Commercial Contracts Checklist: What to Review Before Signing

Why Use a Checklist Before Signing

Signing a commercial contract without thorough review can result in unexpected obligations, loss of rights, or exposure to significant risks. In Colombia, the Commercial Code requires merchants to act with the diligence of a good businessperson. A systematic checklist helps you meet this standard and protect your commercial interests.

To understand the fundamentals of contracts in Colombia, check our guide to civil contracts and the guide on essential clauses in contracts.

Preliminary Verifications

Capacity and Authority

Before analyzing the contract content, verify:

The counterparty legally exists (check certificate of existence and legal representation at Chamber of Commerce)
The legal representative has valid authority to sign the proposed contract type
There are no statutory limitations on the amount or type of contract
The counterparty is not in liquidation, business reorganization, or insolvency proceedings
Check background at the Superintendencia de Sociedades if it's a company

Basic Due Diligence

Check the counterparty's credit history if payment obligations are involved
Verify commercial references from previous business dealings
Review if there are active lawsuits or legal proceedings against the counterparty
Confirm the contract activity corresponds to both parties' corporate purpose

Essential Contract Elements

Party Identification

Full name or exact company name as it appears in the commercial registry
Tax ID and commercial registration number
Main domicile and address for judicial notifications
Legal representative data (name, ID, position)
Power of attorney verification if an agent signs

Subject Matter

Clear and detailed description of goods or services
Concrete technical specifications (not ambiguous)
Exact quantities or formula to determine them
Measurable quality standards
Express exclusions of what the contract does NOT include
Specific deliverables with acceptance criteria

Price and Economic Conditions

Total amount clearly established (in numbers and words)
Contract currency specified
If VAT applies, specify if included or added
Payment schedule with exact dates
Conditions for each payment (milestones, deliverables, deadlines)
Accepted payment method (transfer, check, cash)
Bank account for deposits
Default interest rate for late payment
Price adjustment clause for long-term contracts

Deadlines and Schedule

Start date clearly defined
Total contract duration
Partial delivery dates if applicable
Deadlines for specific obligations
Grace periods clearly established
Deadline for claims or warranties
Procedure and deadlines for renewal if applicable

Party Obligations

Your Obligations

Carefully review:

All obligations you assume are achievable and under your control
Deadlines for compliance are realistic
Obligations are proportional to the consideration received
There are no hidden obligations in other clauses
Consequences of non-compliance are reasonable

Counterparty's Obligations

Obligations are clearly defined and enforceable
Mechanisms exist to verify compliance
There are clear consequences for non-compliance
Quality or performance standards are measurable

Protection Clauses

Warranties

Warranties offered by the counterparty are in writing
Scope and duration of warranties are clear
Procedure to enforce the warranty is defined
Warranty exclusions are reasonable
If you grant warranties, verify they are proportional

Limitation of Liability

Limitation of liability clause exists
Maximum liability amount is reasonable
There are no exclusions that leave you unprotected against serious damages
The limitation applies equitably to both parties

Confidentiality

Confidential information is clearly defined
Confidentiality obligations are reciprocal
Duration of the obligation is reasonable
There are clear exceptions (public information, legal obligation)
Penalties for violation are proportional

Intellectual Property

Clear who owns intellectual property created during the contract
Licenses granted are appropriate for your needs
Use restrictions are acceptable
Moral rights are properly regulated if applicable

Termination Clauses

Grounds for Termination

Contract specifies termination grounds for breach
Possibility of early termination without cause (with or without penalty)
Termination procedure is clearly established
Notice periods are reasonable
Consequences of termination are defined

Effects of Termination

Clear what happens with pending obligations
Specifies how payments made are handled
Obligations surviving termination are identified (confidentiality, warranties)
Procedure for returning documents or materials is defined

Dispute Resolution Clauses

Alternative Mechanisms

Mandatory prior negotiation clause exists
Mediation or conciliation specified as a prior step
Deadlines for each stage are reasonable
Center or institution is identified if applicable

Arbitration vs Ordinary Jurisdiction

Clear whether disputes go to arbitration or courts
If arbitration, verify: arbitration center, number of arbitrators, applicable rules, seat, language
Arbitration costs are acceptable for the contract type
Jurisdiction and city are convenient for you
No waiver of fundamental rights

Special Clauses to Review

Contract Assignment

Review if you can assign the contract to third parties
Verify if the counterparty can assign it
Assignment requirements are clear
No automatic assignment without your consent

Force Majeure

Force majeure events are enumerated
Notification procedure is reasonable
Effects on obligations are clear
Maximum period before contract can be terminated

Penalty Clause

Penalty amount is proportional
Does not exceed legal limits (check applicable legislation)
Clear when it triggers
Specifies if additional to or substitute for damages compensation

Contract Modifications

Clause requiring written modifications exists
Specifies who can authorize modifications
Modification procedures are clear

Formal Aspects

Supporting Documentation

All mentioned annexes are attached
Annexes are signed and dated
Technical specifications are complete
Schedules are realistic and included
Powers of attorney and representation documents are current

Contract Signing

All pages are numbered
All pages have parties' initials
Signatures are originals (not copies)
Each party keeps an original copy
Signing date matches effective date

Red Flags

Stop negotiations and consult a lawyer if you find:

Before Signing: Final Steps

Final Review

Read the complete contract once more, including annexes
Verify all negotiated modifications are incorporated
Confirm there are no blank spaces that could be filled later
Ensure you understand all clauses and their scope
If something is unclear, ask or consult a professional

Documentation

Keep copies of all documents exchanged during negotiation
Archive relevant emails
Document important verbal agreements (ideally in writing)
Store the signed original in a safe place
Make a digital copy of the signed contract

After Signing

Follow-up

Note key dates in your calendar (payments, deliveries, expirations)
Set reminders for important deadlines
Document compliance with your obligations
Keep evidence of counterparty's compliance
Communicate any problems in writing

If the other party does not comply with the contract, check our guide on contract breach and legal options.

For professional assistance in reviewing and negotiating commercial contracts, learn about our commercial law services in Santa Marta.

Commercial Contracts Checklist: What to Review Before Signing

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