When businesses negotiate agreements—whether for supply, services, partnerships, or joint ventures—the focus often remains on commercial terms like price, scope of work, and delivery schedules. While these are important, many critical clauses tend to be brushed aside during negotiations or left buried in the “boilerplate” section of a contract. These overlooked clauses often determine how well your rights are protected when things go wrong. Ignoring them can turn a profitable deal into a costly legal battle. One of the most frequently overlooked clauses is the termination clause. Parties often sign agreements without defining when and how the contract can be ended, whether for breach, convenience, or unforeseen circumstances. A vague or one-sided termination provision can leave you trapped in a non-performing relationship or facing heavy penalties to exit. Closely related is the notice period—the time a party must give before terminating or changing terms. If it’s too short, you may be left scrambling; too long, and you could be stuck in a bad arrangement for months.
Another critical but neglected area is the dispute resolution mechanism. Many contracts simply state “subject to jurisdiction of XYZ Court” without considering alternative mechanisms like mediation, arbitration, or multi-tier processes. The absence of a well-thought-out dispute resolution clause can lead to prolonged litigation in unfavourable forums, increased costs, and unnecessary delays. Parties should clearly define the forum, the governing law, and the procedure for resolving disagreements—especially in cross-border deals.
The force majeure clause is also often treated as boilerplate until a crisis hits. This clause excuses a party from liability when extraordinary events—like pandemics, natural disasters, or government bans—prevent performance. Businesses learned during COVID-19 that a generic force majeure clause may not cover every disruption. A well-drafted clause should list specific events, outline notification requirements, and define the consequences, such as suspension or termination rights.
Confidentiality and non-disclosure provisions are frequently inserted as standard text without tailoring to the deal. They should specify what information is confidential, how long the obligation lasts, and the remedies for breach. For example, sharing technical know-how or client lists without adequate confidentiality safeguards can cause irreparable harm to your competitive position.
The indemnity clause is another area where parties often fail to read the fine print. Indemnities allocate responsibility for losses arising from specific events, such as third-party claims, IP infringement, or breaches of law. An unbalanced indemnity clause could make you liable for damages far beyond the value of the contract, even for events outside your control. Similarly, the limitation of liability clause—which caps the amount a party can be held responsible for—is often absent or drafted in a way that benefits only one side. Without it, your exposure can be unlimited.
Businesses also tend to overlook payment terms beyond price. While the contract may state the total cost, it should also detail payment milestones, late payment interest, currency, tax responsibilities, and adjustment mechanisms for fluctuating costs. Poorly defined payment schedules can cause cash flow problems or disputes over partial deliveries.
Governing law and jurisdiction clauses may seem trivial, but they can have a massive impact in disputes. If your business is based in Mumbai but the contract specifies Delhi courts or foreign jurisdiction, you could face significant inconvenience and expense. For international contracts, choosing the wrong governing law could mean applying unfamiliar rules that put you at a disadvantage.
Finally, change control clauses—which deal with modifications to the contract—are often missing. Businesses evolve, and so do requirements. Without a clear process for agreeing to changes in scope, timelines, or pricing, you may end up with verbal understandings that are unenforceable or disputed later.
In short, the clauses most often overlooked—termination, dispute resolution, force majeure, confidentiality, indemnity, limitation of liability, payment terms, governing law, and change control—are precisely the ones that determine how well a contract protects you when circumstances shift. The safest approach is to read beyond the commercial terms, question the “standard” provisions, and ensure every clause is tailored to your specific deal. In business, what you ignore today in the fine print may be what costs you most tomorrow.
Author: Advocate Dimple Rajpurohit (Bombay High Court)
Contact (Admin): info@nolegalpaisa.com
Last updated: 25-09-2025
