Contract review: a guide to reading a contract

In this guide, we'll go through how to do your own contract review step by step. We’ll go over key sections like payment terms, deadlines, and responsibilities, so you can make sure everything is correct. By following these tips, you’ll feel more confident when signing a contract, knowing that you fully understand what you’re agreeing to.

Why learn how to do your own contract review?

Knowing the contract review process is useful because it can:

1. Help you avoid misunderstandings.
2. Protect your rights and obligations.
3. Stop you from agreeing to things that might cause trouble later.

By following these steps, you’ll know the key parts to look for and the common mistakes to avoid:

1. Identify and verify basic details

Before diving into the details, it’s important to get an overall understanding. Begin by asking yourself these questions:

• Who is involved? Are both parties correctly named?
• What is the purpose? What does each side agree to do?
• When does it start and end?
• How much is involved? Are payments or costs clearly outlined?

These questions help set the stage and ensure the contract is clear and organized. 

Contracts often follow a similar structure. Here’s a list of common sections to help with your contract review:

SECTION	WHAT TO LOOK FOR
Title	A clear name for the contract, such as “Lease Agreement” or “Sales Contract.”
Parties	Names and details of everyone involved. Double-check this information for accuracy.
Recitals	A short introduction that explains why the contract exists.
Definitions	Any special terms or words that have specific meanings in the contract.
Obligations	What each side promises to do. This could include payment terms, services, or the delivery of goods.
Payment terms	The payment amount, due date, and method.
Deadlines	Dates for when things need to be done.
Governing law	Specifies which state’s or country’s laws apply in the event of a dispute.
Termination	Conditions for ending the contract early.
Signatures	Lines for everyone involved to sign. Make sure each party signs and dates the contract.

You can use Rocket Copilot Contract Review to help with this step. Rocket Copilot will break down your contract into simple language and help you review the details, flag potential issues, and connect with a Legal Pro review your contract.

And even if you have reviewed yourself, reviewing with a Legal Pro is still a good idea – they may be able to catch inconsistencies or details specific to your jurisdiction or situation that only someone with more legal knowledge would recognize. 

2. Check the obligations and responsibilities for each side

Every contract includes responsibilities that each side agrees to fulfill. When reviewing this section, ask yourself: “Do I understand what I am required to do? Do the responsibilities seem fair? Is there anything that seems confusing or one-sided?”

For instance, if you’re signing a contract to buy a bike, the seller’s obligation might be to deliver the bike, while yours would be to pay the agreed amount. If there’s anything in the agreement you might want to change, speak up and consider contract negotiation.

3. Review payment terms carefully

One of the most important parts of a contract is the payment section, which outlines how much you need to pay, when payment is due, and how to make the payment (credit card, check, etc.). Make sure these terms match what you discussed with everyone involved.

4. Understand the termination clause

The termination section explains how the contract can end. This could be due to:

• A specific end date.
• A certain task being completed.
• Breaking the contract rules (a breach of contract).

Always check if the contract mentions what will happen if either side doesn’t fulfill their promises. For example, if you’re renting an apartment, a termination clause might explain how to end the lease early if you need to move.

5. Review any additional contract clauses (and what they mean)

Contracts may include words used with meanings that differ from everyday language. For example:

CONTRACT TERM	WHAT IT MEANS
Confidentiality	All about keeping information private. Here, you’ll be able to check what information you need to keep secret.
Non-compete	Restricts one party from competing with the other for a set amount of time.
Force Majeure	Excuses obligations in unexpected circumstances, like natural disasters.
Indemnity	Defines who is responsible if one party suffers losses due to the other’s actions.
Warranty	A guarantee that a product or service must meet certain standards.
Dispute resolution	Describes how disagreements will be handled.

If you find words you don’t understand, try looking them up or ask for clarification from a Legal Pro. You have the right to know!

Contract review checklist

Below is a contract review checklist you can use when reading through a contract. Check off each box as you go through each part:

• Parties’ names are correct: Are the names and titles accurate?
• Purpose of the contract is stated: Do you know what it is about?
• Payment terms are clear: Are all the payment details, including timing, covered?
• Obligations of each party are understandable: Does everyone understand what their scope of work is?
• Important dates and deadlines are listed: Does everyone understand when everything needs to be delivered?
• Clauses are defined clearly: Do you have a good grasp of all the special clauses?
• Termination terms are acceptable: Do they seem fair to you?

Extra tips to review a contract

• Read slowly: Don’t rush. Take your time to understand each section.
• Highlight key points: Mark any critical parts, like responsibilities, payment, and deadlines.
• Look for blank spaces: Make sure there aren’t any blank spaces where someone could later add additional terms.
• Ask questions: If you’re unsure about a term or clause, ask the other party to explain or revise it.
• Take notes: Write down any changes or agreements discussed verbally. It's good to have everything in writing.
• Reread the document: A second read can help catch details you missed the first time.
• Use Rocket Copilot: Upload your document to break down the jargon and flag potential risks.
• Consider a second opinion: Having a Legal Pro review the document gives you extra protection.

Contracts can feel overwhelming, but breaking them down section by section makes them easier to handle. Once you get the hang of reviewing contracts, you’ll feel more confident and know exactly what to look for. If you still have questions about the contract review process, don’t hesitate to reach out to one of our Rocket Legal Pros™.

 

Key takeaways Contracts are legal agreements that explain what each side must do, such as paying for a service or delivering a product. Reviewing them carefully helps avoid problems. Key contract sections to check include names, payment terms, deadlines, responsibilities, and any special rules or clauses, like confidentiality or termination. Take your time and ask questions if something doesn’t make sense. It’s always a good idea to get a second opinion from a legal expert.