Contract Review Skill#

Review legal contracts for risks, extract key terms, and suggest redlines. Built on the CUAD dataset (41 risk categories), ContractEval benchmarks, and LegalBench.

When to Activate#

• User mentions "review contract", "analyze agreement", "check this contract"
• User uploads or references a PDF/DOCX legal document
• User asks about specific clauses, risks, or terms

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Step 1: Pre-Review Checklist#

Before analyzing content, verify document completeness:

• Blank fields: Flag any "$X", "TBD", "[amount]", "____" placeholders
• Missing exhibits: List all referenced schedules/exhibits and note which are missing
• Signature status: Draft or already executed?
• All pages present: Check for truncation or missing sections

If blank fields or missing exhibits exist, flag prominently in output header.

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Step 2: Identify Document Type & User Position#

Ask if unclear: "Which party are you? (customer, vendor, buyer, seller, licensor, licensee, receiving party, disclosing party)"

This affects what's "risky":

• Customer reviewing vendor agreement → flag vendor-favorable terms
• Vendor reviewing own template → flag customer-favorable terms
• Buyer in M&A → flag seller-favorable terms
• Seller in M&A → flag buyer-favorable terms
• Receiving party in NDA → flag disclosing party-favorable terms

Assess power dynamic:

• Startup vs. large enterprise? (limited negotiating leverage)
• Standard form vs. negotiated? (some terms non-negotiable)
• Regulated industry? (some terms legally required)

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Output Format#

Use markdown for readable, scannable output. Do NOT use XML tags.

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Example Output#

markdown

# Contract Review: [Document Name]

**Document Type:** SaaS Subscription Agreement
**Your Position:** Customer
**Counterparty:** Acme Software Inc.
**Risk Level:** 🟡 Medium
**Document Status:** Draft / Executed on [date]

## ⚠️ Pre-Signing Alerts

- **Blank field:** Fee amount in Section 4.1 is "$____"
- **Missing exhibit:** Exhibit B (SLA) referenced but not attached

## Executive Summary

Standard vendor agreement with some one-sided terms. The 3-month liability cap and
asymmetric termination rights need attention. Data ownership is clear.

---

## Key Terms

| Term | Value | Location |
|------|-------|----------|
| Initial Term | 12 months | Section 8.1 |
| Auto-Renewal | 12-month periods, 60-day notice | Section 8.2 |
| Liability Cap | 3 months' fees | Section 10.2 |
| Governing Law | Delaware | Section 12.1 |

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## Red Flags (Quick Scan)

| Flag | Found | Location |
|------|-------|----------|
| Liability cap < 6 months | ⚠️ Yes | Section 10.2 |
| Uncapped indemnification | No | — |
| Unilateral amendment rights | ⚠️ Yes | Section 14.1 |
| No termination for convenience | No | — |
| Perpetual obligations | No | — |
| Offshore jurisdiction | No | — |

---

## Risk Analysis

### 🔴 Critical

**Limitation of Liability** (Section 10.2)
> "Liability shall not exceed fees paid in the preceding three (3) months"

- **Issue:** 3-month cap is below market standard (typically 12 months)
- **Risk:** For $120K annual contract, liability capped at $30K
- **Market Standard:** 12 months' fees
- **Negotiability:** Medium — most vendors accept 6-12 months
- **Redline:** Change "three (3) months" → "twelve (12) months"
- **Fallback:** Accept 6 months as compromise

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### 🟡 Important

**Termination for Convenience** (Section 8.5)
> "Vendor may terminate for any reason upon 30 days notice"

- **Issue:** One-sided; customer lacks equivalent right
- **Market Standard:** Mutual termination rights
- **Negotiability:** High — reasonable ask
- **Redline:** Add "Either party may terminate..." or change to "90 days"

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### 🟢 Reviewed & Acceptable

| Category | Status | Notes |
|----------|--------|-------|
| Data Ownership | ✓ | Customer owns all customer data |
| IP Rights | ✓ | Clear separation, no broad assignment |
| Confidentiality | ✓ | Mutual, 3-year term, standard exceptions |
| Governing Law | ✓ | Delaware — neutral for commercial |

---

## Missing Provisions

| Provision | Priority | Why It Matters |
|-----------|----------|----------------|
| Data Export Rights | Critical | No guaranteed way to get data out on termination |
| SLA Credits | Important | 99.9% uptime stated but no remedy for breach |
| Price Increase Cap | Important | Renewal pricing uncapped |

**Suggested language for Data Export:**
> "Upon termination, Vendor shall make Customer Data available for export in CSV or JSON format for 90 days at no additional charge."

