Contract Wording Matters! Protect Yourself from Costly Mistakes Before Signing

Signing a contract is a serious step for any business owner or individual. The words and phrases used in a contract can have lasting effects on your rights, responsibilities, and financial health. Some contract wording should raise immediate red flags and make you think twice before putting your signature on the dotted line. Understanding these warning signs helps protect yourself and your business from costly mistakes that are difficult or impossible to undo.

This post highlights common problematic contract phrases, explains why they are risky, and offers examples of fair contract language. Whether you are a business owner or simply entering into an agreement, knowing what to watch for can save you time, money, and stress.

Contract document ready for signature

Close-up view of a contract document with a pen poised to sign

Watch for Vague or Open-Ended Terms

Contracts should clearly state the terms both parties agree to. Vague wording leaves too much room for interpretation, which can lead to disputes or unfair demands later.

Problematic Phrases

• "Verbal Agreement"

Relying on verbal agreements is risky because they are hard to prove in court. If a contract references something "agreed verbally," it weakens the written document and can cause confusion about what was actually promised.

• "Discretion of One Party"

This phrase gives one side unchecked power to make decisions without consulting the other. It can lead to unfair changes or actions that harm the other party’s interests.

• "Agreed Later in the Appendix"

Leaving important details to be decided later means the contract is incomplete. This can cause delays, misunderstandings, or force you to accept unfavorable terms just to move forward.

• "Separately Agreed Timeframe"

Without a clear deadline, obligations can drag on indefinitely. This uncertainty can disrupt your business planning and cash flow.

Why These Are Red Flags

Vague or incomplete terms create uncertainty. If a dispute arises, courts often interpret unclear language against the party that drafted the contract. This can leave you vulnerable to unexpected obligations or losses.

Beware of Waivers and No-Claim Clauses

Some contracts include language that limits your ability to seek remedies if something goes wrong.

Problematic Phrase

• "No claims" or "No claims shall be made"

This phrase attempts to prevent you from making any legal claims against the other party, even if they breach the contract or cause harm. Signing such a clause can leave you without recourse if the other side fails to meet their obligations.

Why This Is Risky

Giving up your right to make claims removes your protection under the law. It can force you to absorb losses or damages without compensation. Business owners should avoid contracts that include blanket waivers of claims.

Examples of Fair Contract Language

Contracts should be clear, balanced, and protect both parties. Here are examples of fair wording that business owners can look for:

• Clear deadlines

"The project will be completed within 60 days from the contract signing date."

• Mutual agreement on changes

"Any amendments to this contract must be agreed upon in writing by both parties."

• Defined responsibilities

"Party A will deliver the goods specified in Appendix A. Party B will make payment within 30 days of delivery."

• Dispute resolution

"In case of disagreement, both parties agree to mediation before pursuing legal action."

These examples provide certainty and fairness, reducing the risk of misunderstandings or unfair treatment.

Highlighted contract clauses with calculator

Eye-level view of a contract with highlighted key clauses and a calculator beside it

Tips for Business Owners Before Signing Any Contract

• Read every word carefully

Don’t skim. Ambiguous language can hide risks.

• Ask for clarification

If a phrase like "at the discretion of one party" appears, request it be removed or rewritten to require mutual consent.

• Avoid verbal agreements

Get all promises in writing within the contract.

• Insist on complete terms

Don’t accept "appendix to be agreed later" or "timeframe to be agreed separately" without firm deadlines and details.

• Consult a professional

A lawyer or contract specialist can spot hidden risks and suggest safer language.

Protect Yourself and Your Business

Contracts are legally binding documents. Once signed, you must abide by their terms. Problematic wording can lead to costly mistakes, lost money, or damaged business relationships. Being aware of red flags like vague terms, one-sided discretion, no-claim clauses, and incomplete appendices helps you avoid these pitfalls.

Taking the time to review and negotiate contract language protects your interests and builds stronger, clearer agreements. This approach supports your business’s long-term success and peace of mind.