Five clauses we fix in almost every vendor contract

We have marked up more than two thousand vendor agreements. Five clauses account for most of the red ink. If you only have an hour, read these.

1. Indemnity that never ends

A vendor that indemnifies you for “any claim arising out of the relationship” has just insured your whole company. Narrow it to third-party claims caused by their negligence or IP. Cap it. Time-box it.

2. Auto-renewal with a 90-day notice

If you have to cancel three months before a date nobody put on a calendar, you will miss it. Thirty days, written notice to a named email, is enough for both sides.

3. Liability capped at “fees paid in the last month”

A $400 monthly tool that bricks a production system is not a $400 problem. Push the cap to 12 months of fees, and keep data-breach and IP claims outside it.

4. Assignment that lets them sell the contract

If they can assign to anyone, you may wake up with a competitor as your vendor. Consent, not to be unreasonably withheld, is the usual fix.

5. “Confidential” that includes your own data

Your customer list is not their confidential information just because it sat on their server. Define it. Carve out what you already knew. Set a return-or-destroy date.