Contract Drafting Checklist: A Practical Guide for Transactional Attorneys and Business Owner
Well-drafted contracts don’t just memorialize a deal—they prevent disputes, allocate risk, and keep transactions moving. Whether you’re preparing a simple services agreement or a complex asset purchase, a disciplined checklist helps you catch issues early and draft with purpose.
#1. Define the Deal Clearly
Start with the fundamentals. If the business terms aren’t precise, the legal language won’t save you.
Parties: Correct legal names, entity types, and jurisdictions
Recitals: Background the context of the agreement
Purpose & Scope: Detail exactly what is being exchanged or performed, including deliverables, timelines and milestones (establishes the purpose and context)
Key Definitions: Avoid ambiguity—define technical or recurring terms
Exhibits/Schedules: Specs, pricing tables, deliverables, timelines
Tip: If a term matters operationally, it should be defined or documented somewhere in the agreement.
#2. Economic Terms (prevents disputes and non-payment)
Money is often the source of disputes—be crystal-clear—no room for ambiguity.
Pricing & Payment Structure: Fixed, hourly, milestone-based, or contingent
Timing: Due dates, invoicing procedures, late fees/penalties, interest
Adjustments: Price escalators, change orders, pass-through costs
Taxes: Who bears responsibility for sales/use or other taxes
#3. Performance Obligations (most litigated clauses – be specific)
Translate business expectations into enforceable obligations.
Deliverables & Milestones: What, when, and how measured (holds both sides accountable)
Standards of Performance: “Commercially reasonable efforts” vs. specific benchmarks
Dependencies: What each party needs from the other to perform
Acceptance Criteria: When work is deemed complete or acceptable
#4. Risk Allocation
This is where contracts earn their keep.
Representations & Warranties: Statements of fact (e.g., authority, compliance, IP ownership)
Indemnification: Who covers third-party claims and under what conditions
Limitation of Liability: Caps, exclusions (e.g., consequential damages), carve-outs
Insurance: Required coverage types and limits, if applicable
Tip: Align liability caps with the economic value of the deal and the client’s risk tolerance.
#5. Term and Termination
Plan for both success and failure.
Term: Effective date, end date, and renewal mechanics (important for enforcement and timelines)
Termination for Convenience: Who can exit and on what notice (protects you if the relationship sours)
Termination for Cause: Breach, cure periods, insolvency triggers
Post-Termination Obligations: Payment, return/destruction of data, wind-down
#6. Intellectual Property & Confidentiality (Critical for IP and trade secrets)
Especially critical for service, tech, and consulting agreements.
Ownership: Who owns pre-existing IP vs. newly created work product
Licenses: Scope, duration, exclusivity, sublicensing rights
Confidentiality: Definition, exclusions, duration, permitted disclosures
Data Use & Security: If handling personal or sensitive data, address compliance and safeguards
#7. Boilerplate That Matters
“Standard” clauses often drive real outcomes in disputes.
Governing Law & Venue: Where disputes are decided
Dispute Resolution: Litigation vs. arbitration; escalation procedures (can save you from costly lawsuits)
Assignment: Transfer restrictions and permitted assignments (e.g., M&A)
Force Majeure: What qualifies and what relief is available
Entire Agreement & Amendments: Integration and how changes are made
Notices: How and when notices are effective
#8. Compliance & Regulatory Considerations
Don’t overlook industry- or jurisdiction-specific requirements.
Licensing or registration obligations
Consumer protection rules
Data privacy laws (if applicable)
Export controls or sanctions (for cross-border deals)
#9. Drafting Mechanics & Consistency
Clean drafting reduces confusion and speeds negotiation.
Defined Terms Used Consistently
Cross-References Verified
No Conflicting Provisions (e.g., different payment terms in body vs. exhibit)
Plain Language Where Possible (clarity beats verbosity)
Numbering and Formatting Clean
#10. Negotiation Readiness
Anticipate what the other side will push on.
Liability caps and indemnities
Payment timing and acceptance criteria
IP ownership and license scope
Termination rights
Prepare fallback positions and understand your client’s “must-haves” vs. “nice-to-haves.”
#11. Closing Checklist
Before signature, confirm the details that often slip through:
Correct party names and signature blocks; ensure both parties sign (avoids confusion in court or enforcement)
Exhibits and schedules attached and complete
Dates aligned throughout the document
Required approvals obtained (board, members, etc.)
Final version control (no tracked changes or comments)
#12. After Execution
A contract is only as good as its implementation.
Calendar key dates (renewals, milestones, notice deadlines)
Share with stakeholders responsible for performance
Store executed copies in an organized, searchable system
Monitor compliance and trigger points (e.g., price adjustments)
🏆 Best Practices for Contract Drafting
Take advantage of templates (create custom playbooks)
Define key terms upfront using a checklist or term sheet to guide your process
Focus on clarity, precision, and minimizing ambiguity
🚩 Contract Red Flags to Avoid
Leaving out specific deadlines
Using ambiguous language
Relying on verbal modifications post-signing
Forgetting term and termination provisions, or having automatic renewal without exit rights
Unlimited or uncapped liability exposure
Using one-sided indemnification or hold-harmless clauses
Leaving out non-compliance with regulatory requirements
Using overly restrictive non-compete terms
Final Thought
A strong contract balances precision with practicality. Use this checklist as a baseline, then tailor it to the transaction, the client’s risk tolerance, and the realities of the deal. Over time, refining your own templates and playbooks will make this process faster—and far more effective. It will also help to ensure that standard clauses, best practices, and company policies are consistently applied in all contracts, reducing the chances of errors or omissions.
