This clause renews the contract automatically at the end of its term. The catch is the cancellation window: typically 30 to 90 days before expiry. Miss that window and you are locked in for another full cycle, sometimes at a higher price.

Some vendors bake in evergreen clauses that lock you into another year of service unless you cancel within a tiny window. It is usually buried in the termination section, not highlighted at the front.

What to search for: “automatically renew,” “evergreen,” “unless notice is provided,” “renewal term.”

Vendors love to cap their liability at the value of the last month’s payment. If their failure causes you a $200,000 loss, they owe you $500.

You should push for carve-outs for things like gross negligence or property damage. Without those carve-outs, the cap protects the vendor no matter how badly they perform.

What to search for: “limitation of liability,” “in no event shall,” “aggregate liability,” “fees paid in the preceding.”

Indemnification clauses determine who pays when a third party sues. A well-drafted clause requires the vendor to defend you if their product or service causes a lawsuit.

A poorly drafted one does the opposite. Broad language like “indemnify for any and all claims” can make you financially responsible for events the vendor caused. When broadly worded, these become financial death sentences.

What to search for: “indemnify,” “hold harmless,” “defend,” “any and all claims.”

Some vendor agreements let the vendor change pricing, service levels, or terms at any time with minimal notice. You signed up for one deal. You can end up with a completely different one.

This is especially common in software and SaaS agreements. If the clause is in your contract, your vendor can raise prices mid-term without your consent.

What to search for: “reserves the right to modify,” “may update these terms,” “at vendor’s sole discretion.”

These clauses can lock you out of working with the vendor’s competitors. They are often buried in the scope of work or definitions section rather than a dedicated exclusivity clause.

Hidden exclusivity clauses prohibit you from serving competitors, working with other vendors, or operating in entire industry verticals. When combined with auto-renewal, the lock becomes nearly inescapable.

What to search for: “exclusively,” “sole provider,” “shall not engage,” “competitors,” “market restriction.”

A vendor contract with a loosely defined scope of work is an invitation to disagreement. What counts as a deliverable? What triggers additional charges? When is the work considered complete?

Without precise answers in writing, both parties fill the gaps with their own assumptions. Those assumptions diverge. Ambiguous service level expectations leave too much to interpretation and are among the most common sources of costly disputes.

What to search for: Missing “deliverables,” “acceptance criteria,” “change order,” and “out of scope” provisions.

If a vendor creates anything during your engagement, you need to own it. But many vendor contracts allow the vendor to retain rights to derivative works, custom code, or content created using your original materials.

A contract might specify that the vendor owns all derivative works, meaning they also own any improvements made to your original ideas. You pay for the work and they keep the rights.

What to search for: “work made for hire,” “ownership,” “derivative works,” “license,” “assigns all right, title.”

Where a dispute is resolved can determine whether it is worth pursuing at all. A vendor based in California can require disputes to be arbitrated in Delaware under a specific rules system that costs thousands in filing fees before a word is heard.

Arbitration clauses also often waive your right to a jury trial and ban class actions. Over 60 million private sector workers are now bound by forced arbitration with class action waivers. The same dynamic applies to vendor agreements.

What to search for: “binding arbitration,” “governing law,” “venue,” “waives right to jury trial,” “class action.”