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## Internal Consistency Issues

- ⚠️ Section 5.2 references "Exhibit C" but no Exhibit C exists
- ⚠️ "Confidential Information" defined in Section 3.1 but used lowercase in Section 7

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## Negotiation Priority

| # | Issue | Ask | Negotiability |
|---|-------|-----|---------------|
| 1 | Liability cap | 12 months | Medium |
| 2 | Termination rights | Mutual | High |
| 3 | Data export | Add provision | High |
| 4 | Price cap | 5% annual max | Medium |

---

*This review is for informational purposes only. Material terms should be reviewed by qualified legal counsel.*

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Red Flags Quick Scan#

Check these danger signs FIRST before deep analysis:

Red FlagWhy It MattersLiability cap < 6 monthsInadequate protectionUncapped indemnificationUnlimited exposure"As-is" with no warrantyNo recourse for defectsUnilateral suspension without noticeService can vanishUnilateral amendment rightsTerms can changeNo termination for convenienceLocked inPerpetual obligations (tails, non-competes)Indefinite exposureOffshore jurisdiction (BVI, Cayman)Expensive to enforcePre-signed conflict waiversNo recourse for conflicts"Sole discretion" language favoring counterpartyNo objective standardClass action waiver + mandatory arbitrationLimited remediesAsymmetric assignment rightsThey can assign, you can't

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Document Type Checklists#

NDA Checklist#

CategoryCheck ForDirectionOne-way or mutual?Definition scope"All information" too broad? Standard exceptions?Term2 years short, 3-5 typical, indefinite for trade secretsPermitted disclosure"Representatives" defined? Flow-down required?Residuals clauseCan use general knowledge retained in memory?Non-solicitationEmployees protected?StandstillPrevents hostile acquisition actions?No-contactCustomers, suppliers, employees protected?Return/destructionCertification required?Public announcementProhibits disclosure of discussions?Compelled disclosureNotice required? Time to seek protective order?Injunctive reliefPre-agreed specific performance? Bond waiver?

SaaS/MSA Checklist#

CategoryCheck ForLiability cap12+ months = standardUptime SLA99.9% with credits = standardSuspension rightsUnilateral? Notice required?Data ownershipCustomer owns customer data?Data exportFormat, duration, cost on termination?Price increasesCapped? Notice period?Auto-renewal notice90+ days = good, <60 = riskTerminationMutual for convenience? Cure period for cause?SubprocessorsNotice of changes? Approval rights?InsuranceVendor carries E&O, cyber?

Payment/Merchant Agreement Checklist#

CategoryCheck ForReserve/holdbackAmount, duration, release conditions?Chargeback liabilityCapped? Fraud protection?Network rulesIncorporated by reference? Access provided?Auto-debit authorityNotice before debits?Settlement timingWhen do you receive funds?Volume commitmentsRealistic? Penalty for shortfall?Suspension rightsImmediate or notice?Termination tailHow long do obligations survive?Audit rightsFrequency, notice, cost allocation?PCI complianceWho bears cost?

M&A Agreement Checklist#

CategoryCheck ForPurchase priceCash vs. stock vs. earnout mix?Earnout mechanicsMeasurement, discretion, audit rights, acceleration?Escrow/holdbackAmount (10-15% typical), duration (12-18 mo), release?Rep survival12-24 months general, longer for fundamentalIndemnification cap10-20% of purchase price typicalBasket typeTrue deductible vs. tipping?SandbaggingPro-buyer or anti-sandbagging?Non-compete2-3 years, geographic scope?Working capitalTarget, collar, true-up mechanism?MAC definitionCarve-outs for market conditions?Employment compCounted in purchase price or separate?

Finder/Broker Agreement Checklist#

CategoryCheck ForFee percentageSpecified or blank?Fee calculationWhat's included in deal value? Employment comp?"Covered buyer" definitionHow broad? Any prior relationship carve-out?Tail period12-24 months typical; perpetual = red flagExclusivityExclusive or non-exclusive?Minimum feeFloor amount?Joint representationConsent required? Conflict waiver?Escrow deductionAuto-pay from proceeds?Term/terminationCan you exit?Broker statusBD registered if securities involved?

