Five Contract Clauses Every Founder Should Understand

Commercial contracts often contain clauses that look routine but carry significant consequences. Here are five that founders should read carefully before signing.

1. Indemnification

This clause determines who bears financial responsibility if something goes wrong. Understanding its scope — and any caps on liability — matters more than most founders realize.

2. Termination for Convenience

Some contracts allow either party to walk away without cause, given notice. Knowing whether this right exists (and on what timeline) shapes how much you can rely on a given relationship.

3. Limitation of Liability

This caps how much a party can be forced to pay if things go wrong. It's one of the most heavily negotiated clauses in commercial agreements.

4. Assignment

This governs whether either party can transfer the contract to someone else — relevant in a merger, acquisition, or reorganization.

5. Governing Law and Dispute Resolution

This determines which state's laws apply and how disputes will be resolved — litigation, arbitration, or mediation.

Our corporate team regularly helps founders review agreements before signing. If you'd like a second set of eyes on a contract, we're happy to help.