Most commercial contract disputes are not about fraud or bad faith. They are about clauses that were signed without being fully understood — provisions that seemed routine at the time but turned out, when tested, to mean something very different from what the signing party expected.
This checklist covers the twelve clauses that most frequently cause problems in UK commercial contracts, in rough order of the financial exposure they create. You do not need to be a lawyer to use it. You do need to read your contract carefully, preferably before you are under time pressure to sign.
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1. Limitation of liability
This clause caps what either party can recover if something goes wrong. Most commercial contracts contain one. The questions to ask are: what is the cap (typically expressed as a multiple of fees paid), what types of loss are excluded entirely, and whether those exclusions are valid under the Unfair Contract Terms Act 1977.
Under UCTA, you cannot exclude liability for death or personal injury caused by negligence. You cannot exclude liability for fraud. Beyond those, exclusions between businesses are subject to a reasonableness test. A cap of three months' fees is common. A cap of zero — or an exclusion of all consequential loss with no carve-outs — deserves scrutiny.
2. Indemnity clauses
Indemnities are stronger than damages claims. They typically do not require you to prove loss in the normal way — the obligation to pay arises from the trigger event itself. Broad, one-sided indemnity obligations can therefore create significant exposure.
Look for: whether the indemnity is mutual or one-sided, whether it is capped, whether it sits outside the limitation of liability clause (meaning the cap may not apply to it), and whether the trigger event is precisely defined or open-ended.
3. Payment terms and withholding rights
Check when payment falls due, what triggers the payment obligation, and whether the other party has any right to withhold or set off payment. A clause giving the customer the right to withhold payment "pending satisfaction in their sole discretion" is a serious risk for any supplier — it effectively makes your right to payment subject to the customer's subjective approval.
Under the Late Payment of Commercial Debts (Interest) Act 1998, you are entitled to charge interest on late commercial payments. However, this only helps once a payment is due and overdue — it does not assist if the contractual trigger for payment has not yet been reached.
4. Termination rights
Who can terminate, on what grounds, and with how much notice? Asymmetric termination clauses — where the customer can terminate for convenience with short notice but the supplier cannot — are common but worth flagging. If you are a supplier who has invested in setup or onboarding, a short termination notice period may mean you cannot recover those costs.
Also look for termination for cause provisions. These typically allow either party to terminate immediately for material breach. The definition of "material breach" is important — if it is defined broadly, minor defaults may give the other party a right to terminate immediately and without compensation.
5. Intellectual property ownership
In most commercial contracts, the party doing the work retains the IP in what they create unless the contract says otherwise. But many commercial contracts — particularly those with larger clients — contain broad IP assignment clauses transferring ownership of all work product to the client.
This matters most if you are creating something that has value beyond this particular engagement: software, designs, methodologies, training materials. If your standard working methods or pre-existing tools are incorporated into deliverables, a broad IP assignment without a carve-out for background IP can transfer ownership of things you brought to the engagement.
6. Confidentiality scope
Most commercial contracts include mutual confidentiality obligations. The scope of what is confidential, how long the obligation lasts, and what exceptions apply are all negotiable. Watch for confidentiality clauses that are so broad they would prevent you from discussing your general business experience with future clients, or that capture information that is genuinely in the public domain.
7. Governing law and jurisdiction
The governing law clause specifies which country's laws apply to the contract. The jurisdiction clause specifies where disputes must be heard. For UK businesses, English law and the courts of England and Wales is standard and generally favourable. A clause requiring disputes to be heard in a foreign jurisdiction — or under foreign law — adds cost and complexity to any dispute.
8. Variation clause
A clause giving one party the unilateral right to change the terms of the contract is significant, particularly in longer-term commercial relationships. Subscription services, managed service contracts, and long-term supply agreements sometimes include provisions allowing the supplier to change pricing or service levels on notice.
Check: how much notice is required for a variation, whether you have any right to exit if the variation is unfavourable, and whether variations to key commercial terms require written agreement.
9. Assignment and change of control
An assignment clause controls whether either party can transfer the contract to a third party. This matters in M&A scenarios — if your client is acquired, can they transfer your contract to the acquirer without your consent? If you are acquired, can you continue performing under your client contracts?
Assignment to group companies is commonly permitted without consent. Assignment to unrelated third parties — particularly competitors — should require consent.
10. Force majeure
Force majeure clauses excuse a party from performance in circumstances outside their control. Check what events are covered, whether both parties are equally excused, what notice obligations apply, and whether prolonged force majeure events trigger a right to terminate.
The absence of a force majeure clause does not mean the common law doctrine of frustration applies automatically — frustration has a high threshold in English law. If the contract is silent on force majeure, you may have limited protection against performance obligations in genuinely exceptional circumstances.
11. Entire agreement clause
An entire agreement clause provides that the written contract represents the full agreement between the parties, superseding any prior representations, negotiations, or understandings. This is protective of contractual certainty — but it also means that anything discussed during negotiations and not captured in the written agreement is unlikely to be enforceable.
If something was agreed in pre-contractual discussions that does not appear in the final document, you should either include it in the contract or obtain written confirmation before signing.
12. Auto-renewal
Many commercial contracts — particularly SaaS and service agreements — include automatic renewal provisions. The contract renews for a further period unless one party serves notice within a specified window before the end of the current term. Missing the notice window commits you to another year at the current pricing.
Check the notice period required to prevent renewal (commonly 30, 60, or 90 days), when the current term expires, and whether the renewal is at the same price or subject to increase.
Paste any clause from a commercial contract into UK Contract Clause Checker for an instant risk assessment — plain English, red flags, and specific negotiation points.