In our previous post, we looked at four core clauses that play a major role in allocating risk in commercial agreements, including intellectual property ownership, data protection, force majeure, and warranties and representations. While those provisions often receive significant attention during negotiations, other clauses can shape a contract’s risk profile as well.

These provisions may appear more administrative or procedural at first glance, but they can have meaningful consequences if they are overlooked or drafted without care. Clauses addressing regulatory compliance, audit rights, assignment, and changes in corporate ownership can all affect how obligations are enforced and how relationships evolve over time.

In this post, we’ll look at four additional clauses that frequently influence contractual risk and outline practical ways to review and de-risk them during contract drafting and review. 

Compliance With Laws

What it does
Compliance with laws clauses require each party to follow all applicable laws and regulations in performing their obligations under the agreement. These provisions help ensure that the contract does not expose either party to legal violations arising from the other party’s conduct.

What’s the risk?
If one party violates applicable laws, such as anti-corruption regulations, export controls, or industry-specific requirements, the other party may face regulatory scrutiny, financial penalties, or reputational damage as a result. Vague compliance language can also create disputes over which party is responsible for meeting specific regulatory obligations.

Typical provisions

• Requirement that each party comply with all applicable laws and regulations
• Specific references to anti-corruption laws (e.g., FCPA, UK Bribery Act)
• Compliance with export control and sanctions regulations
• Industry-specific regulatory requirements where relevant
• Obligations to maintain policies or internal controls supporting compliance

How to de-risk it

Clearly identify which laws and regulatory frameworks are most relevant to the agreement and reference them where appropriate. Define each party’s responsibilities for maintaining compliance, particularly in regulated industries or cross-border transactions. Align the clause with related provisions, such as audit rights, termination rights, or anti-corruption representations, to ensure that compliance obligations are enforceable and consistent throughout the contract. 

Audit Rights

What it does

Audit rights clauses give one party the ability to review the other party’s records, systems, or processes to verify compliance with the agreement. These provisions are commonly used in licensing, SaaS (software as a service), outsourcing, and regulated industry contracts where one party must confirm that the other is meeting financial, operational, or regulatory obligations.

What’s the risk?
Without audit rights, a party may have limited visibility into whether the other party is complying with key contractual obligations, such as payment terms, data protection requirements, or service commitments. On the other hand, overly broad audit provisions can create operational burdens, expose sensitive information, or allow disruptive or excessive audit requests.

Typical provisions

• The right to inspect relevant records or systems related to the agreement
• Limits on how frequently audits may occur
• Advance notice requirements before conducting an audit
• Confidentiality obligations for any information reviewed during the audit
• Allocation of audit costs, especially if non-compliance is discovered

How to de-risk it
Define the scope of the audit carefully and limit it to records or systems that are directly relevant to the agreement. Establish reasonable notice requirements and frequency limits to prevent disruptive or excessive audit requests. Protect sensitive information by requiring confidentiality obligations for auditors and limiting access to necessary materials. Ensure the clause aligns with related provisions, such as compliance, data protection, and payment terms, so that audit rights support enforcement of the contract’s key obligations. 

Assignment

What it does
Assignment clauses govern whether a party can transfer its rights or obligations under the contract to another party. These provisions address situations where a party may want to assign the agreement to an affiliate, successor, or third party, or delegate performance of contractual obligations.

What’s the risk?
Without clear assignment restrictions, a party could transfer the contract to an unfamiliar or less reliable counterparty, potentially increasing operational, financial, or reputational risk. At the same time, overly restrictive assignment language can limit legitimate business transactions, such as corporate restructurings, asset sales, or outsourcing arrangements.

Typical provisions

• Restrictions on assigning the agreement without the other party’s consent
• Exceptions allowing assignment to affiliates or successors in a merger or acquisition
• Requirements that consent to assignment not be “unreasonably withheld”
• Clarification that assignment does not relieve the original party of certain obligations
• Limits on delegating performance to subcontractors or third parties

How to de-risk it
Clearly define when assignment is permitted and when the other party’s consent is required. Include reasonable exceptions for common corporate transactions, such as mergers, acquisitions, or internal reorganizations, while maintaining the ability to review assignments to unknown third parties. Specify whether the original party remains responsible for performance after assignment and ensure the clause aligns with related provisions such as change of control, confidentiality, and data protection obligations. 

Change of Control

What it does
Change of control clauses address what happens if one party undergoes a significant ownership change, such as a merger, acquisition, or sale of controlling equity. These provisions give the other party certain rights, such as consent or termination, if control of the counterparty shifts to a new owner.

What’s the risk?
A change in ownership can significantly alter the risk profile of the agreement. The acquiring company may have different business practices, financial stability, or competitive interests. Without a change of control provision, a party may be forced to continue working with a new owner it would not have chosen as a contractual partner.

Typical provisions

• Requirement to notify the other party of a change of control
• Right to terminate the agreement upon a change of control
• Requirement to obtain consent before a change of control takes effect
• Exceptions for internal corporate reorganizations
• Definitions clarifying what constitutes “control” (e.g., ownership thresholds)

How to de-risk it
Clearly define what qualifies as a change of control, including ownership thresholds or voting rights that trigger the clause. Specify whether the other party has termination rights, consent rights, or both, and establish reasonable notice requirements so the parties can address the transition. Align the clause with the assignment provision and confirm that related obligations, such as confidentiality, data protection, and non-compete restrictions, continue to apply after a change in ownership. 

Conclusion

Together with the clauses discussed in our previous post, these provisions illustrate how risk in commercial contracts is often shaped by language that may not appear central to the business deal. Clauses addressing compliance, audit rights, assignment, and changes in corporate ownership can significantly affect how obligations are monitored, enforced, and transferred over time.

Carefully reviewing these clauses during drafting and contract review helps ensure that responsibilities are clearly defined and that the agreement continues to function as intended as circumstances change. Attention to details such as consent rights, notice requirements, and alignment with related provisions can prevent disputes and unintended exposure later in the relationship.

If you’re looking for ways to de-risk your business contracts more efficiently and consistently, get a demo of BoostDraft to see how it streamlines contract review for legal teams like yours every day.