3 Contract Clauses That Can Bankrupt Your Business

Entrepreneurs often focus on opportunity. Contract review focuses on risk allocation: who pays, where disputes happen, and what obligations continue after signature. These three clauses deserve careful attention.

1. Indemnification

Indemnification decides who pays when a claim, loss, or third-party dispute arises. If you agree to indemnify the other party broadly, you could take on risk beyond your own conduct. Consider asking for mutual language, narrower triggers, and limits tied to your own acts or omissions.

2. Automatic Renewal (Evergreen Clause)

You may sign up for a year of services only to find a clause saying the contract renews automatically unless you cancel well before the term ends. These clauses should be reviewed, negotiated where appropriate, and calendared carefully.

3. Venue and Choice of Law

If you are a Houston business dealing with an out-of-state vendor, a distant venue clause can make even a valid claim expensive to pursue. Review venue and choice-of-law provisions before signing, and consider negotiating for a practical forum.