Learn what contract review is, why it's essential, and how businesses can streamline the process with smart tools like SharePoint-based CLM software.

1. Contract Review: A
Comprehensive
Guide (2025)

2. Every contract holds potential risks and opportunities. Carefully
examining contract review process turns dense legal jargon into
valuable insights, giving you the confidence to make decisions backed
by strong legal understanding.
Contracts can occasionally contain vague wording or concealed clauses
that may lead to unexpected issues down the line. A comprehensive
contract review checklist helps spot these issues early. It also opens the
door to better terms and protects important interests before signing.
A professional monitoring process not only prevents costly mistakes but
also enhances the terms to unlock growth opportunities and ensure
lasting business stability.
In this blog, explore the key benefits and proven best practices of
contract review empowering smarter decisions, minimizing risks, and
maximizing business success.

3. What Is Contract Review?
It is a critical step that demands careful attention before any agreement
is finalized. It requires a detailed overview of each clause to promote
clarity, balance, and minimize potential risks.
Whether conducted manually or aided by advanced
contract review software, the process guarantees that all essential
elements are present and precisely articulated.
An effective review process helps avoid expensive miscommunications
and ensures that your business interests remain fully protected.
It transforms complex legal terms into clear, accessible language,
building a solid foundation for confident, well-informed decisions. In
today’s dynamic business world, where precision matters, a meticulous
contract review becomes more than advice it is a necessity.

4. Importance of Contract Review
Lawyers spend an average of 92 minutes reviewing each contract. The
analysis time varied, with the longest duration being 156 minutes and
the shortest just 51 minutes. Below are some essential aspects to
consider.

5. 1. Reduces Legal Risk
A comprehensive review of each section equips companies to spot
unclear phrasing, omitted clauses.
Adopting this proactive stance lowers the risk of legal disputes and
operational setbacks, while protecting the company’s finances and
reputation.
By addressing challenges proactively, companies streamline operations,
cut excess costs, and proceed with enhanced clarity and authority.

6. 2. Protects Business Interests
Contracts are more than just paperwork they are strategic approach
that define relationships, responsibilities, and expectations. A thorough
review confirms the contract supports company goals while protecting
its key assets.
This process covers safeguarding intellectual property, negotiating fair
payment conditions, and spotting clauses that unfairly shift risk or
responsibility onto one side.
A contract shaped around business priorities builds a foundation for
trust and reduces the risk of negative outcomes.

7. 3. Promotes Legal Compliance
Laws and industry regulations change regularly. A careful review
confirms the contract aligns with current laws, covering important areas
like data privacy, workplace regulations, and rules unique to the
industry.
It reduces compliance risks while building confidence among
stakeholders and deepening the company’s dedication to ethical
practices.

8. 4. Aligns Contracts with Business Strategy
It should serve a purpose beyond legal formality. Examining contracts
through the lens of business strategy helps confirm they support the
company’s future goals.
Whether its expanding into new markets, forming vendor partnerships,
or securing reliable services, the agreements should help move the
business forward. When aligned with

9. 5. Improves Negotiation Process
A strong process does not just highlight risks it reveals opportunities for
better terms. By understanding every detail, businesses enter
negotiations with greater confidence and clarity. This insight allows
teams to ask the right questions, suggest fairer clauses, and push back
on unfavourable conditions.
Well-informed negotiations lead to stronger deals that offer more value.

10. Who Is Involved in Contract Review
When a clauses needs overviewed, several key decision makers step in
to ensure it’s fair, clear, and legally sound. Each person or group brings
unique expertise to protect the interests of those signing the document.
Below is a clear breakdown of who i`s typically involved and their roles.
1) Parties Signing the Contract
The individuals or businesses entering the deal are the starting point.
Parties signing a contract hold a vital interest in confirming it meets
their expectations.
Take, for instance, an apartment lease. Before committing, carefully
check that rent, obligations, and conditions match prior discussions
with the landlord. This diligence protects your interests and fosters
clarity in the agreement.

11. 2) Legal Teams
Lawyers are often the backbone of contract review. They focus on
interpreting legal terminology and identifying possible problems. Their
tasks include.
• Ensure the document follows local, state, or federal laws.
• Suggest changes to protect their client’s interests.
• Look for unclear or risky terms that could cause problems later.
Recommended Read:
Best Contract Management Software for Legal Department

12. 3) Financial Advisors or Accountants
When a clause includes financial terms such as payment schedules,
loans, investments, or fees financial advisors and accountants play a key
role in the evaluation process. Their job is to carefully examine any part
of the document that involves money.
They look at how much is being paid, when it’s due, and whether the
terms make financial sense for the business. This includes checking for
hidden costs, late payment penalties, interest rates, and tax
responsibilities that could affect the company’s bottom line.
By studying the numbers and the fine print, they help the business stay
within budget, avoid unexpected charges, and make smarter financial
decisions.

