7 Contract Clauses That Have Bankrupted Small Agencies
A 5-minute checklist for agency owners, freelancers, and small-shop founders who sign their own contracts. Before you sign your next client or vendor agreement, Ctrl+F for these terms.
1. Uncapped or One-Sided Indemnification
Ctrl+F for: indemnif, hold harmless, defend
This clause can make you liable for the other party’s legal costs, even for things you didn’t cause.
A common ask: A common ask is mutual indemnification with your liability capped at the contract value. Have counsel confirm it applies.
2. Auto-Renewal with a Short Notice Window
Ctrl+F for: auto-renew, automatically renew, renewal, notice period
A contract that silently renews for another year unless you cancel within 30-60 days can lock you into bad terms forever.
A common ask: A common ask is a 90+ day notice window and a calendar reminder, or removing auto-renewal entirely. Have counsel confirm.
3. One-Sided Liability Cap
Ctrl+F for: liability, cap, limitation of liability, notwithstanding
If their liability is capped at $100 but yours is uncapped, the risk is entirely on you.
A common ask: A common ask is a mutual liability cap, typically 12 months of fees paid. Have counsel confirm.
4. IP Assignment Overreach
Ctrl+F for: work made for hire, assign, intellectual property, ownership
A client contract that claims ownership of "all work product" can steal your reusable methods, templates, or background IP.
A common ask: A common ask is assigning only the deliverables made for this client, while keeping your pre-existing tools and processes. Have counsel confirm.
5. Net-90+ Payment Terms Disguised as "Standard"
Ctrl+F for: net , days after receipt, payment terms, upon acceptance
Net-60 or Net-90 payment terms kill your cash flow and often disguise "we pay when we feel like it."
A common ask: A common ask is Net-15 or Net-30, with a late fee for overdue payments. Have counsel confirm.
6. Unilateral Scope-Change Rights
Ctrl+F for: additional work, change order, scope, as needed, reasonable request
Vague language lets the client demand unlimited revisions or extra work without extra pay.
A common ask: A common ask is defining deliverables and revision rounds up front, with anything outside scope requiring a written change order and a fee. Have counsel confirm.
7. Non-Compete / Non-Solicit Overreach
Ctrl+F for: non-compete, non-solicit, exclusive, conflict of interest
A broad non-compete can prevent you from taking other clients in your own industry for years.
A common ask: A common ask is narrowing or removing non-competes to specific named competitors and a short window. Have counsel confirm.
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