contract-review

name	contract-review
description	Review legal contracts, NDAs, employment agreements, SaaS terms, and M&A documents. Identifies unfavorable terms, suggests redlines, and compares to market standards. Use for contract analysis, due diligence, or negotiation prep.
version	3.0.0
scope	public

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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Step 3: Redline Approach by Context

If document is a draft (pre-execution): Provide specific redline language AND a fallback/compromise for each flagged issue.

Format per issue:

• Redline: Exact replacement text
• Fallback: Minimum acceptable compromise if counterparty resists

If document is already executed: Shift from redlines to remediation. Do NOT suggest redlines. Instead provide:

• Exposure: What risk you now carry
• Mitigation: Steps to reduce exposure (side letter, addendum, operational workarounds, insurance)
• Trigger: Conditions that would require escalation (breach, renewal, assignment event)

Redline patterns by document type:

Type	Common Redline	Fallback
NDA (receiving)	Narrow CI definition, add standard exceptions	Accept broader definition with explicit carve-outs
NDA (disclosing)	Remove residuals clause	Narrow residuals to "general knowledge only"
SaaS (customer)	Liability cap 3mo → 12mo	Accept 6mo minimum
SaaS (vendor)	Mutual termination → vendor-only or 30-day notice	Accept mutual but extend notice to 60 days
M&A (buyer)	Earnout: add objective metrics + anti-sandbagging	Add audit rights as minimum
M&A (seller)	Escrow >15%: reduce to 10%, shorten to 12mo	Accept 12.5% for 12 months
Broker	Perpetual tail → 18-month tail	Accept 24 months with named-buyer carve-out
Payment	Immediate suspension → 5-day notice + cure	Accept 48-hour notice minimum

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Output Format

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

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Example Output

# 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 |

---

## 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

---

### 🟡 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 |

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## 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."

---

## 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 Flag	Why It Matters
Liability cap < 6 months	Inadequate protection
Uncapped indemnification	Unlimited exposure
"As-is" with no warranty	No recourse for defects
Unilateral suspension without notice	Service can vanish
Unilateral amendment rights	Terms can change
No termination for convenience	Locked in
Perpetual obligations (tails, non-competes)	Indefinite exposure
Offshore jurisdiction (BVI, Cayman)	Expensive to enforce
Pre-signed conflict waivers	No recourse for conflicts
"Sole discretion" language favoring counterparty	No objective standard
Class action waiver + mandatory arbitration	Limited remedies
Asymmetric assignment rights	They can assign, you can't

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Document Type Checklists

NDA Checklist

Category	Check For
Direction	One-way or mutual?
Definition scope	"All information" too broad? Standard exceptions?
Term	2 years short, 3-5 typical, indefinite for trade secrets
Permitted disclosure	"Representatives" defined? Flow-down required?
Residuals clause	Can use general knowledge retained in memory?
Non-solicitation	Employees protected?
Standstill	Prevents hostile acquisition actions?
No-contact	Customers, suppliers, employees protected?
Return/destruction	Certification required?
Public announcement	Prohibits disclosure of discussions?
Compelled disclosure	Notice required? Time to seek protective order?
Injunctive relief	Pre-agreed specific performance? Bond waiver?

SaaS/MSA Checklist

Category	Check For
Liability cap	12+ months = standard
Uptime SLA	99.9% with credits = standard
Suspension rights	Unilateral? Notice required?
Data ownership	Customer owns customer data?
Data export	Format, duration, cost on termination?
Price increases	Capped? Notice period?
Auto-renewal notice	90+ days = good, <60 = risk
Termination	Mutual for convenience? Cure period for cause?
Subprocessors	Notice of changes? Approval rights?
Insurance	Vendor carries E&O, cyber?

Payment/Merchant Agreement Checklist

Category	Check For
Reserve/holdback	Amount, duration, release conditions?
Chargeback liability	Capped? Fraud protection?
Network rules	Incorporated by reference? Access provided?
Auto-debit authority	Notice before debits?
Settlement timing	When do you receive funds?
Volume commitments	Realistic? Penalty for shortfall?
Suspension rights	Immediate or notice?
Termination tail	How long do obligations survive?
Audit rights	Frequency, notice, cost allocation?
PCI compliance	Who bears cost?

M&A Agreement Checklist

Category	Check For
Purchase price	Cash vs. stock vs. earnout mix?
Earnout mechanics	Measurement, discretion, audit rights, acceleration?
Escrow/holdback	Amount (10-15% typical), duration (12-18 mo), release?
Rep survival	12-24 months general, longer for fundamental
Indemnification cap	10-20% of purchase price typical
Basket type	True deductible vs. tipping?
Sandbagging	Pro-buyer or anti-sandbagging?
Non-compete	2-3 years, geographic scope?
Working capital	Target, collar, true-up mechanism?
MAC definition	Carve-outs for market conditions?
Employment comp	Counted in purchase price or separate?

Finder/Broker Agreement Checklist

Category	Check For
Fee percentage	Specified or blank?
Fee calculation	What's included in deal value? Employment comp?
"Covered buyer" definition	How broad? Any prior relationship carve-out?
Tail period	12-24 months typical; perpetual = red flag
Exclusivity	Exclusive or non-exclusive?
Minimum fee	Floor amount?
Joint representation	Consent required? Conflict waiver?
Escrow deduction	Auto-pay from proceeds?
Term/termination	Can you exit?
Broker status	BD 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

Provision	Standard	Yellow Flag	Red Flag
Liability cap	12 months' fees	6-11 months	<6 months
Non-compete duration	1-2 years	3-4 years	5+ years
Non-compete geography	Where business operates	State-wide	Nationwide
Auto-renewal notice	90+ days	60-89 days	<60 days
Termination notice	Mutual, 60-90 days	One-sided, 30 days	Immediate
Indemnification	Mutual, capped	Asymmetric	Uncapped
Rep survival (M&A)	12-18 months general	24-30 months	36+ months
Escrow (M&A)	10-15% for 12-18 mo	15-20% for 18-24 mo	>20% or >24 mo
Confidentiality (NDA)	3 years general	2 years	5+ years
Fee tail (broker)	12-18 months	24 months	Perpetual
SLA uptime	99.9% with credits	99.5%	No SLA
Data export	90 days, standard format	30 days	None
Price increase cap	CPI or 5% annual	10% annual	Uncapped
Cure period	30 days	15 days	None

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Negotiability Guide

Rating	Meaning	Examples
High	Usually accepted	Mutual termination, cure periods, data export
Medium	Depends on leverage	Liability cap increase, price caps
Low	Rarely changed	Network rules (payments), regulatory requirements
None	Non-negotiable	Card 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)