Contract Risk Assessment Checklist
Every contract carries risk in the same five places, whatever it is called. The skill is not memorizing clauses — it is knowing which categories to check and where each contract type hides its worst terms. Below is a general checklist, plus type-specific checklists for the contracts small businesses sign most. This is general information, not advice about your specific contract; the legal judgment about what to do with what you find is yours.
The five categories of contract risk
- Financial. The real cost: price, escalation, pass-throughs, fees, and payment terms. The headline number is rarely the whole cost.
- Liability. Who is on the hook, and how far: personal guarantees, indemnification, insurance, and liability caps.
- Exit. What it costs to leave: term length, early termination, renewal and auto-renewal, assignment, and holdover.
- Operational. What you must do to stay compliant: obligations, maintenance, exclusivity, use restrictions, and service levels.
- Dispute. What happens when something goes wrong: attorney fees, jury or arbitration clauses, default and cure, and governing law.
The generic pre-signature checklist
- The money — total cost over the term (not just the monthly or annual figure), how increases are set and capped, and every named fee.
- The liability — whether you are personally on the hook (a guarantee), how indemnification runs, and the liability cap and its carve-outs.
- The exit — the term, any early-termination right, the renewal and notice terms, and assignment rights.
- The obligations — what you must do or maintain, and any exclusivity or use limits.
- The disputes — attorney-fee shifting, jury or arbitration, default and cure periods, and governing law.
- The missing protections — a protection that simply is not there (no cap, no cure period, no early exit) is itself a finding, not a blank to ignore.
Type-specific checklists
The categories above apply to everything, but each contract type hides its risk in different clauses. Use the checklist built for your contract:
- Commercial leases — The general lease checklist and commercial / industry checklists on our tenant-exposure sites go deepest here.
- Employment contracts — Offer review, restrictive covenants, IP, and severance.
- Personal guarantees — Caps, good-guy clauses, and alternatives.
- Loans — SBA personal guarantee, merchant cash advances, and promissory notes.
- Subscriptions / SaaS — SaaS red flags, auto-renewal, and order forms.
- Service / vendor agreements — MSAs, independent-contractor agreements, and limitation of liability.
For leases specifically, the deepest checklists live on our companion sites: the lease checklist and commercial / industry checklists.
Run the checklist automatically
A checklist tells you what to look for; a scan finds it. Upload a contract to LiabilityScore™ and its AI checks the terms across seven global risk categories — and hundreds of specific clauses — returning a 0–100 risk score.
Scan your contract free →Frequently asked questions
What is a contract risk assessment?
It is a structured review of a contract before signing to identify how its terms affect you across five categories: financial, liability, exit, operational, and dispute risk. The goal is to surface the costly or one-sided terms — guarantees, uncapped costs, weak exit rights — that the headline price does not show.
What should a contract risk checklist include?
At minimum: the true total cost and fees (financial); personal guarantees, indemnification, and liability caps (liability); term, termination, renewal, and assignment (exit); obligations, exclusivity, and service levels (operational); and attorney fees, arbitration, default, and governing law (dispute). Then a type-specific pass for the particular contract.
How do I assess the risk in a specific contract type?
Apply the five categories, then use the checklist built for that type — lease, employment, loan, subscription, or service agreement — since each hides its worst terms in different clauses.
Can software assess contract risk for me?
An automated tool can scan a contract and flag risky terms across the categories quickly, which is useful for triage and for knowing where to focus. It complements, rather than replaces, a lawyer's judgment on what to do about what it finds.
Important
This page is for educational purposes only and does not constitute legal advice. LiabilityScore™ identifies potentially risky contract terms — it is not a substitute for review by a licensed attorney. Always consult qualified legal counsel for advice specific to your situation.