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.

Add an entry in the contract register (Ironclad, LinkSquares, or the shared workbook) with the unique contract ID, counterparty, type, effective date, and term. The register feeds renewal alerts and the year-end commitments footnote.

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.

Auto-renewal language is the most common contract gotcha. Note the notice window required to terminate (typically 30, 60, or 90 days before the renewal date) and set a calendar reminder before the cutoff. Also check termination-for-convenience and early-termination fees.

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.

Send the marked-up draft, the counterparty's redlines, and the deal summary to firm counsel. Set a 5-business-day turnaround expectation and confirm the engagement is under the existing master fee arrangement, not opened as a new matter.

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.

Memo covers the relevant standard (ASC 606, 842, 805, etc.), the conclusion, and the supporting analysis. Attach to the contract file in SmartVault and include in the next quarter's audit PBC list under significant new contracts.

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.

Capture risks the redlines did not eliminate — concentration risk with a single vendor, FX exposure on cross-border deals, customer-credit risk over the term. Tag for the quarterly enterprise risk review.

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.

Liquidated damages must be a reasonable estimate of harm, not a penalty (or courts won't enforce). Cap at a percentage of contract value (commonly 10–15%) and confirm the cap interacts correctly with the overall liability cap.

Document the recommendation, attach the redline summary and any technical accounting memo, and route through DocuSign per the approval matrix. Counter-signed PDF goes back to the contract register and SmartVault folder.