A CIO signs a three-year agreement. Legal approves it. Procurement approves it. Finance approves it.
Eighteen months in, the vendor starts missing SLA targets. One quarter. Two quarters. Three quarters. The CIO wants out.
That's when they find out the contract never included a termination right for vendor non-performance. The remedy in the contract is service credits — a calculation involving documented outage logs, submitted within a specified window, against a formula designed to produce a number smaller than the actual cost of the downtime. The payout is credit toward future service with the vendor that's been underperforming for nine months.
There's no exit. The contract is clean. Legal reviewed it. Nobody reviewed what wasn't there.
That's the problem — and it's not an unusual one.
Your legal team's job is to review what the contract says. Your vendor's legal team wrote every line of it. We review contracts across hundreds of deals and know which terms vendors at each tier actually accept when pushed — and which ones they count on buyers not knowing to ask for. Those are two different bodies of knowledge, and most buyers only have access to one of them.
Here are the five terms most often absent, and what each one costs when you find out too late.
Termination for vendor non-performance
This is the term we most consistently find missing — and the one with the highest cost when it's gone.
Standard contracts route you through the SLA when a vendor fails. Document every outage. Submit claims within the specified window. Survive the calculation. The payout: service credits toward more service with the vendor that just failed you.
That process assumes you want to stay. What you actually want — when a vendor has missed targets three quarters in a row — is the right to leave without penalty.
The term we require: the right to terminate the contract without penalty if the vendor fails to meet defined SLA thresholds over a rolling period. One clause. No math. If they don't perform, you can exit.
Vendors resist this in the first draft. Most accept it when pushed. It is almost never included by default.
Price caps on annual escalations
Most multi-year contracts include an escalation clause. It's in the pricing schedule, not the main agreement. It doesn't look unusual — because it isn't. It's standard vendor practice, and legal review rarely flags it as a concern because it isn't a legal concern. It's a financial one.
At 5 percent annual escalation, a $200,000 year-one contract is $220,500 in year two and $231,525 in year three. The discount your team negotiated in year one is being quietly recovered through years two and three. By the end of the term, you may have paid more than if you'd signed at list price.
The CFO who approved the year-one number didn't approve a number that compounds. That escalation clause wasn't in the contract summary presented to finance. It was in the pricing schedule.
A price cap — a maximum annual increase regardless of CPI or market rate language — is negotiable. Mid-market buyers get this accepted more often than they'd expect. The barrier isn't vendor resistance. It's that most buyers don't know to ask.
Auto-renewal windows that are actually usable
A 30-day auto-renewal notice window sounds reasonable. It isn't.
Four weeks to evaluate alternatives, run a sourcing process, negotiate terms, and execute a new contract — while managing everything else your team is handling — is not a realistic window. One company we worked with missed their window by six days while their IT director was managing an unrelated infrastructure incident. They were locked in for another year of a vendor relationship they'd already decided to exit.
Vendors know the window is too small to act in. That's why it's 30 days.
Ninety days is the minimum that gives you a real decision. Some vendors will negotiate to 60. Fewer go to 90 without being asked. But it's a negotiable term — and it's the difference between a renewal that's an actual choice and one that happens because the calendar moved faster than your team could.
Data portability and exit assistance
When a vendor is acquired — and in the current market, acquisitions happen regularly — the new owner inherits your contract. Your data is on their platform. Your relationship is now with a company you didn't choose, under terms you negotiated with an organization that no longer exists in the same form.
What the original contract says about leaving is all you have.
Most contracts say you can export your data. Few say the vendor is required to cooperate with that export — within a defined timeline, in a usable format, at no additional cost. "You can export your data" and "we will cooperate with your migration" are two different sentences. The first is standard. The second almost never is.
An exit assistance clause — 60 to 90 days of cooperative data transfer, in a mutually agreed format, at no additional fee — converts a theoretical right into an actual one. Without it, switching vendors costs more than any contract comparison will show, and the vendor you're trying to leave has no contractual incentive to make it easier.
Performance guarantees with real teeth
The issue isn't whether the SLA says 99 percent or 99.9 percent uptime. The issue is what happens when the vendor misses it.
Most contracts offer credits. Credits are the vendor's preferred remedy because they're designed to be difficult to claim — you need documented outage logs, submitted within a specified window, against a formula the vendor wrote — and the payout is worth less than what the failure actually cost your business. The credit for four hours of downtime doesn't cover the lost productivity, the customer impact, or the engineering time to recover. It covers four hours of prorated service fees.
Credits keep you in the contract. What buyers need — and rarely have — is a defined threshold below which they can demand remediation on a timeline, and exit without penalty if it doesn't happen.
The question to ask before you sign: at what level of failure does this vendor face real consequences, not paperwork?
Three questions to ask before you sign
If you have a contract in front of you and you're trying to know whether it's actually protecting you, these are the three questions that surface the most exposure:
If this vendor misses SLA targets for two consecutive quarters, can I exit the contract without penalty?
What is the maximum price increase I'll pay over the full contract term — in dollars, not in percentage language?
If I need to migrate off this platform, what is the vendor contractually required to do to help me, and at what cost?
If your legal team can answer all three with specifics — not "that's covered in the SLA" — the contract may be in reasonable shape. If the answers are uncertain, the contract needs work before you sign.
What the review actually covers — and what it doesn't
Your attorney reviews contracts. Your vendor writes them. We sit in the middle of hundreds of deals and know what vendors at each tier actually accept when buyers push — what terms get added with a single redline request, which ones require a harder conversation, and which ones a vendor will concede only when they believe you'll walk.
That's not a legal function. It's a market function. Most buyers don't have access to it.
Legal review tells you whether the language is accurate and consistent. It doesn't tell you whether what you're being offered is competitive, what's missing by design, or what you'd have if you'd known to ask. We've seen buyers negotiate a vendor down from $150 to $125 per seat and consider it a win — when the floor we've signed other clients at, same size, more features, was $65. The gap between what buyers think is competitive and what the market actually bears is almost always larger than anyone involved in the negotiation realizes.
The companies that find out what was missing from their contracts find out at the worst possible time — after the vendor misses targets, after the acquisition, after the renewal window closes.
If a renewal or a new contract is what's in front of you right now, this is where to start — what's actually at stake and what changes when someone on your side is reviewing the market, not just the language.
Before you sign, know what protections are missing, what leverage you actually have, and what other buyers at your size are getting from the same vendors. Get Started
No pitch. No prep. Just answers.
