7 Clauses Your AI Should Always Flag in Commercial Contracts

Most commercial contracts look harmless at first glance. The language feels familiar, the structure looks standard, and it is tempting to assume everything is in order.

That is usually where risk hides.

Teams miss risks because they are careless. They miss them because manual contract review is time-consuming, repetitive, and often shaped by habit. When you read dozens of similar agreements every month, it is easy to skim past a clause that quietly shifts liability, limits your rights, or exposes you financially.

This is exactly why AI-powered risk analysis matters.

Lexapar’s Risk feature is built to identify clauses that genuinely affect your business, not just highlight text. Below are seven clauses your AI should always flag when reviewing commercial contracts.

1. Indemnity Clauses

Indemnity clauses decide who pays when something goes wrong. A poorly drafted indemnity can make you responsible for losses you did not cause or could not control.

AI should flag indemnity clauses that are one-sided, have no financial limits, or extend to indirect or third-party actions. These are often the clauses that create the biggest surprises during disputes.

With AI, you can quickly understand the scope of indemnity and see whether the risk is reasonable for the deal you are signing.

2. Limitation of Liability

This clause defines your maximum downside. If liability is unlimited or poorly capped, even a small dispute can turn into a serious financial threat.

Your AI should flag contracts where liability caps are missing, tied to irrelevant amounts, or effectively cancelled out by broad exclusions. These issues are easy to overlook during manual review but extremely costly later.

AI helps surface whether the liability structure actually protects you or just looks like it does.

3. Termination Clauses

Termination clauses control who has the power to exit the relationship. When termination rights are unbalanced, one party gets flexibility while the other absorbs risk.

AI should flag unilateral termination rights, missing cure periods, and clauses that allow immediate termination without cause. These terms often leave businesses locked into contracts with no realistic exit.

With AI, you can quickly spot whether termination rights are fair and aligned with your commercial expectations.

4. Payment and Penalty Clauses

Cash flow problems often start in the fine print.

AI should flag vague payment timelines, excessive late fees, and penalty structures that apply only to one side. These clauses may look standard but can quietly erode margins and strain relationships.

AI risk analysis helps you see the real financial exposure hidden behind routine language.

5. Confidentiality and Data Protection

Confidentiality clauses protect sensitive information, but only if they are drafted properly.

AI should flag agreements where confidentiality obligations do not survive termination, lack exceptions for legal disclosure, or fail to address data protection responsibilities. Weak clauses expose your information, while overly broad ones can restrict normal business operations.

AI helps ensure confidentiality clauses are both protective and practical.

6. Governing Law and Jurisdiction

Disputes become far more expensive when they are governed by unfamiliar or unfavorable jurisdictions.

AI should flag contracts that impose foreign governing laws without clear justification, include arbitration clauses that limit remedies, or contain conflicting dispute resolution mechanisms.

Catching jurisdictional risk early can save significant time and legal cost later.

7. Amendment and Waiver Clauses

These clauses determine how a contract can change over time.

AI should flag provisions that allow oral amendments, implied waivers, or changes without written consent. These terms often weaken enforceability and make disputes harder to resolve.

AI helps ensure that contract changes happen deliberately, not accidentally.

Why AI Makes Risk Review Better

Manual contract review is slow, inconsistent, and heavily dependent on individual experience.

AI-driven risk reports review contracts in minutes, flag high-impact clauses, explain why they matter, and help legal teams focus on what actually needs attention. Instead of reading every line equally, you can prioritise real risk.