Clauses to Check Before Signing Contract: 5 Risks in Leases & MSAs

You have a commercial lease or vendor MSA in front of you. The headings look standard and the language feels familiar, so the urge to sign and move on is strong. The clauses to check before signing contract are often buried in sections that seem routine but carry automatic rent bumps, stealth price increases, or exit penalties that only appear when you try to leave. This guide walks through the five clauses to check before signing contract that trip up founders, why they matter, and the exact questions to ask the other party.

Key takeaways

• "Standard" language often hides automatic increases or exit conditions that favor the drafter.
• Price adjustment clauses need an objective index and a cap, not unilateral discretion.
• Governing law and indemnification clauses decide where you can be sued and how far your liability reaches.
• A termination right that costs more to use than to stay is not a real exit option.
• Quoting the exact sentence from your file gives you leverage to negotiate specific changes.

Why "standard" language often hides automatic increases or exit traps

The word "standard" is a signal to pause. What one side calls routine may be a template refined over years to shift risk onto you. In a five-year lease a 3 percent annual rent increase tied to CPI sounds reasonable until you see that the clause has no cap, compounds quarterly, or excludes certain index fluctuations. A $3,000 monthly rent can become $4,200 by year three without warning.

Exit traps work the same way. A clause that says you may terminate with 60 days notice might only apply after year three, require six months of rent as a penalty, or obligate you to pay CAM fees after you vacate. One bakery owner nearly signed a lease where the termination right depended on the landlord first approving a replacement tenant, a process with no deadline.

What to ask: "If I wanted to leave in 18 months, what would my actual financial obligation be, not just the notice period, but all fees, penalties, and continuing responsibilities?"

Vague answers such as "it is standard" or "we would work it out" are warning signs. Push for a written example based on your timeline. If they cannot or will not provide one, that is your cue to dig deeper.

How to spot price increase clauses that let vendors raise rates mid term

Vendor MSAs often show a clean price table, then bury a fee adjustment clause in a later section. You might see "Monthly Fee: $500" followed by language that lets the provider modify fees on 30 days written notice at the start of the next billing cycle. Thirty days notice seems fair until you ask what triggers the change. If the clause is not tied to an objective metric such as CPI or a published industry index and does not cap the percentage, the vendor could raise your fee by 20 percent next month citing rising operational costs.

This risk is highest in long term agreements for essential services like payment processors, SaaS tools, or inventory suppliers. A coffee shop locking in a per pound bean price may later find the contract allows the vendor to pass through market volatility surcharges with minimal notice.

What to ask: "Can you show me exactly how and when this fee could increase? Is it tied to a specific index, capped at a certain percentage, or subject to your sole discretion?"

If the answer is "it is discretionary but we have never used it that way," treat that as a yellow flag. Past behavior does not bind future contracts. Request a revision that ties increases to a verifiable index and caps them at a round number like 3 percent per year. If they refuse, ask why and decide if the risk is acceptable.

The exact questions to ask about jurisdiction and liability surprises

Governing law and indemnification sections look like boilerplate, yet they determine where a dispute is heard and whether you cover the other party's negligence. Your cafe may be in one state while the lease mandates the laws of another. If a slip and fall claim arises, you could be forced to defend yourself thousands of miles away under unfamiliar rules. Check the rules where you are for how courts treat such clauses.

An MSA indemnification clause may read "Customer shall indemnify, defend, and hold harmless Provider from any and all claims arising out of Customer's use of the Services." If "use of the Services" is defined broadly, you could be liable for claims stemming from the vendor's own software bugs, data breaches, or third party integrations they control.

What to ask:
- "If a dispute arises, where would it be resolved, and under which state's laws?"
- "Under this indemnification clause, what specific scenarios would make me responsible for your legal costs or damages?"
- "Is there a cap on my liability here, or does it apply to all claims, regardless of fault?"

Hesitation or deflections like "it is just standard language" are red flags. If they cannot give a plain English example of how the clause plays out in a real scenario, assume the worst case interpretation is possible and negotiate accordingly.

Why a favorable termination clause might actually lock you in longer

Termination clauses are where optimism bias bites hardest. Language like "Either party may terminate this agreement with 90 days written notice" looks fair. Dig into surrounding sections and you may find the notice period only starts after you cure an alleged breach the vendor defines, termination triggers liquidated damages equal to 12 months of fees, or you must keep paying for ancillary services for the full notice period even if you stop using the core service.

A freelance designer once signed an MSA with a 60 day termination clause, only to realize terminating still required two months of minimum usage fees for a stock asset library they no longer needed. In leases, an early termination right may require paying all rent due through the end of the term, turning an exit into a full buyout.

What to ask: "If I give notice today, walk me through exactly what I owe, when I owe it, and what services or obligations continue during the notice period."

Get the answer in writing. If they balk at a concrete example, push for revisions such as a mutual termination right with symmetrical notice periods, a cap on early termination fees (for example three months rent), and clarity that service access continues until the effective termination date unless you are terminating for cause.

How to use an exact quote from your file to validate if a term is fair or risky

The most practical skill in contract review is to stop summarizing and start quoting. When you paraphrase, you lose precision. When you lift the exact sentence, you gain leverage.

Suppose your vendor MSA says: "Fees for Services shall be reviewed annually and adjusted to reflect changes in the Consumer Price Index for All Urban Consumers (CPI-U) as published by the Bureau of Labor Statistics." That is specific, measurable, and capped by an external benchmark. Contrast it with: "Provider may adjust fees at its sole discretion to account for increased costs of delivery." The first is objective and predictable. The second is a blank check. By comparing the exact language you can say: "I am comfortable with CPI linked adjustments, but unilateral discretion creates unacceptable risk. Can we revise this to match the first example?"

This works for any clause. Copy the termination provision verbatim, highlight ambiguous phrases, and ask: "What does this mean in practice? Give me a scenario where this would be triggered." You do not need a lawyer to do this, just attention to detail and the courage to ask for clarity. Tools like AxiomRisk contract check can help by surfacing the exact risky sentences in your file and suggesting plain English questions to ask the other side, turning vague anxiety into targeted action.

The goal is not to eliminate all risk. It is to ensure you are not signing up for surprises you did not see coming.

Next step

Before you sign, take 20 minutes to highlight every clause related to rent, fees, termination, governing law, and indemnification. Copy the exact sentences. For each one ask: "What does this mean in real dollars and real time?" If you cannot answer confidently, pause. Send those questions to the other side and wait for a written reply. That is how founders build resilience, not by avoiding risk but by facing it with eyes open. Check your contract free to get the risky sentences quoted word for word from your file with plain English questions to ask.