Free tool · Contract Law
Contract Clause Risk Checker
Most contract trouble comes from a handful of clauses: limits on liability, indemnities, automatic renewal, a power to change the terms alone, arbitration and jury waivers, restrictions on competing, and disclaimers of warranties. Paste a clause or an agreement below and the checker will find these, say in plain words what each does to the party reading it, note the usual legal limits on enforcing it, and list common clauses that seem to be missing. It is a reading aid for learners, not a legal review.
Tool · Contract Clause Risk Spotter
8 kinds of clause found (5 to read with particular care), and 4 common clauses that seem missing.
Limitation of liability Read with particular care
“The Supplier's aggregate liability under this Agreement shall not exceed the fees paid in the preceding twelve months.”
What it does: Caps the amount that one party can be made to pay, often at the fees paid.
Usual limits: Generally enforceable between businesses if clear. It cannot usually excuse fraud, intentional wrongdoing or, in some states, gross negligence, and consumer contracts face tighter limits. Under the UCC a limit on consequential damages for personal injury from consumer goods is prima facie unconscionable (UCC 2-719(3)).
Look at: Is the cap mutual? Does it apply to indemnities, confidentiality and data breaches? Is it very low compared with the likely loss?
Exclusion of consequential damages Read with particular care
“In no event shall the Supplier be liable for consequential damages or lost profits.”
What it does: Removes liability for knock-on losses such as lost profits.
Usual limits: Generally enforceable between businesses. May be refused where the remedy fails of its essential purpose (UCC 2-719(2)) or the clause is unconscionable.
Look at: Are lost profits the main loss you would suffer? Is the exclusion mutual?
Indemnity Read with particular care
“The Customer shall indemnify and hold harmless the Supplier from all claims.”
What it does: Makes one party reimburse the other, and often defend it, for certain losses or third-party claims.
Usual limits: Strictly interpreted: many states require clear language before an indemnity covers the indemnitee’s own negligence, and some limit it by statute (for example in construction).
Look at: Is it one-sided? Does it cover the other side’s own fault? Is it uncapped? Who controls the defence?
Automatic renewal Worth checking
“This Agreement shall renew automatically for successive one-year terms unless notice is given ninety days before the end of a term.”
What it does: Continues the contract for another term unless notice is given by a deadline.
Usual limits: Enforceable in general, but many states regulate auto-renewal in consumer contracts, requiring clear disclosure and easy cancellation.
Look at: What is the notice window, and who will diary it?
Unilateral change Read with particular care
“The Supplier may modify these terms at any time in its sole discretion.”
What it does: Lets one party change the terms, or decide key questions, alone.
Usual limits: A power exercised at sole discretion is limited by the implied duty of good faith and fair dealing in most states. A contract in which only one party is bound may fail for lack of mutuality or be treated as illusory.
Look at: Is notice required? Can you leave if you disagree with a change?
Arbitration, jury and class waiver Read with particular care
“Any dispute shall be resolved by binding arbitration, and the Customer waives any right to a jury trial or to join a class action.”
What it does: Moves disputes out of court, and may remove the right to a jury or to sue as a group.
Usual limits: Generally enforced under the Federal Arbitration Act, including class waivers in many contracts, subject to defences such as unconscionability. Some statutory claims and some consumer or employment settings are treated differently.
Look at: Who pays the costs? Where is the hearing? Can you opt out? Is the process fair to both sides?
Disclaimer of warranties (‘as is’) Worth checking
“The software is provided as is, and the Supplier disclaims all warranties.”
What it does: Removes the implied promises that goods or services are of reasonable quality or fit for purpose.
Usual limits: For goods, a disclaimer of the implied warranty of merchantability must mention merchantability and be conspicuous if written (UCC 2-316). Consumer protection laws limit disclaimers in many places.
Look at: Is it conspicuous (bold, capitals)? Did anyone make express promises that the disclaimer ignores?
Time of the essence Worth checking
“Time is of the essence.”
What it does: Makes a late performance a material breach, even if only slightly late.
Usual limits: Enforced if clear. Courts may excuse minor delay otherwise, but not where time is of the essence.
Look at: Are the deadlines realistic? Is there any grace period?
Common clauses that seem to be missing
- Governing law and where disputes are heard. Without it, the court will have to decide which law applies, which is slow and uncertain.
- How the contract ends. Without a termination clause, ending a long contract can be hard, and rights after the end are unclear.
- How notices are given. Disputes often turn on whether, when and where a notice was properly given.
- Entire agreement. Without it, earlier statements may be argued to be part of the deal.
A clause is read in the light of the whole agreement, the parties’ positions and the law that applies. Take advice before signing anything that matters.
Reads pasted contract wording for the kinds of clause that most often cause trouble (liability caps, indemnities, automatic renewal, one-sided changes, arbitration and the like), says in plain words what each does, notes the usual legal limits on enforcing it in general American terms and what to look at. It works on wording alone, so it cannot judge fairness in context or enforceability where you are. A reading aid for learners, not legal advice: use invented or public text, never a confidential document. Runs in your browser; nothing is stored or sent.
How to use it
- Paste the wording of a clause or a whole agreement (use invented or public text, never a confidential document).
- Read each clause the tool finds, the sentence it came from, and what it does.
- Note the usual legal limits, and the questions to ask before agreeing.
- See which common clauses the text leaves out.
Common questions
Is a limitation of liability clause enforceable?
Generally yes between businesses if it is clear, but it cannot usually excuse fraud or intentional wrongdoing, and consumer and unconscionability rules can limit it. The checker explains the usual limits.
What is an indemnity?
A promise to reimburse the other party for certain losses or claims, often including the cost of defending them. Courts read them strictly, and many require clear words before an indemnity covers the other party’s own negligence.
Does this replace a lawyer?
No. It finds familiar patterns in wording and explains them. It cannot judge fairness in context, the parties’ bargaining positions or enforceability where you are, so take advice before signing anything that matters.
Learn the law behind the tool
This tool is part of our Contract Law course, with lectures, concept maps, flashcards, interactive exercises and a capstone case. Contract Law, Module 2: Terms and Interpretation.
More free law tools
General information, simplified, mainly on American law, not legal advice. States and countries differ, and real cases turn on facts that a tool cannot capture.