They sent their contract: how to read it from your side
A reading order for the contract the other side sends, a fine / ask / stop table across 11 clause families, and the email to send back.
Read their contract in a fixed order: first the deal pages against what you agreed, then the clauses that move money and risk, then the ones that bind you later. Mark each clause fine, ask or stop as you go. Send back one email and one tracked file, stops first.
What are you holding?
A contract the other side sends is often their standard form: written once, used with everyone, and drafted with their interests in mind. Some of its terms may sit in other documents. In Common Paper's standard Professional Services Agreement, the "Agreement" includes "the policies and documents referenced in or attached to" its key terms (§13). Reviewing it is stage 2 of a contract deal.
In what order should you read it?
The order fits most service and supply contracts; for an NDA, skip steps that don't apply.
- Write down what you agreed. Five lines: price, dates, scope, when you get paid, and anything else they promised. Check the contract against these, not your memory.
- Read the first page and the signature block. Check the legal names, which company you'd contract with, the start date and the term.
- Check the deal pages against your five lines. The order form, statement of work or schedule holds the price, dates and scope. Anything different needs an answer.
- Collect everything it pulls in. Linked web terms, policies, purchase order terms, and the clause saying which document wins. A document you can't see must be supplied, or taken out, before you sign.
- Read the money and risk clauses. Payment, ownership of the work, the liability cap, indemnities, warranties and insurance.
- Read the exits. Renewal, who can end it and on what notice, and what you're paid when it ends.
- Read what binds you later. Confidentiality, non-compete, non-solicit, exclusivity and publicity. Then the back pages: governing law, courts or arbitration, assignment and amendments.
- Search the file for the phrases below.
Which words should you search for?
A few phrases can shift power to whoever wrote the contract. A hit isn't a verdict: neutral forms use the same words. What matters is what the clause covers and whether it works both ways.
| Phrase | What it can do | What to ask |
|---|---|---|
| "sole discretion" | They decide on their own, with no standard written in | A standard in the clause, such as "reasonable" |
| "at any time", "without notice" | At any time: they choose when. Without notice: no warning | Check the notice clause, or ask for notice, such as 30 days |
| "automatically renew" | Another term starts unless you cancel in time | A cancellation window you can calendar |
| "as updated from time to time" | They can change the terms after you sign | The signing-day version, or notice and a right to leave |
| A web link | Terms you haven't read join the deal | A copy, and whether it's a fixed version |
| "arising out of or relating to" | In an indemnity or other promise to cover losses, it reaches anything linked to your work | "Caused by" your breach or negligence, in those clauses only |
| "irrevocable", "perpetual" | Irrevocable: it can't be withdrawn. Perpetual: it has no end date | What continues after the contract ends, and for what purpose |
How do you mark each clause fine, ask or stop?
Give every clause one mark:
- Fine: you understand it, it's commercially acceptable, and it matches the deal you agreed.
- Ask, nice to have: a change you'd like, but you'd sign without it.
- Ask, must answer: a question or missing document to settle before you sign.
- Stop: you won't sign until it changes.
Our rule of thumb for a closer look: does the clause work both ways? It's a prompt, not a pass: mutual unlimited liability still exposes you. The idea comes from Australian law. The ACCC's examples of possibly unfair terms include ones letting one party "(but not the other)" end the contract or change its terms. The legal test also weighs imbalance, legitimate interests and harm. That law covers standard form contracts with Australian small businesses (fewer than 100 employees, or under A$10 million turnover) made or renewed from November 9, 2023, and terms varied or added since. It is not a US rule.
Section numbers below refer to two free neutral forms: Common Paper PSA 1.1 and Bonterms PSA 1.2.
| Clause family | Fine | Ask | Stop |
|---|---|---|---|
| Payment | The amount and days you agreed, from the invoice date | Longer terms, payment on "approval," PO or portal rules | No payment date, or payment only once their customer pays them |
| Scope and acceptance | Deliverables listed; changes only by written agreement (Common Paper §1.3) | "And related tasks"; acceptance with no deadline | They can change the scope alone, or reject work with no reason or deadline |
| Who owns the work | Your existing tools stay yours, licensed only for using the deliverables (Common Paper §2.3) | Ownership on payment, a provider-friendly option (Common Paper cover page, §2.1); Bonterms doesn't tie it to payment (§6.3(a)) | Tools or code you use for other clients become theirs |
| Liability cap | A cap for both sides, every exception read; Bonterms leaves indemnities and confidentiality breaches, among others, uncapped (§12.3, §12.5) | Exceptions that leave little under the cap | No cap on you, where a claim could exceed what you can pay |
| Indemnity | You know which outsiders' claims you'd "indemnify, defend, and hold harmless" against (Common Paper §9.1), and the cost | Coverage for anything "arising out of" your work | Their own negligence, or claims they bring themselves |
| Ending early | Either side can end for an uncured material breach (Bonterms §11.3); a client ending for convenience pays for work done (§11.2(b)); refunds apply to rejected or faulty work (§3.4(d), §7.2(b)) | Only the client can end for convenience (as in Bonterms): ask for the same right | A convenience exit cancels pay for work done or costs you've committed |
| Warranties and insurance | Promises within your control, such as meeting the spec, with a set time to fix (Common Paper §6.3, §6.4); insurance types, amounts and duration you already meet (Bonterms §17.9) | Cover above what you carry: price it first | Results you can't control, or cover you can't get before the start |
| Restrictions on you | None: neither form has a non-compete or exclusivity clause | Any limit on who you work for: its scope and length | A non-compete or exclusivity that keeps you from other clients; a staff no-hire (see below) |
| Confidentiality and publicity | Mutual, excluding what you knew free of any duty of confidence (Common Paper §11.2); no announcements without approval unless law requires (Bonterms §16) | One-way protection, or you want portfolio use | So wide it covers what you already knew freely |
| Changing the terms | In writing: signed or e-accepted by each party (Common Paper §12.2), or signed by authorized representatives (Bonterms §17.6) | Web terms "as updated from time to time" | They can change the terms alone, and you can't leave |
| Law, courts and assignment | Law and courts you both chose (Common Paper §12.3); assignment by consent, or on notice in a merger or sale (Bonterms §17.1) | Another state's or country's law; arbitration far away | They can pass the contract to anyone without telling you |
A promise between two businesses not to hire or solicit each other's staff needs a lawyer's look. DOJ and FTC antitrust guidance (revised January 2025) says agreements between companies "not to recruit, solicit, or hire workers" may violate antitrust law. The guidance isn't law, and the answer depends on facts such as whether the businesses compete for workers.
