10 Risk Clauses You Should Always Include in a Contract

Introduction

Many businesses run into legal trouble not because they acted recklessly, but because their contracts failed to anticipate common risks. From missed deadlines to data breaches, the cost of ignoring key risk clauses can be massive. Yet many entrepreneurs and consultants still sign contracts with vague or missing protections.

In this post, we break down 10 essential risk clauses that should appear in every well-drafted contract. Whether you’re a startup founder, service provider, or legal advisor, these provisions help you manage liability, avoid disputes, and create clear expectations.

Who This Is For / Why This List Matters

This list is for:

• Freelancers and consultants working with corporate clients
• Founders and CEOs reviewing vendor or investor contracts
• In-house legal teams updating agreement templates
• Law students or new legal professionals learning contract structure

If you’re negotiating any agreement—especially in B2B, SaaS, real estate, or international deals—these clauses are your risk management toolkit.

1. Limitation of Liability

Limits the amount or types of damages one party can recover from the other.

Why it matters: Without this, you could be on the hook for unlimited financial damages due to a mistake, even if it was minor.

What to do: Include a cap (e.g., total fees paid) and exclude indirect or consequential damages.

2. Indemnity Clause

Defines who bears the cost if a third party sues over an issue related to the contract.

Why it matters: You could be dragged into legal disputes over someone else’s actions unless this is clearly addressed.

What to do: Specify scenarios where each party agrees to indemnify the other, and require timely notice of any claim.

3. Force Majeure

Excuses parties from performing obligations due to unforeseeable events like natural disasters, wars, or pandemics.

Why it matters: Without this, you might be in breach even when the failure was out of your control.

What to do: Define what counts as force majeure and how notice must be given.

4. Confidentiality Obligations

Ensures sensitive business information isn’t shared improperly.

Why it matters: A leak could cost you clients, IP, or competitive advantage.

What to do: Define “confidential information,” duration of protection, and remedies for breach.

5. Termination for Cause

Gives either party the right to exit if specific breaches occur.

Why it matters: Being trapped in a non-performing contract can drain your business.

What to do: List grounds for termination (non-payment, breach, insolvency) and specify cure periods.

6. Dispute Resolution Clause

Outlines how conflicts will be resolved—e.g., arbitration, mediation, or court.

Why it matters: Without clear procedures, small issues can escalate into lawsuits.

What to do: Choose method, location, and governing law in advance.

7. Warranties and Disclaimers

Warranties promise that certain facts or conditions are true; disclaimers limit what’s not guaranteed.

Why it matters: They define responsibility and manage expectations.

What to do: Be clear about what is being warranted (e.g., performance, legality) and what is not (e.g., suitability).

8. Data Protection Clause

Covers handling of personal data in compliance with laws like GDPR or HIPAA.

Why it matters: Mishandling user data can lead to fines and lawsuits.

What to do: Outline data storage, access rights, security measures, and breach notifications.

9. Non-Solicitation Clause

Prevents one party from hiring the other’s employees or clients.

Why it matters: Protects your team and customer base from poaching.

What to do: Specify duration, scope, and whether it applies to employees, contractors, or clients.

10. Entire Agreement Clause

States that the written contract is the full and final agreement between the parties.

Why it matters: Prevents old emails or verbal promises from becoming legal issues.

What to do: Add language nullifying prior discussions unless they’re included in the signed document.

Mini Case Example

A logistics startup entered a tech licensing deal without a Limitation of Liability clause. When the software crashed during a high-volume delivery window, they were sued for losses exceeding $500,000. The court sided with the plaintiff. If the clause had capped liability to the total contract value, exposure would have been just $40,000.

Lesson: One missing clause can cost you more than the entire project value.

Summary Checklist

• Limitation of Liability
• Indemnity
• Force Majeure
• Confidentiality
• Termination for Cause
• Dispute Resolution
• Warranties and Disclaimers
• Data Protection
• Non-Solicitation
• Entire Agreement

Closing Thoughts + Call-to-Action

Risk isn’t something you eliminate—it’s something you manage. These 10 clauses are your front line of defense. Every contract, no matter how small, deserves this level of protection.

Need help drafting or reviewing a contract? Book a call with our legal team to make sure your agreements are ready for the real world.