13. 4) Managers or Decision-Makers
Managers and key decision-makers add strategic value during contract
review by ensuring that the document directly supports the company’s
business goals. Their involvement helps align obligation with budgets,
timelines, and expected outcomes turning each document into a tool
for progress rather than just a formality.
Consider a marketing manager reviewing an advertising agreement.
They verify that campaign costs align with budget and target ideal
audiences.
Likewise, a project or operations manager confirms deliverables,
timelines, and duties sync with business needs, keeping operations on
track with precision.
Contract Review Process: Clear Step-by-Step Approach
A well-structured process helps businesses avoid costly mistakes,
uncover hidden risks, and secure better terms before signing any
document. This step-by-step guide walks through each stage clearly,

14. 1. Define the Business Intent
Begin by gaining a clear understanding of the document purpose and
the nature of the commercial relationship it governs. Clearly define the
business goals and confirm that the agreement aligns with both
operational needs and long-term strategic direction.
This context sets the foundation for evaluating whether the terms
reflect the intended arrangement.
2. Highlight Core Provisions
Focus on core components like payment timelines, deliverables, service
expectations, renewal terms, and exit clauses. These directly shape
financial outcomes and operations, demanding careful scrutiny to
confirm they match your goals.
These elements have direct operational and financial implications and
require focused review to ensure alignment with expectations.

15. 3. Conduct a Detailed Legal and Commercial Analysis
Examine the thoroughly, clause by clause. Give thorough attention to
clauses covering liability, indemnification, dispute resolution,
confidentiality to protect your business interests effectively. Detect
vague language, overly broad obligations, or terms that may introduce
hidden risks or future conflicts.
4. Prepare for Negotiation
Where terms appear unfavourable, unclear, or incomplete, propose
appropriate revisions. Collaborate with legal advisors or contract
specialists to refine proposed changes. This keeps agreements legally
sound while aligning with business goals.

16. 5. Seek Internal Review and Approval
Distribute the revised version to relevant internal departments,
including legal, finance, and leadership teams. Collect input from all
parties to make sure every concern is fully addressed.
Final contract approval process should come from authorized personnel
who are accountable for managing risk and ensuring regulatory
compliance.
6. Execute and Archive the Agreement
Once finalized and approved, arrange for official contract execution by
designated signatories. After signing, store the contract securely in a
centralized system. Proper documentation supports future audits,
performance tracking, and renewals.
Challenges Faced During Contract Review
Evaluating contracts often brings challenges that can slow progress or
create complexity. Recognizing these obstacles equips professionals to
approach reviews with greater clarity and efficiency. Below are seven

17. 1. Complex Legal Language and Jargon
A key hurdle in contract review lies in navigating dense legal
terminology. Specialized phrases and lengthy sentences often pose
difficulties for those without legal expertise, complicating
comprehension.
Understanding of contract language can spark errors in grasping critical
sections, potentially locking parties into unintended commitments.
2. Unclear and Vague Terms
Unclear or vague language can cause confusion. Vague terms can spark
varied interpretations among parties, sowing seeds for future disputes.
Identifying and refining these murky sections during review fosters
shared understanding and prevents conflicts.

18. 3. Incomplete or Missing Clauses
Sometimes, it may not include important sections that are necessary to
protect the interests of one or both parties involved. For example, they
might be missing clear rules about how it can be ended.
When these key parts are left out, it can create unexpected risks or
problems in the future. That is why a careful and detailed overview of
the is very important.
Recommended Read: Clause Library Explained
4. Balancing Negotiation and Collaboration
Contract review is not just about identifying potential issues, It’s a
collaborative effort that demands thoughtful negotiation. Walking the
fine line between protecting one’s position and fostering mutual
understanding is often a delicate task. Pushing too hard can damage
valuable relationships, while being too accommodating may open the
door to disadvantageous commitments.

19. 3. Incomplete or Missing Clauses
Sometimes, it may not include important sections that are necessary to
protect the interests of one or both parties involved. For example, they
might be missing clear rules about how it can be ended.
When these key parts are left out, it can create unexpected risks or
problems in the future. That is why a careful and detailed overview of
the is very important.
Recommended Read: Clause Library Explained
4. Balancing Negotiation and Collaboration
Contract review is not just about identifying potential issues, It’s a
collaborative effort that demands thoughtful negotiation. Walking the
fine line between protecting one’s position and fostering mutual
understanding is often a delicate task. Pushing too hard can damage
valuable relationships, while being too accommodating may open the
door to disadvantageous commitments.

