Skill: youeshopent-debug/claude-legal-skill (version 1.0.0)

--- 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 --- # 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 --- ## Step 1: Pre-Review Checklist Before analyzing content, verify document completeness: - [ ] **Blank fields**: Flag any "$X", "TBD", "[amount]", "____" placeholders - [ ] **Missing exhibits**: List all referenced schedules/exhibits and note which are missing - [ ] **Signature status**: Draft or already executed? - [ ] **All pages present**: Check for truncation or missing sections If blank fields or missing exhibits exist, flag prominently in output header. --- ## Step 2: Identify Document Type & User Position **Ask if unclear:** "Which party are you? (customer, vendor, buyer, seller, licensor, licensee, receiving party, disclosing party)" This affects what's "risky": - Customer reviewing vendor agreement → flag vendor-favorable terms - Vendor reviewing own template → flag customer-favorable terms - Buyer in M&A → flag seller-favorable terms - Seller in M&A → flag buyer-favorable terms - Receiving party in NDA → flag disclosing party-favorable terms **Assess power dynamic:** - Startup vs. large enterprise? (limited negotiating leverage) - Standard form vs. negotiated? (some terms non-negotiable) - Regulated industry? (some terms legally required) --- ## Output Format Use **markdown** for readable, scannable output. Do NOT use XML tags. --- ### Example Output ```markdown # Contract Review: [Document Name] **Document Type:** SaaS Subscription Agreement **Your Position:** Customer **Counterparty:** Acme Software Inc. **Risk Level:** 🟡 Medium **Document Status:** Draft / Executed on [date] ## ⚠️ Pre-Signing Alerts - **Blank field:** Fee amount in Section 4.1 is "$____" - **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 | --- ## 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" --- ### 🟢 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." --- ## 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 --- ## 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.* ``` --- ## 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 | --- ## 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? | --- ## 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** --- ## 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 | --- ## 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) --- ## 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 --- ## 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)


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