Contract Review Checklist

Pull the counterparty's exact legal name from their W-9 or formation documents — not the trade name on the proposal. Note entity type (LLC, S-corp, C-corp, partnership) since it drives 1099 treatment and the form of any indemnification.

Tag the agreement so downstream reporting and renewal tracking work. MSAs and SOWs route differently; leases trigger ASC 842 evaluation; NDAs typically skip the financial-impact path.

Tie the SOW back to the requesting department's approved budget and the proposal that originated the spend. Watch for vague deliverables ("professional services as needed") — those tend to drive scope creep and revenue-recognition disputes downstream.

Confirm Net 30 / 60 / 90 terms align with company AP policy. Flag prepayments, milestone billing, retainers, and any escalation clauses (CPI bumps, annual price increases) that affect future-period accruals.

Push back on counterparty home-state jurisdiction and binding arbitration in their venue. Default to the company's state of incorporation and either AAA arbitration or local courts.

Liability cap should typically be 12 months of fees paid; uncapped indemnities are limited to IP infringement, breach of confidentiality, and gross negligence. Mutual indemnification — not one-way running against the company.

If the counterparty receives PII, customer data, or financial records, confirm a DPA is attached and the security exhibit aligns with the company's WISP and any SOC 2 commitments to downstream customers.

Outside counsel is warranted when the contract value exceeds the policy threshold (commonly $250K), contains uncapped indemnities, transfers IP ownership, or includes non-compete or exclusivity language.

Compute TCV across the initial term (not including unexercised renewal options). This number drives the materiality assessment, the disclosure footnote for purchase commitments, and the approval matrix below.

For customer contracts, walk the five steps: identify performance obligations, allocate transaction price, determine timing of recognition (point-in-time vs. over-time). Variable consideration, free trials, and most-favored-nation clauses tend to require constraint analysis.

Skip if not a lease. Otherwise classify as operating vs. finance, calculate the right-of-use asset and lease liability using the incremental borrowing rate, and load the schedule into LeaseQuery / Visual Lease before close.

Apply the firm's materiality threshold (typically 5% of pre-tax income or 1% of revenue, whichever is lower). Material contracts require a written technical accounting memo and disclosure-committee review at the next reporting period.

Check general liability ($1M / $2M minimum), professional liability for service vendors ($1M+), cyber coverage when data is in scope, and workers' comp where required. The COI must list the company as additional insured with a waiver of subrogation.

Post-2020 force majeure language should explicitly address pandemics, supply-chain disruption, and cyber events. For critical vendors, require a documented BC/DR plan and an RTO commitment.

Acceptance language drives when revenue can be recognized (for customer contracts) or when invoices become payable (for vendor contracts). "Deemed accepted after 15 days unless rejected in writing" is preferred over open-ended subjective acceptance.

Service-credit math should be auditable — define the measurement window, exclusions for scheduled maintenance, and the credit calculation. Credits applied automatically in the next invoice are easier to administer than refund requests.