Published: seacoasonline.com
Most people don’t read contracts carefully. They skim. They assume the document is “standard.” They focus on the price and the basic business terms. Then they sign.
In my practice, I routinely see disputes that trace back to a provision someone did not realize they had agreed to. By the time the disagreement reaches my desk, the contract has already allocated the risk—often in ways one party never anticipated.
Whether you’re hiring a contractor, signing a lease, entering a partnership, or entering a service agreement, the fine print often matters more than the headline terms. Many disputes arise not because the parties expected conflict, but because the contract says something one side did not fully understand.
Here are five common provisions that can quietly cost you thousands if you don’t pay attention before signing:
1. Attorneys’ Fees Clauses
Many contracts state that the “prevailing party” in a dispute is entitled to recover attorneys’ fees and costs. That single sentence can dramatically increase your financial exposure. Without such a clause, each side typically pays its own legal fees. With it, the losing party may be responsible for both sides’ fees. A $30,000 dispute can quickly become far more expensive once legal costs are added. Before signing, consider whether you are prepared to risk paying the other side’s fees if a dispute arises.
2. Personal Guarantees
This issue commonly affects small business owners. You may sign a contract on behalf of your LLC or corporation, assuming your personal assets are protected. But buried in the agreement may be a personal guarantee. A personal guarantee means that if the business cannot pay, you must. Your personal savings, property, and other assets may be exposed.
Look carefully for language stating that the “undersigned personally guarantees” performance or payment. If a guarantee is required, understand whether it is limited in scope or amount—and whether it continues after the contract ends.
3. Automatic Renewal Provisions
Also known as “evergreen” clauses, these provisions state that a contract automatically renews unless written notice of termination is provided within a specific window—often 30, 60, or 90 days before the term expires. These clauses are common in service agreements, software subscriptions, equipment leases, and maintenance contracts.
The problem is simple: people forget. They assume the agreement will expire on its own. Instead, it renews for another year and often at higher rates. If you sign a contract with automatic renewal language, calendar the notice deadline immediately.
4. Indemnification Clauses
“Indemnify” is a word many people gloss over. It generally means one party agrees to reimburse the other for certain losses and, often, to defend them against claims. Some indemnification clauses are narrow and reasonable. Others are broad enough to require you to pay for claims that may not be entirely your fault. For example, a clause requiring indemnification for “any and all claims arising out of or related to the agreement” can be expansive. Does it apply if both parties were negligent? Is there a cap on liability? Are attorneys’ fees included? Indemnification provisions shift risk. Make sure you understand how much risk you are assuming.
5. Dispute Resolution and Forum Selection Clauses
Many contracts require disputes to be resolved through arbitration rather than in court. Others require lawsuits to be filed in a specific state, which could be far from where you live or operate. These provisions can significantly affect cost and leverage. Arbitration may limit discovery and restrict appeals. A forum selection clause may require hiring out-of-state counsel and traveling for hearings. When disputes arise, these clauses often become central. They can determine not just where a case is heard, but how much it will cost to pursue or defend.
Practical Steps
Contracts allocate risk long before a dispute begins. Many of the cases I see stem from provisions that were never carefully reviewed at the outset. Before signing an agreement, read beyond the price and scope of work. Pay close attention to provisions addressing attorneys’ fees, guarantees, indemnification, renewal, and dispute resolution. Calendar important notice deadlines immediately.
If the financial exposure is meaningful, consider having counsel review the agreement before signing; not after a dispute arises. A brief review on the front end is almost always less expensive than litigating unintended consequences later.
The bottom line is simple: what you agree to today may determine your leverage tomorrow.