8 Contract Clauses That Quietly Cost You Money
Some clauses look like standard boilerplate and behave like a bill. They rarely cause problems at signature; they cause them twelve months later, which is exactly why they survive review.
These eight come up constantly in small-business contracts.
1. Auto-renewal with a narrow cancellation window
The contract renews for another full term unless you cancel between 90 and 60 days before expiry. Miss the window by a day and you owe another year. Diary the notice date on the day you sign, or negotiate to month-to-month after the initial term.
2. Pay-when-paid
You get paid when their customer pays them. Their collection problem becomes your cash-flow problem. Ask for a longstop date after which payment is due regardless.
3. Uncapped or one-way indemnity
You cover their legal costs and damages with no ceiling, while they carry no reciprocal obligation. This is the clause most capable of producing losses far larger than the contract value. Ask for mutuality and a cap.
4. Unilateral price or terms changes
"Provider may amend fees on 30 days' notice." Fine for a $10 SaaS tool; expensive when it is your core supplier. Negotiate a cap on annual increases, or a right to terminate without penalty on any change.
5. Exclusivity with no minimum commitment
You agree to work only with them, but they commit to no volume. You have given up the market for nothing. Tie any exclusivity to a minimum spend or revenue commitment.
6. Broad set-off rights
They may deduct any amount they claim you owe — including disputed amounts from unrelated matters — from what they pay you. Limit set-off to undisputed sums under the same agreement.
7. Termination for convenience, one way only
They can exit on 30 days' notice; you are locked in for the term. If they keep the right, ask for payment of work in progress plus a wind-down fee, or push for mutuality.
8. Most-favoured-nation pricing
You promise them your lowest price given to any customer, forever. It sounds generous and quietly caps your pricing power across the whole book. If you must accept, scope it to comparable volumes and terms.
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LegalAIContracts provides document automation and AI analysis, not legal advice. Professional review is advisable for high-value or unusual agreements.