How to Review a Contract: The Contract Review Checklist
When reviewing a contract, it’s easy to overlook small details—until those details become costly problems. That’s where a contract review checklist comes in. It provides structure, keeps teams focused, and ensures that every agreement, whether routine or complex, gets the attention it deserves.
This isn’t just helpful for legal teams. Anyone responsible for contracts, from project managers to procurement leads, benefits from having a reliable framework to follow. And with the rise of AI construction contract management software, even large-scale review processes are becoming faster, smarter, and easier to manage.
In the sections ahead, you’ll learn what a contract review checklist includes, why it matters, and how it prevents issues that derail deals before they even begin.
What Is a Contract Review Checklist?
A contract review checklist is a practical tool designed to guide a person or team through the key parts of a legal agreement. It outlines the most critical elements to confirm before finalizing a deal, helping to ensure clarity, consistency, and legal soundness. Think of it as a step-by-step filter separating safe agreements from risky ones.
This type of checklist is especially useful in organizations where multiple contracts are handled regularly. Rather than relying on memory or starting from scratch each time, teams can follow a consistent review process. It helps protect against errors, streamlines approvals, and gives everyone a shared language when discussing contracts. For legal professionals, it’s a baseline. For non-legal reviewers, it’s an essential guide.
Why Use a Checklist for Reviewing Contracts
Reviewing a contract without a checklist is like inspecting a building without a blueprint. You might catch obvious flaws, but subtle issues are easy to overlook. A well-built checklist ensures that each clause, responsibility, and risk is intentionally evaluated. It transforms contract review from a passive read-through into an active, accountable process.
The value becomes even more apparent when reviewing third-party contracts. In those cases, the language may favor one party over another. A checklist helps ensure that key issues like indemnification, payment terms, or termination rights are fair and reasonable. In time-sensitive industries, such as construction, having a standardized approach like this also accelerates contract turnaround—without sacrificing diligence.
Contract Review Checklist
Before a contract is signed, reviewed, or even redlined, it needs a clear framework for evaluation. A contract review checklist offers exactly that: a reliable, repeatable structure that ensures every agreement is assessed thoroughly and consistently. It saves time and prevents oversights that could lead to serious financial or legal consequences.
In high-pressure environments like construction, where agreements are often complex and time-sensitive, this checklist becomes more than helpful—it becomes necessary. But it’s just as useful in any context involving multiple stakeholders, strict timelines, or detailed deliverables. Instead of relying on memory or manually scanning dozens of pages, a checklist brings order to the process and helps teams focus on what actually matters.
Scope of Work
The scope of work sets expectations for what will be delivered, when, and by whom. It should be precise and unambiguous. Generic language here is dangerous. It leads to scope creep, delayed timelines, and disputes over deliverables. Every task and responsibility should be accounted for and linked to measurable outcomes.
This section often contains specific material lists, service timelines, or personnel responsibilities in construction or service-based contracts. Missing or vague items in this section result in misalignment between parties.
Payment Terms
Understanding how and when payments are made is essential to financial planning. This contract section should outline invoice schedules, payment triggers (such as milestone completion), and any retainage or withholding provisions. If a contract lacks these details, it creates room for confusion and delayed cash flow.
Also, look for penalties tied to late payment or missed deliverables. Even a short delay in payment can put unnecessary strain on budgets,especially in capital-heavy industries like construction. Clear terms protect both payer and payee and eliminate uncertainty around the most sensitive part of the deal.
Change Order Process
Every project is susceptible to change. Whether it’s an adjustment in timeline, cost, or scope, there must be a process for documenting and approving these changes. Contracts should define who has authority to initiate change orders, what documentation is required, and how the changes affect the rest of the agreement.
Even minor adjustments can spiral into larger issues without a structured change order process. Untracked changes often result in billing disputes, schedule delays, or finger-pointing when something goes wrong. This part of the checklist ensures there’s a controlled way to adapt, rather than relying on informal communication.
Termination Clauses
Contracts should never be one-way streets. There needs to be a clear understanding of how an agreement can end and under what circumstances. Termination clauses detail the conditions for cancellation, required notice periods, and any associated penalties or obligations.
There are typically two types of termination: for cause (due to a breach or failure to perform) and for convenience (by choice, without cause). A solid contract explains both and makes the exit process predictable. Without it, ending a contract can be as difficult—and costly—as a legal dispute.
Indemnification and Liability
Indemnity clauses allocate risk. They define who is responsible if someone is harmed, if property is damaged, or if a third party brings legal action. These are some of the most important and most misunderstood clauses in any agreement.
