Contracts Guide

10 Contract Clauses to Read Before You Sign

The contract terms that decide who carries the risk — liability caps, indemnities, IP, termination, non-competes, attorney's fees — with California-specific notes.

By Eight Law · Updated · 2 min read

Most contract risk sits in a handful of clauses. Here's where to look first, with a few California rules worth knowing.

1. Scope and deliverables

What exactly is being provided, by when, and how acceptance works. Vague scope is the most common source of disputes.

2. Payment terms

Price, invoicing, due dates, late fees, and what happens if payment is disputed.

3. Term, renewal, and termination

How long the contract lasts, whether it auto-renews, how much notice is needed to end it, and whether either side can terminate for convenience or only for cause.

4. Limitation of liability

Caps on damages and exclusions of indirect or consequential damages. Check what's carved out of the cap and whether it applies to both sides. In California, Civil Code § 1668 makes contracts that try to exempt a party from responsibility for its own fraud, willful injury, or certain violations of law against public policy.

5. Indemnification

Who covers whom for third-party claims, for what, and whether the indemnity is capped. One-sided indemnities are common in the other side's paper.

6. Intellectual property

Who owns what's created, what licenses each side gets, and what happens to them when the contract ends.

7. Confidentiality and data

What counts as confidential, how long the obligation lasts, and how personal or customer data must be handled.

8. Non-competes and non-solicits

California Business and Professions Code § 16600 makes contracts that restrain anyone from engaging in a lawful profession, trade, or business void, subject to narrow statutory exceptions — such as certain agreements made in connection with the sale of a business (§ 16601). Clauses copied from other states' templates may not hold up here.

9. Attorney's fees and liquidated damages

Under Civil Code § 1717, a contract clause awarding attorney's fees to one side in a contract dispute is generally applied reciprocally to whichever party prevails. Pre-set "liquidated damages" are governed by Civil Code § 1671 and must meet its requirements to be enforceable.

10. Disputes, governing law, and assignment

Which state's law applies, where disputes are heard, whether there's arbitration, and whether the contract can be assigned — including on a sale of either company.

Enforceability depends on the facts and the full contract. Use this list to spot issues, then get the specific language reviewed.

General information, not legal advice. This guide is for general information only and is not legal advice. Laws, fees, and deadlines change, and how they apply depends on your facts. Reading this guide or contacting us does not create an attorney-client relationship.

Sources

  1. Cal. Civil Code § 1668
  2. Cal. Civil Code § 1671 (liquidated damages)
  3. Cal. Civil Code § 1717 (attorney's fees in contract actions)
  4. Cal. Bus. & Prof. Code § 16600 (contracts restraining trade)
  5. Cal. Bus. & Prof. Code § 16601 (sale of business exception)
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