5 mistakes in commercial contracts that can cost a company more than it seems

A commercial contract should not only describe the terms of cooperation but also protect the company in the event of payment issues, delays, changes in the project, or failure by the counterparty to perform its obligations.

Many disputes do not arise from the lack of a contract itself, but from the fact that its content does not reflect the actual business model of cooperation or is insufficiently drafted. 

My professional practice shows that the most common mistakes in commercial contracts include: 

Mistake 1: No limitation of liability in the contract 

One of the key mistakes in commercial contracts is the lack of a clear definition of the scope of the parties’ liability. If the contract does not provide for a liability cap, the entrepreneur may be exposed to claims that are disproportionate to the amount of remuneration received. 

It is worth recalling that Article 473 § 2 of the Civil Code prohibits the exclusion of liability only in cases of wilful misconduct. All other modifications of liability rules are therefore, as a rule, permissible. As a result, the absence of a liability cap may cause even a relatively small contract to generate significant financial risk. 

In practice: 

For example, a supplier provides services worth PLN 40,000, but in the event of a delay the client claims PLN 300,000 in damages for lost profits. If the contract does not include a liability cap or an exclusion of indirect damages, the dispute begins to concern amounts that are entirely disproportionate to the value of the contract. 

A well-prepared contract should specify, among other things: 

1. the maximum liability cap,

2. the types of damages covered by liability,

3. cases in which liability is excluded or limited.

It should be emphasized that a limitation of liability should not be automatic or unilateral. It should be tailored to the type of contract, the value of the agreement, and the scale of potential damages. 

Mistake 2: No right to suspend services or deliveries in the event of non-payment 

A frequent mistake in commercial contracts is the lack of a mechanism allowing the suspension of services, deliveries, or further work in the event of payment arrears on the part of the counterparty. 

In practice, a company may find itself in a situation where it is required to continue performing the contract even though the other party fails to pay invoices on time. This leads to deterioration of liquidity and increased financial risk. 

It should be remembered that the Civil Code does not regulate this issue precisely. Article 490 § 1 of the Civil Code provides that a party may withhold performance if the performance by the other party is doubtful due to its financial condition. However, this basis is so general that, as my practice shows, it allows the counterparty to relatively easily challenge its application. As a result, under the contractual framework, certain rights may accrue to the unreliable counterparty. 

Therefore, in commercial contracts it is advisable to stipulate that the right to suspend services or deliveries is conditional upon a specific delay in payment. This is an objective criterion that is much

Accordingly, the contract should specify: 

1. after what period of payment delay services or deliveries may be suspended,

2. whether a prior payment demand is required,

3. whether and what additional deadline should be granted to the counterparty,

4. whether suspension affects the schedule,

5. who bears the costs of downtime,

6. when performance will be resumed.

Mistake 3: Inadequate contractual penalties and the risk of their reduction 

Contractual penalties are an important tool for securing the performance of a contract, but their improper construction may lead to disputes. A mistake consists both in the absence of contractual penalties and in introducing penalties that are excessive, imprecise, or completely detached from the value of the contract. 

In commercial contracts, penalties often appear for delays, breaches of confidentiality, or failure to perform specific obligations. The problem arises when the penalty is too high and does not distinguish between a minor breach and a serious non-performance of the contract. 

Under the Civil Code, a contractual penalty may be stipulated for non-performance or improper performance of a non-monetary obligation. However, it should be remembered that Article 484 § 2 of the Civil Code provides for the so-called reduction of the penalty, i.e. in a situation where the obligation has been largely performed or the penalty is grossly excessive. 

Therefore, when entering into a contract, it should be considered whether the amount of the penalty is proportionate to the value of the contract and the type of breach. 

In practice: 

For example, when claiming a penalty of PLN 1,000 per day for failure to provide an updated insurance policy, even a delay of just a few days may result in the counterparty challenging the amount of the penalty, as no actual – nor even hypothetical – damage could have arisen from the breach of this obligation. 

A well-drafted contractual penalty clause should genuinely motivate proper performance of the contract, rather than merely constitute an excessive burden or a purely punitive mechanism. Otherwise, the dispute will not concern whether the grounds for imposing the penalty have arisen, but what its actual amount should be. 

Mistake 4: Failure to adapt the contract to the actual course of the process 

A commercial contract should reflect how cooperation actually operates in practice. A frequent mistake is using a document that formally describes the relationship between the parties but does not correspond to the real course of the sales, delivery, or implementation process. 

I see this problem particularly often when a client seeks to assert claims under a contract in court. During pre-litigation analysis, it turns out that each order under a framework agreement required written form under pain of nullity, while in practice orders were placed by email without any formal acceptance. 

This occurs especially when a company uses standard contract templates, copies previous agreements, or fails to update documents despite changes in its operating model. As a result, it is very common that the contract does not describe the actual stages of cooperation, approval procedures, ordering methods, acceptance rules, or complaint processes, but instead creates an alternative reality that does not exist in practice. 

Such inconsistency may even lead to losing a court case, as it may be unclear: 

1. when and whether a valid order was placed,

2. whether a given service was accepted,

3. who was authorized to approve changes,

4. whether the contractor was obliged to perform additional work,

5. when the right to issue an invoice arose,

6. whether the client effectively raised objections.

A well-prepared contract should be adapted to the actual way the business is conducted. Therefore, before signing the contract, it is worth verifying whether the document reflects how business processes actually operate within the company. 

Mistake 5: Failure to align the contract with other contracts and obligations of the company 

The final, yet very significant, mistake is the lack of consistency between commercial contracts and other agreements or obligations of the company, for example towards clients, investors, financing institutions, or entities within a corporate group. 

In practice, a commercial contract always operates in conjunction with a whole range of other agreements and obligations. A company may simultaneously have contracts with end clients, suppliers, subcontractors, technology partners, financing institutions, lessors, insurers, or related entities. If a new contract is not consistent with these, a liability gap or a conflict of obligations may arise. 

Risk arises, for example, when: 

1. the company commits to a specific deadline towards a client but does not pass this deadline on to a subcontractor,

2. the supplier contract does not correspond to the warranty conditions granted to the client,

3. the counterparty imposes specific reporting or audit obligations that have not been transferred to the subcontractor,

4. the contract does not take into account obligations arising from financing or grants,

5. provisions on confidentiality, personal data, or ESG are inconsistent across different contracts,

6. liability caps in one contract do not correspond to liability assumed under another.

It should be emphasized that each commercial contract should be analyzed not only on its own but also in the context of the company’s other obligations. This helps avoid situations in which an entrepreneur assumes obligations that cannot be effectively transferred to counterparties or subcontractors. 

Summary 

The most common mistakes in commercial contracts are not always visible at first glance. They often do not involve the absence of basic clauses but rather the failure to align the contract with actual business risk, the settlement model, operational processes, or other obligations of the company. 

Before signing a contract, it is particularly worth checking whether the document includes an adequate limitation of liability, a mechanism for suspending services in the event of non-payment, proportionate contractual penalties, a description of the actual cooperation process, and whether it is consistent with other contracts. 

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