20. 5. Time Constraints and Deadlines
Tight schedules often demand swift contract reviews, pressing legal
teams to balance speed with precision. Rushed efforts risk missing vital
details or introducing errors, potentially leading to significant
consequences. Poor document management could diminish up to 40%
of a contract
6. Ensuring Compliance with Laws and Regulations
Keeping up with shifting rules and managing risks is no small feat. If the
agreement doesn’t meet these standards.
Failure to comply not only undermines the enforceability but can also
result in legal penalties. Careful attention to legal frameworks during
review is therefore indispensable.

21. 7. Managing Multiple Stakeholders’ Inputs
Contract evaluation often calls for collaboration across multiple
departments legal, finance, operations, and leadership teams. Each
brings its own perspective, which, while valuable, can also lead to
contrasting priorities.
Coordinating these inputs and aligning everyone on key terms is rarely
quick.
The process can become intricate, requiring thoughtful negotiation and
time-consuming back-and-forth to reach a consensus that works for all
involved.
Having clear ways to communicate and following an organized review
process make it easier.

22. Best Practices to Implement While Reviewing Contracts
Smart contract review practices help identify errors, lower risk, and
build trust between parties.
1. Confirm Key Details
The first step in reviewing any contract is to validate the key
details. Minor mistakes like a misspelled name or wrong date can
trigger serious legal or operational setbacks.
• Review party details: Confirm all names, roles, addresses, and
contact information are spelled correctly and legally sound.
• Check important dates: Go over the start and end dates, renewal
clauses, and key milestones to confirm they reflect the agreed terms.
• Review the value: Cross-reference the total amount, currency, and
any percentage-based calculations with earlier proposals.

23. Best Practices to Implement While Reviewing Contracts
Smart contract review practices help identify errors, lower risk, and
build trust between parties.
1. Confirm Key Details
The first step in reviewing any contract is to validate the key
details. Minor mistakes like a misspelled name or wrong date can
trigger serious legal or operational setbacks.
• Review party details: Confirm all names, roles, addresses, and
contact information are spelled correctly and legally sound.
• Check important dates: Go over the start and end dates, renewal
clauses, and key milestones to confirm they reflect the agreed terms.
• Review the value: Cross-reference the total amount, currency, and
any percentage-based calculations with earlier proposals.

24. 2. Clarify Roles & Scope
Precisely defined obligations are the bedrock of any successful
agreement, dispelling ambiguity regarding individual contributions and
timelines. Ill-defined scopes of work invariably sow the seeds of delay,
misinterpretation, and contention.
Specify Provisions: Articulate with precision the exact nature of goods,
services, or outcomes to be rendered, accompanied by applicable
quality benchmarks or quantifiable metrics.
Allocate Accountabilities: Explicitly delineate the party responsible for
each component of the undertaking, encompassing both internal
personnel and external collaborators.
Establish Milestones: Tabulate crucial dates, from inception to
completion, alongside pivotal interim review points to maintain
universal alignment

25. 3. Review Payment Terms
A well-crafted contract should lay out payment details with precision—
when funds are expected, how they’re to be transferred, and what
follows if either party misses a step. Well-defined monetary terms help
avoid disputes and foster accountability between all parties involved.
Examine the payment breakdown: Look into due dates, instalment
triggers, and whether the fee is tied to specific deliverables or timelines.
Assess rewards and penalties: Take note of clauses involving interest on
overdue payments, benefits for early settlement, or bonuses linked to
outstanding performance.
Match with internal practices: Confirm that the financial terms
complement your budgeting approach, reporting cycles, and cash
management processes.

26. 4. Check Legal Compliance
An addendum’s provisions must invariably resonate with prevailing
statutory and regulatory mandates. Any oversight in this domain risks
nullifying the accord or exposing your enterprise to considerable
liabilities, including punitive measures or judicial proceedings.
Legal benchmarks: Validate that the specified conditions are in
complete conformity with pertinent employment legislation, data
protection statutes, and any specialized sectoral regulations.
Integrate obligatory stipulations: Certain covenants such as non-
disclosure commitments or indemnity provisions might be mandatory
based on jurisdictional dictates or prevailing industry customs.
Solicit specialized legal counsel: In instances of indeterminate or
convoluted phrasing, it is prudent to engage legal professionals to
affirm comprehensive conformity with legal strictures.

27. 5. Automate Where Possible
Contract review can be time-consuming and repetitive. Using
contract automation helps businesses speed up oversight, minimize
mistakes, and maintain better organization.
Adopt reliable software: Leverage digital contract management to
easily create, save, and keep track of the process in a safe and
organized way.
Automate approvals and alerts: Set up automatic reminders for
review deadlines, renewals, and approval workflows.
Enable version control: Keep track of changes across drafts to avoid
confusion or outdated terms.

