Avoid These 7 Contract Mistakes That Cost Small Businesses Thousands
- Delta Law
- Apr 10
- 3 min read
Updated: Apr 11
Even the most well-meaning business owners make costly contract mistakes—often without realizing it. Whether you’re using templates from the internet, recycling outdated agreements, or rushing to close a deal, small legal oversights can quickly escalate into expensive disputes.
Below are seven contract mistakes that frequently cost Ontario small businesses thousands of dollars—along with practical tips to help you avoid them before they cause harm.
1. Vague or Missing Scope of Work
Your contract should precisely define what services or deliverables are included—and just as importantly, what’s not. Without this clarity, you leave yourself open to endless revisions, unmet expectations, and “scope creep.”
A proper scope of work includes:
Specific tasks and deliverables
Timelines or milestones
Client responsibilities
Without this level of detail, disputes can arise even if your intentions were clear.
2. No Termination Clause
What happens if the relationship sours, or you need to pivot? Contracts that don’t include a termination clause can trap you in an unwanted relationship—or leave you exposed if the client or vendor walks away.
Every agreement should define:
How either party can terminate the agreement (e.g., with notice or for breach)
What happens to outstanding fees or deliverables
Any termination fees or refunds
Without it, you risk uncertainty and even potential lawsuits.
3. Missing or Unenforceable Payment Terms
Contracts should clearly outline:
How much is being charged and for what
When payments are due (e.g., net 15, net 30)
What happens if payment is late
Whether interest or penalties apply
Ambiguous payment terms can delay cash flow or result in non-payment, which can be devastating for small businesses.
4. Verbal Agreements or Handshake Deals
Trust is great—proof is better. Verbal agreements are hard to enforce and often result in conflicting recollections of what was agreed.
Always get agreements in writing, even for short-term or one-time projects. A signed document protects both parties and builds trust.
5. Outdated Legal Language
Legal templates that have been reused for years—or borrowed from U.S. sources—often contain terms that no longer reflect current Ontario law. That means even a good-faith contract could have entire sections that are void or unenforceable.
Keeping your contracts updated ensures:
Compliance with recent legislative changes
Use of enforceable and fair terms
Avoidance of clauses that are overly broad or ambiguous
6. Ignoring Jurisdiction and Governing Law
If your agreement doesn’t specify Ontario as the jurisdiction and governing law, you could end up dealing with unfamiliar legal systems, out-of-province court appearances, or unexpected costs.
This is especially risky in contracts with national or international clients, where cross-border issues can complicate enforcement.
7. Skipping Legal Review
This is arguably the biggest mistake of all. Even well-drafted contracts can contain risks specific to your business model or industry.
A lawyer doesn’t just make things “sound legal”—they:
Spot risks you hadn’t considered
Ensure your contract is enforceable under Ontario law
Align terms with your business strategy and risk tolerance
👩🏻⚖️ How Delta Law Can Help
At Delta Law, we work with small business owners across Ontario to make sure your contracts do what they’re supposed to—protect your business.
We offer:
Flat-fee contract reviews and custom drafting
Practical advice in plain English
Fast turnarounds so your deals don’t get delayed
Don’t wait for a dispute to realize your contract isn’t working. Book a review with Delta Law today.
