Contract Traps & Red Flags

A low price on paper means nothing if the contract hides costly traps. Mid-market buyers can’t afford surprises. Red-flag clauses in energy contracts can add six figures to costs over time. Knowing what to watch for keeps your decisions solid.

Common Red Flags

• Early Termination Fees: Penalties that lock you in, even if the market drops.
• Bandwidth Clauses: Limits on how much usage can vary. Exceed it, and you pay punitive rates.
• Pass-Through Charges: Hidden fees for capacity, transmission, or compliance added later.
• Change-in-Law: Broad clauses letting suppliers pass costs of new regulation directly to you.

How to Protect Yourself

• Benchmark every offer — red flags stand out when contracts are compared side by side.
• Negotiate limits: narrow pass-through language and define bandwidth tolerance.
• Demand transparency: ask suppliers to mark up contracts with plain-English explanations.

Why Mid-Market Buyers Are Targeted

SMEs often sign without reading. Corporates throw contracts at legal teams. Mid-market companies are caught in the middle: large enough to matter, but often without dedicated energy counsel. Suppliers know this. The defense is clarity and benchmarking.

Learn how supplier choice impacts contract language. Compare with fixed vs. index pricing to see how structure affects traps. For resilience, read what your board expects.

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