Most executives who sign a commercial contract have read it. Very few have fully understood what they were signing - particularly the clauses that, seemingly innocuous, actually determine the balance of risk between the parties. This is not a lack of intelligence. It is a lack of legal context.
Here are the clauses that recur most frequently in my work as General Counsel - the ones that cause problems, and what they actually imply.
The liability limitation clause
This is probably the most systematically underestimated clause. It caps the amount your provider will owe you in the event of a serious failure - and this cap is almost always set at a level far below the actual damages you could suffer. A critical SaaS service that goes down for 48 hours can cost far more than a few months of fees - but that is often what the clause limits.
What to look for: what is the cap, how is it calculated, and what are the exclusions from the cap - because some types of harm may not be subject to it.
The confidentiality and intellectual property clause
In a partnership or development agreement, the question of who owns what at the end of the contract is critical - and often settled by generic wording that no one really reads. Do developments made during the partnership belong to your company, to the partner, or are they jointly owned? Can data you share be used for other purposes? Can your brand be mentioned after the contract ends?
These questions seem abstract at signing. They become very concrete at separation.
Termination conditions
A contract that seems easy to sign can be very hard to exit. Termination clauses define the conditions under which each party can end the contract, notice periods, any penalties, and what happens during the transition period. A 12-month notice period on a critical SaaS contract, or a minimum commitment clause that applies even if the service fails to deliver, are situations I have encountered regularly.
The question to ask before signing: under what conditions can I exit this contract, and at what cost?
The force majeure clause
The pandemic made this clause visible for many organisations that had never looked at it. What constitutes a force majeure event in your contract? Does this clause suspend obligations, or release the parties? Who bears costs during the force majeure period? And how long can force majeure be invoked before a party can terminate?
Escalation and indexation clauses
In long-term contracts, clauses that allow the provider to unilaterally modify their terms - pricing, service levels, features - can transform an attractive commitment into a costly constraint. These clauses often exist but are drafted to go unnoticed.
What this implies
Understanding what you sign is not a matter of distrust - it is a matter of knowing the risks you are accepting. A General Counsel is not there to block contracts. They are there to ensure decisions are made with the right information, and that the terms committing the organisation genuinely reflect the parties' intent.