Vendor contract review: 5 checks before you sign

A contract can be clear about its sentences and still leave you unsure what the business is agreeing to. Before signing a vendor agreement, put the draft beside the last signed version, the order form or statement of work, and the decision notes. If something is missing, say so. These five checks help you find questions for the right decision-maker. They are not legal advice, and a consequential deal deserves qualified counsel.

1. Find out what work you are buying

Start with the work. What will the vendor deliver, when will it arrive, and who decides that it meets the brief? A proposal may describe one thing in generous detail while the contract refers only to "services." The people involved may know precisely what they mean. Six months later, the person reading the agreement may be someone else.

Put the proposal and the statement of work next to the contract. If they disagree, ask which document controls and have the answer reflected in the final paperwork. Check who can approve changes, too. An exception discussed by a salesperson is context worth investigating, not an amendment merely because it was typed with confidence. Find out who had authority and what they actually approved.

2. Read the old agreement with the new one

If you have worked with this vendor before, compare the new draft with the last agreement you signed. Familiar formatting can make an unfamiliar term oddly easy to miss. Pay particular attention to the work covered, renewal, notice, price changes, liability limits and termination. Which differences were negotiated? Which simply arrived in the new version?

If the vendor is new, use a comparable agreement your business has accepted before, if one exists. You are not looking for a house style that every vendor must obey. You are trying to notice a departure before it becomes a commitment. That is a quieter and more useful ambition.

3. Ask what the liability number is measuring

A liability cap does not mean much by itself. Read the clause, its exceptions and any other limits together. Then look at the order form and the records of the decision. Does the number belong to this work, this vendor, and the risk the team thinks it has accepted? If the answers differ by document, do not pick the answer you like best.

The question for the decision-maker or legal reviewer is whether the proposed cap fits the deal as it will be signed. The question is not whether an internal chat can be promoted, by collective optimism, into a contract.

4. Plan for the ending while things are going well

The end of a vendor relationship often gets the least attention when everyone is enthusiastic about the beginning. Find the initial term, the renewal mechanism and the deadline for giving notice. If the contract renews automatically, put that deadline on a calendar with an actual owner. A right to terminate is less useful if the notice period is longer than your team expects, or if it applies only after a breach and an opportunity to fix it.

Ask what happens to unfinished work, fees already paid and access to your information when the relationship ends. If the team expects a month-to-month arrangement but the draft commits the business for a year, the difference deserves a conversation now. An informal assurance is not a reliable way to solve a written mismatch.

5. Compare the price with the way payment works

A price can be accurate and still be incomplete. Work out what triggers payment. It might be signature, delivery, acceptance, a recurring date or usage. Compare the contract with the quote and the budget approval. Look for implementation fees, overages, minimum commitments and increases. If your business needs a purchase order before it pays an invoice, check whether the payment terms allow that process to happen.

Do the same for the work that follows the signature. If the vendor will handle information or access a system, ask whether the agreement matches the access your team intends to provide. The answer may belong with the person who runs finance, IT or operations rather than with the person who negotiated the price. Contracts have a habit of collecting decisions that nobody thinks of as contract decisions.

Leave the review with an answer, or a named question

You do not need a complete archive to start. For each issue you find, record the contract term, the business record that raised it, the person who can resolve it, and the answer that belongs in the final document. If the record is ambiguous, say so. A question with an owner can be answered. An assumption passed along as a fact tends to survive until the least convenient moment.