A well-drafted business contract does more than just finalize a deal. It helps you avoid unnecessary disputes and minimize legal risks while building trust with your partners and clients. Therefore, it’s important to carefully review any legally binding agreement before committing to it.
Unconscionable clauses are among the things you should be on the lookout for in a business contract. These are contract provisions that are so unfair or one-sided that they heavily favor one party at the expense of the other.
While courts may refuse to enforce such terms, it can be costly and time-consuming to challenge them after the fact. Catching unconscionable clauses before signing a contract gives you the chance to renegotiate the contract or walk away before any damage is done.
Beware of these red flags
Unconscionable clauses can take many forms. Some of the common warning signs to watch out for in a contract include:
- One-sided liability waivers that excuse one party from all responsibility, even in cases of negligence or misconduct
- Clauses that allow one party to change contract terms at any time without the other’s consent
- Mandatory arbitration clauses that limit your right to take legal action in case of a breach
- Excessive penalties for minor breaches or delays
- Hidden fees or unclear pricing
These and other unfair clauses aren’t always obvious or easy to spot, especially when contracts are long, complex or written in legal jargon. That’s why it’s wise to have a second set of eyes.
Before putting pen to paper on a contract, it’s wise to have experienced legal guidance when reviewing the agreement to help you identify unfair terms early before they become expensive problems and limit your options down the road.