What should I check before signing a contract?

Parties. Make sure the contract names the right legal entities. For a company, that means its registered name and number, which you can check free on Companies House, not just a trading name. Look out for clauses that make a director or owner personally liable, such as a personal guarantee.

Scope. The contract should say exactly what each side will deliver, to what standard and by when, how work is accepted, and how changes are agreed and priced. Vague scope is the most common source of disputes.

Payment. Check the price, whether it includes VAT, when you can invoice and the payment terms. Look for rights to raise prices, deposits, and what happens if payment is late. Between businesses, if the contract doesn't set its own remedy, statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998 applies.

Check how long the contract lasts and whether it renews automatically. Many business contracts roll over unless you give notice within a set window, sometimes months before the end date. Diarise it.

Then look at how each side can end it:

• for convenience: can you leave without a reason, and on how much notice?
• for breach: is there a chance to fix a breach before termination?
• on insolvency or change of control
• what happens on exit: final payments, early termination fees, return of data and materials, and any handover help

A contract that's easy for the other side to end but hard for you to leave is a red flag.

Most business contracts limit or exclude liability. Read these clauses closely, along with any indemnities, which can expose you to losses well beyond the contract value.

For business contracts in England, Wales and Northern Ireland, the Unfair Contract Terms Act 1977 sets limits:

• Death or personal injury. Under section 2 of the Unfair Contract Terms Act 1977, liability for death or personal injury caused by negligence can't be excluded or restricted. Other negligence liability can be limited only if the term is reasonable.
• Standard terms. Under section 3 of the Unfair Contract Terms Act 1977, if you deal on the other side's written standard terms, they can only exclude or limit liability for their own breach, or reserve the right to perform substantially differently from what was reasonably expected, or not at all, if the term is reasonable.

The test is in section 11 of the Unfair Contract Terms Act 1977: the term must have been fair and reasonable given what the parties knew or should have known when the contract was made. For a cap at a fixed sum, the court looks especially at the resources available to meet the liability and whether insurance was available. The party relying on the term must prove it's reasonable.

Courts are slow to rewrite terms negotiated between businesses, so don't rely on this test to rescue a bad bargain. Scotland has similar rules in Part II of the Act. Consumer contracts are covered by the Consumer Rights Act 2015 instead.

If the contract involves creating anything, such as designs, software, content or reports, check who will own it. Under section 11 of the Copyright, Designs and Patents Act 1988, the creator is usually the first owner of copyright, except work made by employees in the course of their job. A contractor or agency usually keeps ownership unless it's transferred, and under section 90 of the Copyright, Designs and Patents Act 1988 a transfer must be in writing and signed by or for the person transferring it.

If you're paying for the work, look for an assignment to you, or at least a licence wide enough for how you'll use it. If you're the supplier, make sure you keep your pre-existing tools and know-how.

Also check confidentiality, and data protection terms if either side will handle personal data.

• Governing law and courts: England and Wales, Scotland and Northern Ireland are separate legal systems, and an overseas law clause can make disputes slow and expensive.
• Disputes: is there a negotiation, mediation or arbitration step before court?
• Entire agreement: this usually means promises made before signing don't count unless they're in the contract. Get anything important written in.
• Variations: many contracts require changes to be in writing and signed.
• Restrictions: watch for exclusivity, non-compete or non-solicitation clauses, and whether the other side can assign the contract to someone else.