While Halloween is all about tricks, treats, and harmless scares, there’s nothing fun about being haunted by a commercial contract gone wrong. Many businesses unknowingly sign agreements that contain “ghost clauses”, these are unclear or overlooked terms that can return to bite later on

Here’s how to spot the hidden risks and protect your business from contractual frights.

What Are “Ghost Clauses”?

These are the provisions buried in contracts that can have unexpected consequences, especially if they haven’t been properly reviewed or tailored. Beware of the following:

· Uncapped indemnities

· Automatic renewal terms

· Vague performance obligations

· Unclear liability clauses

· Ambiguous termination rights

At best, these clauses can create confusion. At worst, they could expose your business to significant financial or operational risk.

Here are our suggested common contractual frights to watch out for:

1. Indemnities That Won’t Die

Indemnity clauses can significantly shift the risk of liability, especially if they’re not capped or clearly defined. Broadly drafted indemnities which do not contain specific limits on your financial exposure or time limits on bringing claims can expose your business to unnecessary risks.

Top Tip: Always ask whether the risk you’re being asked to indemnify is within your control.

2. The Curse of Uncapped Liability

Is your liability limited to the value of the contract, or could you be exposed to far more? If there’s no clear financial cap on your liability, or there are no exclusions for consequential losses, a small deal could create a big liability.

Top Tip: Consider agreeing different caps for different types of loss (e.g. data breaches vs performance delays).

3. Auto-Renewal Clauses in Disguise

Some contracts automatically roll over unless you give notice at exactly the right time. These can lock you into unfavourable terms unless you’re paying close attention.

Top Tip: Diarise renewal deadlines or negotiate rolling notice periods instead.

4. Creeping Obligations

Vague wording such as “best efforts” or “as agreed from time to time” can expand your responsibilities beyond what you expected, or even beyond what’s commercially viable.

Top Tip: Be specific. If something is critical to performance, define it clearly in the contract.

5. Termination Traps

Some contracts give the other party broad termination rights, while restricting your ability to exit or even allowing auto-renewal with price increases.

Top Tip: Make sure your right to terminate is clear, fair, and aligned with your commercial needs.

Clean Up Your Contracts Before They Haunt You

Here are a few tricks to keep your contracts from turning terrifying:

· Exorcise Old Templates – Review your contract templates regularly, especially if laws, pricing, or your business model have changed. Outdated terms can rise from the grave and cause real damage.

· Don’t Trust the Boilerplate Boogeyman – Standard clauses may look harmless, but they can carry lurking risks. What seems “normal” might be anything but, especially when disputes arise.

· Summon Legal Wizards Early – Before you sign on the dotted line, consult your legal team, especially for high-value or long-term deals. A quick review now can save you from a monstrous mess later.

· Arm your ghost hunters – Equip your staff with the knowledge to identify risky terms and suspicious clauses.

Berry Smith Bottom Line

Contracts don’t need to be scary, but ignoring the risks can turn even the most promising deal into a legal nightmare.

This Halloween, shine a light on the shadows, seek legal guidance early, and keep your agreements from becoming the stuff of legal horror stories. A little caution now can save you from a frightful future.