Be on the lookout for overly broad indemnification language. Ideally, these clauses are mutual and balanced. If one party assumes all risk, it must be clear why and under what limitations. In construction contracts, for example, it’s common for subcontractors to carry liability, but those limits need to be carefully reviewed.
Insurance Requirements
Having insurance isn’t enough. The contract needs to say what kind, how much, and who provides proof. This section should list required coverage types (like general liability, workers’ compensation, or professional liability) and specify dollar amounts.
It should also note whether the other party needs to be listed as an additional insured. These small details can have big consequences. If coverage is lacking when something goes wrong, both parties could be exposed to serious financial risk.
Dispute Resolution
Disagreements happen. The contract should say how those disagreements are handled. Arbitration, mediation, and court are all options, but each comes with its own cost, timeline, and risk.
Also check for the jurisdiction and governing law listed. It matters where a dispute would be resolved, especially when parties are in different states. Without this clause, conflicts often end up more drawn out and expensive than they need to be.
Deliverable Timelines
Deadlines drive progress. Contracts should include detailed schedules that specify when deliverables are due, how they’re tracked, and what happens if they’re missed. Timelines should be realistic but enforceable.
Particularly in construction contracts, these schedules are tied to payments, staffing, and inspections. A vague deadline can lead to costly delays or confusion over which party is at fault when work runs late.
Retainage or Withholding Provisions
Retainage allows the paying party to hold back a portion of the payment until the work is verified as complete. It’s a common clause in construction but also appears in service-based agreements.
It’s important to understand how much is being withheld, when it will be released, and under what conditions. These terms can significantly affect cash flow. Inconsistent or unclear language here often causes disputes at the final stages of a project.
Close-Out Requirements
Finishing a contract is more than just shaking hands. There are often final documents, certificates, or approvals required. This may include lien waivers, final invoices, or performance reports.
The close-out section should clearly list what’s expected at the end of the agreement and who is responsible for delivering it. Leaving this undefined can delay final payments or leave one party exposed to post-contract claims.
Common Mistakes the Checklist Prevents
Without a checklist, it’s easy to miss recurring issues. Legal teams may be more diligent, but for others, the lack of structure can lead to preventable mistakes. Inconsistent clauses, unfair risk allocation, and vague language are just a few examples.
| Mistake | Avoided By Checklist Item |
| Unclear or missing deliverables | Scope of Work and Deliverables Section |
| Overexposure to liability or indemnity risks | Indemnification, Insurance, and Limitation of Liability Clauses |
| Late or withheld payments | Payment Terms, Billing Schedule, and Retainage clauses |
| Legal battles over disputes | Dispute Resolution Clause and Governing Law |
Many contract risks come from silence of ambiguity. A good checklist doesn’t only flag what is wrong, but it also ensures nothing important is left out.
Standardized Review Processes
A standardized review process removes guesswork. It ensures that every contract, no matter the team or department, is evaluated the same way. This helps maintain consistency across projects, speeds up onboarding for new team members, and reduces legal exposure.
Especially in high-volume environments, standardization becomes a competitive advantage. It’s the difference between reacting to problems and preventing them before they start.
Risk Review in Contracts
Risk isn’t always obvious. Many high-risk clauses are buried in legal language or buried deep in addendums. However, there are tools out there, like Document Crunch, to make the risk review process easier and bring these to the surface.
It allows teams to quickly flag key provisions like indemnity issues, missing insurance clauses, or unrealistic timelines. In fast-moving sectors, automation helps here, surfacing risk points without needing to read every page line-by-line.
Tools That Help Automate the Process
Software can’t replace good judgment, but it can take care of the repetition. AI-powered contract platforms now identify red flags, compare clauses to standard operating procedures, and even suggest revisions based on best practices. These systems are fast and trained to spot patterns and inconsistencies that manual reviewers might miss.
AI tools are especially valuable for teams managing high contract volumes by reducing review time and improving consistency. Whether you’re reviewing five agreements a week or fifty, the right solution can transform a checklist into a dynamic, automated workflow, one that adapts, scales, and supports smarter decision-making.
Conclusion
A contract is only as strong as the attention given to its details. Whether it’s the scope of work, payment terms, or risk allocation, each part protects the people and projects behind the agreement. A contract review checklist helps keep that process focused. It ensures nothing important slips through and that the terms reflect what both sides actually intend.
If your team is handling contracts regularly, or working through the added complexity of other project documents, having a structured approach can make all the difference.
Schedule a demo to see how our AI construction contract management software supports better reviews, transparent communication, and reliable outcomes.