A Contract Negotiation Checklist by Clause

How to use a clause by clause negotiation checklist The fastest way to negotiate a contract well is to work clause by clause against a checklist, so you never sign something you did not notice. For each clause, ask three things: what does it say, what is the standard range, and where should I push. This checklist covers the clauses that carry the most risk in a commercial contract. Use it to prepare before a negotiation and to review a draft you have been sent. This is general guidance, not legal advice. The right position on any clause depends on the deal, your leverage and the governing law, so have a qualified professional review an important contract. ## The checklist, clause by clause Price and payment

• Check: the amount, the currency, the payment term, late payment interest, and whether prices can rise.
• Common positions: 30 day payment terms are typical; watch for automatic annual escalation.
• Push on: a shorter payment term if you are the supplier, a cap on price increases if you are the buyer. In India, note the 45 day MSMED rule for registered micro and small suppliers. Term and renewal
• Check: the start date, the length, and whether it auto renews.
• Common positions: one to three year terms with auto renewal unless notice is given.
• Push on: removing auto renewal or shortening the notice window, so you are not locked in by inertia. Termination
• Check: termination for convenience, for cause, the notice period, and what survives termination.
• Push on: a right to terminate for convenience on reasonable notice, and a cure period before termination for breach. Limitation of liability
• Check: the cap amount, what is excluded from the cap, and whether it is mutual.
• Common positions: liability capped at fees paid in the prior 12 months, with carve outs for confidentiality, IP and indemnities.
• Push on: a cap you can live with, mutual where possible, and carve outs that are not so wide they swallow the cap. Indemnity
• Check: who indemnifies whom, for what, and whether it is capped.
• Push on: narrowing the indemnity to third party claims arising from the other side's fault, and avoiding open ended indemnities for your own conduct. Intellectual property
• Check: who owns what is created, and what licences are granted.
• Push on: retaining ownership of your pre existing IP, and getting a licence wide enough to actually use the deliverable. Confidentiality
• Check: the definition, the carve outs, the duration, and the return or destruction obligation.
• Push on: a mutual obligation and a sensible duration; perpetual confidentiality for ordinary information is often unnecessary. Data protection
• Check: whether personal data is processed, and whether a data processing agreement is attached.
• Push on: clear roles, security obligations, breach notice, and in India alignment with the Digital Personal Data Protection Act, 2023 as it comes into force. <!-- [VERIFY: DPDP Act 2023 rules and phased commencement; confirm current status] --> Warranties and service levels
• Check: what is promised, and the remedy if it is not met.
• Push on: meaningful service levels with service credits, not vague promises of best efforts. Force majeure
• Check: the events covered, the notice requirement, and the relief.
• Push on: a balanced clause that does not let the other side walk away from payment obligations too easily. Assignment and change of control
• Check: whether either side can assign, and what happens on a change of control.
• Push on: consent before assignment, with a carve out for group reorganisations if you need it. Governing law and dispute resolution
• Check: the governing law, the forum, and whether disputes go to court or arbitration.
• Common positions: Indian contracts often choose arbitration under the Arbitration and Conciliation Act, 1996, with a named seat.
• Push on: a neutral and convenient seat, and a clear escalation path before formal proceedings. Insurance
• Check: what cover the other side must hold, the limits, and whether you must be named as an additional insured.
• Push on: cover that matches the real risk of the deal, and proof of a live policy rather than a bare promise. Non-solicitation and exclusivity
• Check: whether you are restricted from hiring or dealing elsewhere, and for how long.
• Push on: narrowing the scope and duration so it does not restrict ordinary business. ## How to prepare before you negotiate The checklist works best when you have done a little preparation first. - Know your walk away points. Decide in advance which clauses you cannot concede and which you can trade. A negotiation is a set of trades, so know what you are willing to give to get your must haves.
• Understand your leverage. Who needs the deal more, and who holds the pen, shapes how hard you can push on each clause.
• Read the whole contract once before marking anything. Clauses interact. A generous liability cap means little if the indemnity is uncapped, and a payment term is only as good as the termination right behind it.
• Line up your standard positions. If your company has a preferred and fallback position on each clause, bring them. Negotiating from a known standard is faster and more consistent than deciding each point from scratch. ## Common mistakes to avoid - Negotiating price hard and skimming everything else, when liability and indemnity carry more risk.
• Missing auto renewal, so a contract locks in by inertia.
• Accepting an uncapped indemnity or a liability cap riddled with carve outs.
• Ignoring the data protection clause when personal data is involved.
• Agreeing a governing law and forum that are expensive or inconvenient for you. ## Turning a checklist into a repeatable playbook A checklist works for one contract. The next step is a playbook: your standard position and your fallback on each clause, so everyone who negotiates for your company pushes for the same things. That is where a contract workspace tuned to your company helps. It can hold your preferred and fallback positions, flag where a counterparty's draft departs from them, show per clause risk, and let you edit a clause in plain language to your standard wording. A workspace such as Adira is built around that idea, so the judgement in this checklist becomes a repeatable standard rather than something each person re-derives on every deal.