Written by Fraz Butt, Senior Director · SRA-regulated · Last reviewed 8 September 2026
Negotiating commercial contracts effectively means knowing which clauses are worth pushing back on, such as liability caps, payment terms and termination rights, and which are standard market practice not worth spending time on. Many business owners either accept the first draft they are given without question, or push back on every clause equally, wasting time and goodwill on points that do not really matter. This guide sets out a more practical approach.
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Understand What You Are Actually Agreeing To First
Before negotiating anything, make sure you understand the contract as drafted, particularly the clauses covering liability, payment and termination, which we cover in detail in our guide on commercial contract clauses. It is far easier to negotiate effectively when you understand exactly what you are being asked to accept, and why.
Related reading: commercial contract clauses.
Focus Your Negotiation on the Points That Matter
In most negotiations, only a handful of clauses genuinely affect your risk, typically liability, payment terms, termination rights and, where relevant, intellectual property ownership. Spending negotiation capital on minor wording points can slow the deal down and use up goodwill that would be better saved for the clauses that actually matter to your business.
Liability, Push for Proportionality
If a contract asks you to accept unlimited liability, or a liability cap far above the value of the contract, this is usually a reasonable point to push back on, particularly for a smaller business. A liability cap tied to the value of the contract, or the fees paid in a set period, is common market practice and a reasonable position to argue for.
Payment Terms, Protect Your Cash Flow
Longer payment terms benefit the paying party at the expense of the supplier’s cash flow. If you are the party being paid, it is worth negotiating shorter payment terms, or at least a clear right to charge interest or suspend work for late payment, rather than leaving this unaddressed.
Termination, Make Sure You Can Exit if Things Go Wrong
Check whether you can terminate the contract for the other party’s breach, and on what notice you can exit for convenience if the arrangement simply is not working. A contract that locks you in for a long period with no reasonable exit route can become a serious liability if the relationship deteriorates.
Know When to Get Advice
For low value, low risk contracts, a business owner with a good understanding of the key clauses can often negotiate confidently without outside input on every point. For higher value contracts, or those involving exclusivity, long terms, or significant liability exposure, it is worth having someone review the position before you sign, or negotiate directly on your behalf.
Related reading: our startup legal guide.
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Frequently Asked Questions / Questions & Answers
What should I always negotiate in a commercial contract?
Liability caps, payment terms and termination rights are usually worth close attention in every contract, since they have the greatest impact on your risk and cash flow.
Is it normal to negotiate a contract before signing?
Yes, it is standard commercial practice, and most businesses expect some level of negotiation, particularly on liability and payment terms. Not negotiating at all can mean accepting unnecessary risk.
How do I know if a liability clause is unfair?
A useful benchmark is whether the cap on your liability is proportionate to the value of the contract. An uncapped liability clause, or a cap far exceeding the contract value, is usually worth challenging.
Should I negotiate every clause in a contract?
No, focusing on every clause equally slows negotiations and can damage the relationship. It is more effective to identify the small number of clauses that genuinely affect your risk and focus your effort there.
When should someone else get involved in contract negotiations?
For higher value contracts, long term commitments, exclusivity arrangements or anything involving significant liability, it is worth having the position reviewed, or the negotiation led, by someone experienced before you sign.
Speak to Saracens Solicitors
For support negotiating a commercial contract, speak to our Corporate Law team.
Visit our Corporate Law service page or call us on +44 (0)20 3588 3500 to arrange a consultation.
Saracens Solicitors, Thanet House, 231 to 232 Strand, London, WC2R 1DA.