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Risk Categories (CUAD 41 + Extensions)#

Document Basics#

• Document Name and Type
• Parties (legal names, roles)
• Agreement Date / Effective Date
• Expiration Date
• Renewal Terms
• Document Status (draft/executed)
• Blank Fields / Placeholders

Term & Termination#

• Contract Term / Duration
• Termination for Convenience
• Termination for Cause
• Post-Termination Services
• Survival Clauses
• Suspension Rights (immediate vs. with notice)
• Cure Periods

Assignment & Control#

• Anti-Assignment Clause
• Change of Control
• Consent Requirements
• Asymmetric Assignment (they can, you can't)

Financial Terms#

• Payment Terms
• Price Restrictions / Adjustments
• Most Favored Nation (MFN)
• Minimum Commitment
• Volume Restrictions
• Audit Rights
• Price Escalation Caps
• Reserve/Holdback Requirements
• Auto-Debit Authority

Liability & Risk#

• Limitation of Liability
• Cap on Liability
• Uncapped Liability Carve-outs
• Indemnification
• Insurance Requirements
• Warranty Duration
• Warranty Disclaimer (As-Is)
• Exclusive Remedy Clauses
• Chargeback/Return Liability

IP & Confidentiality#

• IP Ownership Assignment
• License Grant
• Affiliate License - Licensor/Licensee
• Covenant Not To Sue
• Non-Compete
• Non-Solicitation (Employees/Customers)
• Competitive Restriction Exception
• Exclusivity
• Non-Disparagement
• Confidentiality Duration
• Third Party Beneficiary
• Residuals Clause
• Feedback Ownership

Dispute Resolution#

• Governing Law
• Jurisdiction / Venue
• Arbitration vs Litigation
• Jury Trial Waiver
• Class Action Waiver
• Offshore Jurisdiction Flags

Special Provisions#

• ROFR / ROFO / ROFN
• Revenue/Profit Sharing
• Joint IP Ownership
• Source Code Escrow
• Irrevocable or Perpetual License
• Data Export Rights
• Uptime/Availability SLA
• Sublicensing Rights
• Unilateral Amendment Rights

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Market Standard Benchmarks#

ProvisionStandardYellow FlagRed FlagLiability cap12 months' fees6-11 months<6 monthsNon-compete duration1-2 years3-4 years5+ yearsNon-compete geographyWhere business operatesState-wideNationwideAuto-renewal notice90+ days60-89 days<60 daysTermination noticeMutual, 60-90 daysOne-sided, 30 daysImmediateIndemnificationMutual, cappedAsymmetricUncappedRep survival (M&A)12-18 months general24-30 months36+ monthsEscrow (M&A)10-15% for 12-18 mo15-20% for 18-24 mo>20% or >24 moConfidentiality (NDA)3 years general2 years5+ yearsFee tail (broker)12-18 months24 monthsPerpetualSLA uptime99.9% with credits99.5%No SLAData export90 days, standard format30 daysNonePrice increase capCPI or 5% annual10% annualUncappedCure period30 days15 daysNone

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Negotiability Guide#

RatingMeaningExamplesHighUsually acceptedMutual termination, cure periods, data exportMediumDepends on leverageLiability cap increase, price capsLowRarely changedNetwork rules (payments), regulatory requirementsNoneNon-negotiableCard network mandates, banking regulations

Power dynamic factors:

• Large customer + small vendor = more leverage
• Startup + enterprise vendor = less leverage
• Competitive market = more leverage
• Sole-source vendor = less leverage
• Regulated terms = no leverage (legally required)

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Jurisdiction Notes#

Non-Competes:

• California, North Dakota, Oklahoma, Minnesota: Generally void
• Other states: Reasonableness test applies

Choice of Law:

• Delaware: Corp-friendly, predictable
• New York: Financial agreements, sophisticated courts
• California: Employee-friendly, tech industry
• BVI/Cayman: Offshore, expensive to litigate, potential red flag

Arbitration Venues:

• AAA, JAMS: Standard US commercial
• SIAC (Singapore), LCIA (London): International, expensive
• Mandatory + class waiver: Limits remedies significantly

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Guardrails#

• Not legal advice: Recommend attorney review for material terms
• Not tax advice: Flag but don't opine
• Jurisdiction matters: Note when enforceability varies
• Express uncertainty: Say when interpretation is unclear
• No hallucination: Only reference text actually in document
• Show what's acceptable: Always include "Reviewed & Acceptable" section
• Document status matters: Note if already executed (review is informational)