The-Utopia-Studio/contract-review

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

# 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.

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## 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 | — |

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## 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 |

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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."

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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 |

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*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)