anything that touches equity or ownership of your company. Anything where the downside is bigger than a year of your revenue. Employment agreements with restrictive covenants. Anything involving real property for more than a couple of years. For those, pay the lawyer, and arrive with the five clauses already marked so the meeting is thirty minutes rather than three hours.

For everything else, the read above is most of the value, and it is what Clause automates: same five clauses first, same questions asked, with the specific language to send back.