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Legal glossary
The clauses that decide who pays, who’s bound, and who can walk away - defined without the jargon. Run into one of these in your own document? Scan it and Hidden Catch will flag it for you.
A promise by one party to cover the other party’s losses, damages, or legal costs arising from certain events.
What it means for you
If you agree to indemnify someone, you may have to pay their legal bills and damages if a claim comes up. Watch for one-sided indemnities where only you take on that risk.
A clause requiring disputes to be resolved by a private arbitrator instead of in court.
What it means for you
You typically give up your right to sue in court and to a jury trial. Combined with a class-action waiver, it can make small claims impractical to pursue.
A fixed amount agreed in advance that one party must pay if they breach the contract.
What it means for you
The number is set before anything goes wrong, so you may owe it even if the actual harm is small. Check that the amount is reasonable, not a penalty.
A clause excusing a party from performing when extraordinary events beyond their control (natural disasters, war, pandemics) make it impossible.
What it means for you
It decides who bears the risk when something drastic happens. Look at which events are covered and whether it lets the other side walk away from obligations to you.
A provision stating that if one part of the contract is found invalid, the rest still applies.
What it means for you
One unenforceable clause won’t void the whole agreement. Usually neutral, but it can keep an otherwise lopsided contract alive.
The transfer of a party’s rights or obligations under the contract to someone else.
What it means for you
A broad assignment clause can let the other side hand your contract to a company you never chose to deal with. Check whether your consent is required.
A restriction preventing you from working for competitors or starting a competing business for a set time and area after the relationship ends.
What it means for you
It can limit your next job. Scrutinize the duration, geography, and scope - and note that enforceability varies widely by jurisdiction.
A clause capping the amount, or the types, of damages a party can be responsible for.
What it means for you
It can shrink what you’re able to recover if the other side fails you - sometimes down to a token sum. Check whether the cap is mutual.
A term that renews the contract for a new period unless you cancel by a specific deadline.
What it means for you
Miss the notice window and you’re locked in for another term. Note the cancellation deadline and how notice must be given.
The clause choosing which state or country’s laws apply and where disputes must be filed.
What it means for you
It can force you to litigate far from home under unfamiliar law, which raises the cost of enforcing your rights.
The defined category of information an NDA or contract requires you to keep secret.
What it means for you
The broader the definition, the more you’re bound to protect. Look for carve-outs for public or independently known information.
A statement that a product or service is provided without guarantees of quality or fitness.
What it means for you
If something is sold or provided “as is,” you generally can’t rely on it working as expected or seek a remedy if it doesn’t.
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