28. 6. Keep Communication Open
Open, respectful, and timely communication is key during the oversight
process. They often involve multiple departments and stakeholders, so
maintaining clarity and transparency helps resolve issues faster and
keeps the monitoring process smooth.
Create a feedback loop: Allow all stakeholders to share their input and
suggestions.
Use collaborative tools: Platforms like Google Docs or contract
management systems allow real-time editing and comments.
Clarify doubts early: Don’t wait to flag unclear terms raising concerns
early saves time later.

29. 7. Review Regularly & Early
Contract review should begin as soon as a draft is available and
continue at key intervals throughout the lifecycle. Waiting until the last
minute often leads to rushed decisions or overlooked clauses.
Start early: Begin the approach once the first version is ready so you
have time to assess thoroughly.
Schedule check-ins: For long-term agreements, set regular dates to
revisit and update the agreement as needed.
Avoid last-minute approvals: Allow enough time for proper legal and
operational reviews before signing.

30. Benefits of an Effective Contract Review Process
An effective contract review process is essential for reducing risks,
improving clarity, and building stronger business relationships. It not
only protects legal and financial interests but also ensures smoother
operations and long-term success.
1) Minimizes Legal and Financial Risks
World CC estimates that businesses can lose up to 9% of their annual
revenue due to value leakage.
A thorough check of any agreement is vital. This careful review helps
find unclear words, missing parts, or unfair rules before you sign it.
Doing this helps you fix problems early and protect your interests.

31. 2) Improves Clarity and Understanding
Detailed and thoughtful contract reviews foster open communication,
keeping all parties on the same page and promoting effective
collaboration for stronger outcomes.
This builds confidence, brings everyone’s expectations into harmony,
and helps each person clearly grasp their role and what’s expected—
laying the foundation for a cooperative and successful partnership.
3) Enhances Operational Efficiency
A well-organized contract review process saves time by preventing
delays, reducing back-and-forth communication, and speeding up
decision-making.
A carefully planned contract review cuts down delays, limits endless
back-and-forth, and helps decisions happen faster. It keeps approvals
moving smoothly and makes sure everyone is on the same page with
clear, final terms.

32. 4) Protects Business Interests
Contracts usually hold important details like sensitive information,
payment conditions, service expectations, and legal duties.
Taking the time to review them carefully gives you greater control and
clear insight, helping protect your business from risks, prevent costly
mix-ups, and keep everything running more smoothly.
5) Strengthens Relationships
A fair and straightforward agreement builds a solid base of trust and
respect. When both sides clearly understand what’s expected,
confidence grows and misunderstandings fade away.
This approach sets a positive, professional tone from the start and
fosters a dependable partnership grounded in openness and teamwork.
Careful review of agreements helps keep communication clear, reduces
conflicts, and paves the way for a productive, lasting collaboration that
works well for everyone.

33. 6) Ensures Legal and Regulatory Compliance
For businesses operating across various regions or managing
confidential data, this takes on even greater importance.
It helps steer clear of legal headaches, keeps your operations running
smoothly, and builds your reputation as a dependable partner.
When agreements are straightforward and follow the rules, working
with clients and collaborators becomes easier, with everyone knowing
the foundation is solid and fair from the very beginning.
How AI Helps to Review Contracts
AI is changing how contracts get reviewed, making the process quicker,
more precise, and less of a hassle. It supports legal and business teams
by highlighting important details, cutting down on tedious tasks, and
helping everyone work more efficiently.

34. 1) Speeds Up the Review Process
AI powered systems can speed through lengthy contracts, highlighting
key points such as payment deadlines, termination conditions, and legal
responsibilities. This eases the burden on legal and business teams,
freeing up their time from tedious reading so they can concentrate on
the bigger picture.
2) Improves Accuracy and Consistency
Contract lifecycle management with AI operate with consistent rules
and standards, thoroughly checking it against predefined criteria. This
careful attention to detail helps companies steer clear of expensive
errors, stay within the rules, and keep everything consistent.
3) Supports Better Decision-Making
The review process becomes faster and more effective by providing
clear summaries and highlighting potential risks or important areas
that need attention. With easy-to-understand, data-driven reports,
managers and legal teams are better equipped to make confident and

35. How CLM 365 Enhances the Contract Review Process
CLM 365 is a Microsoft-certified system and leverages advanced AI and
automation to simplify the entire contract review process.
Users can swiftly review the process, generate clear summaries, and
stay on top of key obligations.
By connecting with platforms like SharePoint, Outlook, Microsoft Teams,
and Azure, it fosters smooth teamwork, helping everyone collaborate
more effectively and manage contracts with greater ease.
Streamline your contract reviews with CLM 365. Book a demo now!