Contract Review

Contract Review

Overview

Analyze legal contracts and agreements to identify risks, missing clauses, unfavorable terms, and compliance issues. This skill reads contract documents, categorizes clauses, flags potential problems, and produces a structured risk report with actionable recommendations.

Instructions

When a user asks you to review, analyze, or check a contract, follow these steps:

Step 1: Load and parse the contract

Read the contract file. Supported formats include PDF, DOCX, TXT, and Markdown.

For PDF files, extract text using pdfplumber:

import pdfplumber

def load_contract(pdf_path):
    full_text = ""
    with pdfplumber.open(pdf_path) as pdf:
        for page in pdf.pages:
            text = page.extract_text()
            if text:
                full_text += text + "\n\n"
    return full_text

For DOCX files, use python-docx:

from docx import Document

def load_docx(docx_path):
    doc = Document(docx_path)
    return "\n\n".join([p.text for p in doc.paragraphs if p.text.strip()])

Step 2: Identify the contract type

Determine the contract type from the content:

• Employment contract: Look for salary, benefits, termination, non-compete clauses
• NDA / Confidentiality agreement: Look for confidential information definitions, duration, exceptions
• Service agreement / SaaS: Look for SLA, liability caps, data handling, termination for convenience
• Vendor / Supplier agreement: Look for delivery terms, payment terms, warranties, indemnification

Step 3: Extract and categorize key clauses

Identify and extract these critical sections:

1. Parties: Who is involved, are they correctly identified
2. Term and termination: Duration, renewal terms, termination conditions, notice periods
3. Payment terms: Amounts, schedule, late payment penalties, currency
4. Liability and indemnification: Liability caps, mutual vs one-sided indemnification
5. Confidentiality: Scope of confidential information, duration, exceptions
6. Non-compete / Non-solicitation: Geographic scope, duration, reasonableness
7. Intellectual property: Ownership, assignment, licensing rights
8. Dispute resolution: Jurisdiction, arbitration vs litigation, governing law
9. Force majeure: Events covered, notice requirements
10. Data protection: GDPR compliance, data processing terms, breach notification

Step 4: Perform risk analysis

For each clause, assess:

• Risk level: High, Medium, or Low
• Issue: What is problematic or missing
• Recommendation: Specific change or addition to suggest

Flag these common red flags:

• One-sided indemnification without caps
• Automatic renewal without opt-out notice period
• Non-compete clauses exceeding 12 months or unreasonable geographic scope
• Missing limitation of liability
• Vague termination conditions
• No data protection or breach notification terms
• Missing force majeure clause
• Unclear IP ownership assignment

Step 5: Generate the review report

Produce a structured report with:

1. Contract summary (type, parties, effective date, term)
2. Clause-by-clause analysis with risk ratings
3. Missing clauses that should be added
4. Top recommendations ranked by priority
5. Overall risk score (Low / Medium / High / Critical)

Examples

Example 1: Review an employment contract

User request: "Review my employment contract at ~/contracts/offer.pdf for any red flags"

Actions taken:

1. Extract text from offer.pdf
2. Identify as employment contract
3. Analyze each clause for risks
4. Flag issues found

Output:

CONTRACT REVIEW REPORT
======================
Type: Employment Contract
Parties: Jane Doe (Employee) <-> Acme Corp (Employer)
Term: Indefinite, starting March 1, 2025

RISK ANALYSIS:
-------------------------------------------------
| Clause              | Risk   | Issue                                    |
|---------------------|--------|------------------------------------------|
| Non-compete         | HIGH   | 24-month duration, nationwide scope       |
| Termination         | MEDIUM | No severance terms specified              |
| IP Assignment       | HIGH   | Covers all work, including personal projects |
| Benefits            | LOW    | Standard package, clearly defined         |
| Confidentiality     | LOW    | Reasonable scope and 2-year duration      |

MISSING CLAUSES:
- No remote work policy or location flexibility terms
- No bonus or equity vesting schedule details

TOP RECOMMENDATIONS:
1. Negotiate non-compete down to 6-12 months with limited geography
2. Add carve-out for personal projects in IP assignment clause
3. Request explicit severance terms (e.g., 2 weeks per year of service)

OVERALL RISK: HIGH - Address non-compete and IP clauses before signing

Example 2: Audit a SaaS service agreement

User request: "Check this vendor agreement for our SaaS tool. Flag anything we should push back on."

Actions taken:

1. Parse the service agreement
2. Check for standard SaaS contract terms
3. Compare against best practices for data protection and SLAs

Output:

CONTRACT REVIEW REPORT
======================
Type: SaaS Service Agreement
Parties: Your Company <-> CloudTool Inc.
Term: 12 months, auto-renews

RISK ANALYSIS:
-------------------------------------------------
| Clause              | Risk     | Issue                                  |
|---------------------|----------|----------------------------------------|
| SLA / Uptime        | HIGH     | No uptime guarantee or credits defined |
| Data Processing     | HIGH     | No DPA or GDPR compliance language     |
| Liability Cap       | MEDIUM   | Capped at 1 month of fees (very low)   |
| Termination         | MEDIUM   | 90-day notice required to cancel        |
| Auto-renewal        | LOW      | 30-day opt-out window before renewal    |

TOP RECOMMENDATIONS:
1. Require a 99.9% uptime SLA with service credits
2. Add a Data Processing Agreement as an appendix
3. Negotiate liability cap to at least 12 months of fees
4. Reduce cancellation notice to 30 days

Guidelines

• Always specify that this is an AI-assisted review and not legal advice. Recommend the user consult a lawyer for final decisions.
• Present risks in order of severity (High first) so the most important issues are seen immediately.
• When clauses are ambiguous, flag them as risks rather than assuming favorable interpretation.
• For multi-party contracts, analyze obligations and risks from the perspective of the user's party.
• If the contract references external documents (exhibits, schedules, addenda), note which ones are missing from the review.
• Compare terms against standard market practices for the contract type when assessing reasonableness.
• Keep the report concise. Use tables for clause analysis and bullet points for recommendations.