The information in this blog is for general informational purposes only and does not constitute legal advice. Consult a qualified attorney for advice on your specific situation. We make no guarantees about the accuracy or completeness of the information provided. Reliance on any information in this blog is at your own risk.
Contracts are the foundation of almost every business relationship—whether it’s a supplier agreement, a service contract, a partnership arrangement, or a licensing deal. But too often, Ontario business owners sign contracts without fully understanding what’s in them—or worse, without legal review at all.
Even a short contract can include clauses that shift risk, limit liability, or restrict your ability to operate freely in the future. That’s why commercial contract review is one of the most important legal steps you can take before signing on the dotted line.
At AMAR-VR LAW, we help businesses across Ontario review and negotiate contracts with clarity and confidence. This guide outlines what to look for when reviewing a commercial agreement, what to watch out for, and how we support clients in protecting their interests.
Why Commercial Contract Review Matters
No matter how good the relationship seems at the start, things can go wrong. A vague or one-sided contract can lead to misunderstandings, financial losses, or legal disputes down the road. Proper contract review helps:
- Clarify the obligations and expectations of each party
– - Identify risks and liabilities before they become problems
– - Avoid unfair terms or hidden restrictions
– - Ensure the contract reflects the actual deal you negotiated
It’s not just about protecting yourself in a dispute—it’s about preventing the dispute in the first place.
When to Review a Contract
You should have a commercial contract reviewed by a lawyer before you sign. Common examples include:
- Vendor or supplier agreements
– - Service contracts (e.g., IT, consulting, design, marketing)
– - Licensing and distribution agreements
– - Franchise agreements
– - Partnership or joint venture contracts
– - Equipment leases and commercial real estate leases
– - Technology and SaaS agreements
– - Non-disclosure agreements (NDAs) tied to commercial transactions
Even if a contract is described as “standard” or “non-negotiable,” it’s still worth reviewing. Many standard contracts contain terms that may not reflect your business’s needs or risk tolerance.
What to Look For: A Lawyer’s Checklist
When we review a commercial contract at AMAR-VR LAW, we look at the deal from a legal, operational, and risk-management perspective. Here’s what we focus on—and what you should, too:
1. Parties to the Agreement
Make sure the correct legal names are listed—not just trade names or individuals. Each party should have the legal authority to enter the contract. For corporations, confirm that the person signing has signing authority.
2. Scope of Work or Deliverables
The contract should clearly describe what is being provided: products, services, timelines, milestones, and any deliverables. Vague or open-ended language can create confusion later. Ask: What exactly is the other party agreeing to do? What are you responsible for?
3. Payment Terms
Review how much you’re paying (or being paid), when payments are due, and under what conditions. Look for clauses on:
- Late payment penalties
– - Refund policies
– - Additional charges or rate changes
– - Whether costs are fixed or variable
Clear, specific payment terms help avoid future billing disputes.
4. Term and Termination
Understand how long the contract lasts and how it can end. Are there automatic renewal clauses? Can you terminate for convenience or only for cause? Are there penalties or notice periods? A good contract allows for a clean exit if things don’t go as planned.
5. Limitation of Liability and Indemnity
Many commercial contracts attempt to limit the other party’s liability, often to the amount paid under the agreement or even lower. Some also contain indemnity clauses that shift risk back to you. It’s important to:
- Understand what risks you’re being asked to accept
– - Push back on one-sided terms, especially if the other party controls the risks
These clauses are critical if something goes wrong—such as a service failure or third-party claim.
6. Intellectual Property (IP) Rights
If the contract involves any kind of creative work, software, or proprietary processes, clarify:
- Who owns the intellectual property created?
– - Do you get a licence to use it—and on what terms?
– - Are there restrictions on your ability to modify, resell, or adapt the IP?
Don’t assume you own the work just because you paid for it. Ownership must be clearly spelled out.
