Commercial contract review under the law of England and Wales

Supply, distribution, services and licence agreements governed by the law of England and Wales share a short list of rules that decide whether key clauses actually work. Most disputes about commercial contracts turn on the same few clauses: exclusions and caps, liquidated damages, entire agreement wording, termination rights and the boilerplate that nobody read. This checklist covers each one and shows how to redline the contract in Word with LexDraft.

Last checked: 17 October 2026. The law changes; check the current position before relying on this page.

Before you start

• Confirm the governing law. "The law of England and Wales" is a single system of contract law. "UK law" is not. If the contract is governed by Scots law, the rules on consideration, remedies and third-party rights differ; see our Scots law guide.
• Know the commercial deal. Read the schedules, price and service levels before the boilerplate. The legal risk usually sits where the operational terms are vague.
• Check who signs. Confirm the contracting entity, its company number and whether a parent guarantee is needed.

Clause checklist

• Exclusion and limitation clauses. Under the Unfair Contract Terms Act 1977, liability for death or personal injury caused by negligence cannot be excluded, and many other exclusions in standard terms must satisfy the reasonableness test. Check the cap amount, what sits outside it, and whether "loss of profit" is excluded as a head of loss or only as indirect loss.
• Indirect and consequential loss. English courts read these words narrowly and in context. If you mean to exclude lost profits, revenue or data, list them expressly.
• Liquidated damages and service credits. A sum payable on breach is a penalty, and unenforceable, if it is out of all proportion to the innocent party's legitimate interest in performance. Tie the amount to a real interest and record why.
• Entire agreement and non-reliance. An entire agreement clause alone does not exclude liability for misrepresentation. Terms that exclude or restrict liability for pre-contractual misrepresentation must satisfy the reasonableness test under section 3 of the Misrepresentation Act 1967.
• Payment and late payment. The Late Payment of Commercial Debts (Interest) Act 1998 implies statutory interest unless the contract gives a substantial remedy for late payment. Check payment terms, invoice disputes and set-off rights.
• Termination. Check the triggers for termination for convenience, for material breach (with or without a cure period) and on insolvency. Note that the Corporate Insolvency and Governance Act 2020 restricts many termination rights triggered by a customer's insolvency procedure in supply contracts.
• Fraud prevention clauses. The failure to prevent fraud offence under the Economic Crime and Corporate Transparency Act 2023 has applied to large organisations since 1 September 2025. Expect counterparties to ask for anti-fraud warranties and audit rights alongside the usual anti-bribery wording.
• Third-party rights. State whether the Contracts (Rights of Third Parties) Act 1999 applies. If group companies need to enforce a clause, say so; if not, exclude the Act.
• Variation and notices. A "no oral modification" clause is generally effective in English law, so check that the variation process is one the parties will actually follow. Make notice addresses and email notice rules precise.
• Execution. Simple contracts can usually be signed electronically. Deeds need to be executed and delivered as deeds; for companies, see sections 44 and 46 of the Companies Act 2006. The limitation period is six years for simple contracts and twelve for deeds under the Limitation Act 1980.
• Governing law and jurisdiction. Cover non-contractual claims, decide between exclusive and non-exclusive jurisdiction, and consider arbitration if enforcement abroad matters.

Review the contract in Word with LexDraft

1. Open the contract in Word, open LexDraft from the Home tab and set the jurisdiction chip to UK: England & Wales (or UK: Scotland or UK: Northern Ireland if that is the governing law).
2. Run the quick checks. They are rule-based and run without AI, catching undefined or unused defined terms, broken cross-references, numbering gaps and inconsistent capitalisation.
3. Run the review. For a services agreement use the Services playbook, and for a SaaS contract use the SaaS MSA playbook. LexDraft has no dedicated supply or distribution playbook, so those run as a general review under English law. Findings are graded Critical, High, Medium or Low, and LexDraft flags standard terms that are missing.
4. Accept or reject each proposed redline. Accepted edits land as native Word tracked changes, ready for the other side.
5. Ask the Assistant to explain a clause in plain English or suggest wording for your side. Answers use UK spelling.
6. Look up any case you want to rely on in the Case law tab, then open the judgment on Find Case Law and read it yourself. UK judgments in LexDraft come from The National Archives' Find Case Law service, which only partially represents the activities of the courts and tribunals. Not every judgment or decision is included. Find Case Law does not include judgments from Scottish or Northern Irish courts or tribunals.

LexDraft does not give legal advice and does not summarise judgments. AI output can be wrong, so qualified counsel must check every redline before it goes out.

Common mistakes

• Copying a US form and leaving in references to state law, punitive damages or jury trial waivers.
• Relying on an entire agreement clause to exclude misrepresentation claims without non-reliance wording that is reasonable.
• Setting a liquidated damages figure with no record of the interest it protects.
• Defining "Services" in one clause and using "Deliverables" for the same thing elsewhere. The defined-term check catches this.

This guide is general information, not legal advice. LexDraft does not give legal advice; qualified counsel must review every draft. LexDraft is not affiliated with or endorsed by The National Archives or any court. Spotted something out of date? Email support@lexdraft.ai and we will fix it.