For long payment terms, see how to push back on Net-60; for an NDA, a standard mutual NDA read from both sides.
What do you send back?
If they sent a PDF, ask for an editable Word file first. Then send one email and their file with your changes tracked: stops and must-answer questions first, each with your wording, then the nice-to-haves. Leave the fine clauses out.
“Subject: [Agreement name]: our comments Hi [Name], Thanks for the agreement. We're happy with most of it, but [three] points need to be settled before we can sign: 1. Payment (Section [X]): we agreed [30 days from invoice], not [payment on approval]. We've changed it back. 2. Liability (Section [Y]): we'd need a cap for both sides, at [the fees paid or payable in the 12 months before the claim, or $amount if higher]. 3. Supplier policy (Section [Z]): we haven't seen it. Could you send a copy? If it can't be shared, we'll need the reference removed. One smaller request: [a 30-day notice period in Section A]. Our changes are tracked in the attached copy. Best, [Your name]”
Sort their reply the same way: see which redlines to push back on.
Does it change with the kind of contract?
The reading order stays the same; the pressure points move.
| Situation | What to do | What usually goes wrong |
|---|---|---|
| A client sent its master services agreement (MSA) | Read it with the first statement of work; find which document wins | Reading only the statement of work and missing the MSA's cap |
| A large company sent its vendor agreement | Ask for stops and top asks only, with paste-ready wording | Marking up every clause, so the stops get lost |
| A prime contractor sent a subcontract | Ask for the parts of the main contract passed down to you | Agreeing to "flowed down" terms you've never seen |
| You have one day | Do steps 1, 3 and 5 first, then the phrase search | Reading every page at the same pace |
| You're not sure what's a deal-breaker | Keep stops for real money or a claim you couldn't pay | Marking every one-sided clause stop |
| You're not sure a clause is normal | Compare it with a neutral form | Accepting it because their template calls itself "standard" |
| You're not sure you need a lawyer | Use the triggers below | Paying for a full review of a two-clause problem |
When should you get a lawyer?
A careful read prepares you; it can't tell you a contract is safe. Bring in a lawyer when:
- You can't tell what a clause means, or what it could cost you.
- One claim under an indemnity or an uncapped clause could cost more than your business can absorb.
- They'd own tools you reuse, or you'd be barred from working for or hiring from others.
- The governing law, courts or arbitration are somewhere you don't know.
- The deal is a big share of your year's revenue.
To keep the bill down, ask for a quote on just your stops and open questions.
When does reading their contract by hand stop working?
Your notes, the reading order and the table work for a short contract that arrives now and then. They slip when the contract links out to policies and web terms, when several land in one week, or when two people on your side each read half. Then it's worth having a tool read their paper from your side first and show you what's risky, so your time goes on the stops.
DealMate is an AI contract assistant that takes a deal from first draft to final: describe the deal in a sentence and get a draft built from your templates and clauses; when they send their template, review it from your side and see what's risky; when their redlines come back, compare the versions and see every change and the risk it carries.
Sources
- Professional Services Agreement Standard Terms, Version 1.1 — Common Paper
- Professional Services Agreement: Cover Page and annotations (Standard Terms v1.1) — Common Paper
- Professional Services Agreement, Version 1.2 — Bonterms
- Contracts: unfair contract terms — Australian Competition and Consumer Commission (ACCC)
- Antitrust Guidelines for Business Activities Affecting Workers (revised January 2025) — U.S. Department of Justice and Federal Trade Commission
This is general information, not legal advice. For high-stakes or unusual terms, talk to a lawyer.
Got their contract in front of you? DealMate reads it from your side and points out what's worth pushing back on.
Try it on your next contractFree trial · no card needed