7. Confidentiality
Most commercial contracts include a confidentiality clause, but not all are well-drafted. Make sure:
- “Confidential Information” is properly defined
– - The obligations are mutual (unless there’s a reason otherwise)
– - The duration of confidentiality is reasonable and enforceable
If you’re sharing sensitive information, this clause needs close attention.
8. Non-Compete and Non-Solicitation
Some contracts include restrictive covenants that prevent you from competing or soliciting clients or staff. These clauses must be reasonable in scope, duration, and geographic reach to be enforceable under Ontario law. Unreasonable restrictions can create legal risk—or limit your future business plans.
9. Dispute Resolution
How will disputes be handled? Some contracts specify mediation, arbitration, or court. Consider:
- Is the process practical and cost-effective?
– - Is the jurisdiction Ontario, or elsewhere?
– - Are you required to pay legal costs if the other party wins?
A well-drafted dispute resolution clause can save you time and money if problems arise.
10. Boilerplate Clauses
Don’t overlook the so-called “standard” clauses at the end of the contract. These can affect:
- How amendments are made
– - Whether notices must be in writing
– - If the agreement can be assigned to another party
– - How force majeure events (e.g., pandemics, natural disasters) are handled
These details matter, especially in long-term contracts or volatile industries.
Red Flags to Watch For
While reviewing contracts, we often spot red flags that business clients should be aware of, such as:
- Unilateral rights, where only one party can terminate or change terms
– - Hidden auto-renewal clauses that extend the contract without notice
– - Broad indemnity provisions that expose you to third-party liability
– - Ambiguous scope of work, which leads to disputes about expectations
– - Silence on key issues, such as IP rights or payment conditions
Identifying these issues early gives you a chance to negotiate or walk away before signing something risky.
How AMAR-VR LAW Helps with Contract Review
At AMAR-VR LAW, we review contracts not just for legal compliance—but for real-world impact. We help you understand what the contract actually means, where the risks are, and how to align it with your business goals.
Our services include:
- Reviewing commercial contracts and identifying red flags
– - Explaining key terms in plain language
– - Suggesting revisions and negotiation points
– - Coordinating with your other advisors where needed
– - Drafting or redrafting contracts to reflect your actual deal
We don’t just read legal documents—we translate them into clear guidance so you can make informed decisions.
Conclusion
Contracts should reflect your understanding of the deal, not create new risks you didn’t agree to. Whether you’re working with a supplier, contractor, partner, or client, taking the time to review your commercial contracts can prevent costly disputes, ensure fair terms, and protect your business.
At AMAR-VR LAW, we help Ontario businesses review, understand, and negotiate contracts with confidence. If you’re about to sign a commercial agreement, or want a second set of eyes on one you’ve received. Contact us today for a consultation to make sure the terms protect your interests and support your success.
Frequently Asked Questions (FAQs)
- Why is it important to have a commercial contract reviewed by a lawyer in Ontario?
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Contract review ensures that your business understands and mitigates legal and financial risks. A lawyer can identify vague language, unfair liability clauses, or auto-renewal traps that could expose you to costly disputes or obligations.
– - What are the most common red flags in commercial contracts?
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Red flags include unilateral termination rights, overly broad indemnity clauses, hidden renewal provisions, unclear payment terms, and missing intellectual property ownership language—all of which can severely disadvantage one party if left unaddressed.
– - What should a commercial contract include to be enforceable in Ontario?
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An enforceable contract should clearly outline the parties involved, deliverables, payment terms, duration, termination rights, liability limits, IP ownership, confidentiality, and dispute resolution procedures, all in compliance with Ontario contract law.
– - Is a standard or boilerplate contract safe to sign without legal review?
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Not always. Even standard contracts can contain clauses that aren’t in your favour. Legal review ensures the terms reflect your specific business arrangement and don’t expose you to unnecessary risk.
– - How does AMAR-VR LAW support businesses with contract review?
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AMAR-VR LAW provides in-depth commercial contract reviews, explains terms in plain language, highlights risks, suggests revisions, and ensures the agreement aligns with your business goals—all with a focus on practical, enforceable legal protection.