Contract Clause Library: What 14 Common Clauses Actually Do

Contracts are made of a small number of recurring parts. Once you can recognise the fourteen below, most commercial agreements become readable — you are checking known things rather than reading prose.

Each entry: what the clause is for, what a reasonable version looks like, and what to push back on.

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Money

Payment terms

What it does: sets how much, when, and on what trigger.

Reasonable: a number, a period (“within 30 days of invoice”), and a consequence for late payment.

Push back on: payment conditional on subjective approval, or a trigger you do not control. “On acceptance” is not a date.

Late payment interest

What it does: prices the cost of being paid late, so that being late is not free.

Reasonable: 1–2% per month, or the statutory rate where one exists.

Push back on: its absence. A contract with no late-payment clause has no mechanism at all — you are relying entirely on goodwill.

Expenses

What it does: decides who pays for travel, software, subcontractors and materials.

Reasonable: pre-approved expenses reimbursed at cost, with a threshold above which approval is needed.

Push back on: “all expenses included in the fee” where the work obviously requires expenses.

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Risk

Limitation of liability

What it does: caps what either side can be made to pay if things go wrong.

Reasonable: a cap tied to the value of the contract — commonly the fees paid in the preceding twelve months — applying to both sides.

Push back on: a one-way cap, or carve-outs so broad they swallow the cap. Some exceptions are standard and cannot be excluded by law (death, personal injury, fraud); a carve-out for “any breach of this agreement” is not standard, it is the cap being cancelled.

Indemnity

What it does: one side agrees to cover the other’s losses from a specified kind of claim — usually third-party claims about IP infringement or data.

Reasonable: mutual, specific about what triggers it, and inside the liability cap.

Push back on: an uncapped indemnity. This is the one clause that can exceed the value of the deal, and it is one sentence. Always search for indemnif.

Insurance

What it does: requires a party to carry cover, so a liability clause is worth something in practice.

Reasonable: a level proportionate to the work.

Push back on: requirements that cost more than the contract earns.

Force majeure

What it does: excuses performance made impossible by events outside anyone’s control.

Reasonable: a defined list plus a general catch-all, with notice obligations and a right to terminate if it goes on too long.

Push back on: a version covering only one side, or one so broad it excuses ordinary failure to perform.

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The work

Scope of work

What it does: defines what is being delivered.

Reasonable: deliverables, acceptance criteria, and a defined number of revision rounds.

Push back on: adjectives instead of nouns. “Reasonable support”, “as required”, “industry standard” and “minor amendments” are all future arguments.

Change control

What it does: says what happens when the scope changes — because it will.

Reasonable: changes in writing, priced before they start.

Push back on: its absence. Without it, every change is a negotiation with someone who has already got the previous work.

Service levels

What it does: sets measurable performance standards, usually for a service or SaaS contract.

Reasonable: an uptime figure, a response time, and a remedy — usually credits — when they are missed.

Push back on: service levels with no remedy attached. A promise with no consequence is a statement of intention.

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Ownership and secrecy

Intellectual property assignment

What it does: transfers ownership of what is created.

Reasonable: the deliverable transfers on payment; each side keeps what it brought.

Push back on: assignment of “all materials used in the creation” — which takes your existing tools — and assignment on delivery rather than on payment.

Confidentiality

What it does: stops each side sharing what the other told them.

Reasonable: a defined category of information, standard exclusions (already known, independently developed, publicly available, required by law), and a sensible duration.

Push back on: perpetual obligations over ordinary business information, and missing exclusions — those make the clause both unfair and, in places, unenforceable.

Non-compete and non-solicit

What it does: restricts working with competitors, or hiring the other side’s people.

Reasonable: narrow, short and specific. Non-solicit of people you actually worked with, for a year or so.

Push back on: broad non-competes in an ordinary supplier or freelance contract. Many jurisdictions will not enforce them, but an unenforceable clause still deters you from taking work — which is often the point.

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Ending it

Termination

What it does: says how the relationship ends.

Reasonable: symmetric notice for convenience; termination for cause with a chance to fix the problem first; and clarity on what happens to work in progress, prepaid fees and data.

Push back on: asymmetric notice periods, and “for cause” left undefined.

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Using this

Read the contract once for structure — which of these fourteen are present. Then read again for the three that carry the money: payment, liability, and termination.

To have the same territory checked automatically, run the contract through a free review. It scores clarity, risk protection, enforceability, balance of terms, structure and overall exposure, and counts the concrete weaknesses — which is a fast way to find which of the fourteen above is missing entirely.

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Related

• The contract review checklist — the same clauses as a working sequence
• Contract risk analysis — the ones that cost the most
• AI contract review — what software can and cannot do here
• PDF to Word — to draft your redline