# Contract Patterns > When to activate: MSA, SOW, NDA, contract negotiation, redlines, contract lifecycle management, approval workflows, key contract clauses, legal review process - Skill: `mattakushi432/contract-patterns` (Agent Skill) - Install (CLI): `npx skillmds@latest add mattakushi432/contract-patterns` - Raw SKILL.md: https://api.skillmd.com/api/skills/mattakushi432/contract-patterns/raw - Safety review: pending - Works with: Claude Code, Claude.ai, OpenAI Codex - Category: Coding & Dev Tools - Author: Mattakushi432 (https://skillmd.com/u/mattakushi432) - Updated: 2026-09-17 - Page: https://skillmd.com/skills/mattakushi432/contract-patterns --- # Contract Patterns ## Contract Types Reference | Contract | Purpose | Who signs | |----------|---------|-----------| | NDA (Mutual) | Protects confidential information during evaluation | Both parties before sharing sensitive info | | MSA (Master Services Agreement) | Governs entire commercial relationship | Both parties once, referenced by all SOWs | | SOW (Statement of Work) | Defines specific project scope, deliverables, timeline | Both parties per project / engagement | | Order Form | Captures commercial terms for a specific purchase | Both parties per transaction | | DPA (Data Processing Agreement) | GDPR/CCPA compliance for data handling | Both parties when processing personal data | | SLA (Service Level Agreement) | Defines service standards and remedies | Often an exhibit to MSA | | BAA (Business Associate Agreement) | HIPAA compliance for health data | Both parties when handling PHI | --- ## MSA Key Clauses ### Intellectual Property ``` Preferred (vendor-friendly): All IP developed by Vendor remains with Vendor. Customer receives a license to use deliverables. Alternative (customer-friendly): All work product developed specifically for Customer under this agreement is work-for-hire and owned by Customer. Negotiation note: For SaaS: Vendor always retains platform IP. For custom development: negotiate based on leverage. ``` ### Liability Cap ``` Standard cap: "Aggregate liability shall not exceed the greater of (a) fees paid in the 12 months preceding the claim or (b) $[X]." Watch out for: - Uncapped liability for: IP infringement, gross negligence, willful misconduct, indemnification obligations, data breaches - "Uncapped" clauses can expose vendor to existential risk Customer push: "Remove the cap for data breaches." Vendor counter: "Cap applies to all claims including data breaches, but we carry cyber insurance of $[X]M." ``` ### Indemnification ``` Mutual indemnification covers: - Each party's IP infringement claims - Each party's gross negligence / willful misconduct - Vendor: indemnifies customer if third party claims product infringes their IP - Customer: indemnifies vendor for customer's data and content Red flag: one-sided indemnification with unlimited scope. ``` ### Termination ``` Termination for cause: Either party may terminate if material breach not cured within 30 days notice. Termination for convenience: Customer: 30–90 days written notice (negotiate based on contract value) Vendor: typically not allowed to terminate for convenience in B2B SaaS Effect of termination: - Customer data returned or deleted within 30 days - Fees paid not refunded for current period (pro-rated annual is negotiable) - Outstanding invoices payable ``` ### Governing Law and Dispute Resolution ``` Vendor preference: Vendor's home state / country Customer preference: Customer's home state / country Compromise: neutral jurisdiction or "each party's home jurisdiction for claims against them" Dispute resolution order: 1. Executive escalation (30 days) 2. Mediation (60 days) 3. Arbitration (AAA / JAMS rules) or litigation ``` --- ## SOW Structure ``` STATEMENT OF WORK Reference: MSA dated [Date] between [Vendor] and [Customer] SOW #: [NNN] Effective date: [Date] 1. SERVICES [Specific description of what will be delivered] Inclusions: [Explicit list of what is in scope] Exclusions: [Explicit list of what is NOT in scope — prevents scope creep] 2. DELIVERABLES | Deliverable | Description | Acceptance criteria | Due date | |-------------|-------------|--------------------|----- ----| | [Name] | [What it is] | [How customer accepts] | [Date] | 3. TIMELINE | Milestone | Description | Date | |-----------|-------------|------| | Kickoff | Project kickoff meeting | [Date] | | [Phase 1] | [Deliverables] | [Date] | | Final delivery | All deliverables accepted | [Date] | 4. FEES AND PAYMENT Total fee: $[X] Payment schedule: [X]% upon signing: $[Y] [X]% upon [milestone]: $[Y] [X]% upon final acceptance: $[Y] Expenses: [reimbursable / included / capped at $X] Change orders: any scope change requires written change order signed by both parties 5. CUSTOMER OBLIGATIONS [List what customer must provide: access, data, stakeholder availability, review turnarounds] Customer delay clause: if customer delays by > [N] days, timeline adjusted accordingly 6. ACCEPTANCE PROCEDURE Customer has [N] business days to accept or reject each deliverable. If no response within [N] days, deliverable is deemed accepted. Rejected deliverables: vendor has [N] days to revise; customer has [N] days to re-review. 7. PROJECT CONTACTS Vendor: [Name, email, role] Customer: [Name, email, role] ``` --- ## NDA Essentials ### Key Provisions ``` Definition of Confidential Information: - Include: technical, business, financial, customer, product information - Exclude: publicly available, independently developed, received from third party Obligations: - Use only for evaluation/business purpose - Limit disclosure to employees with need to know - Same protection as own confidential information (not less than reasonable care) Term: - Mutual NDA: 2–3 years standard - Confidentiality obligations often survive termination by 2–5 years Exceptions: - Compelled disclosure by law (notify before disclosing if legally permitted) - Information recipient can independently prove was not derived from disclosing party ``` ### Red Flags in Incoming NDAs - One-sided (only protects discloser's information) - No carve-outs for publicly available information - Overly broad definition of confidential (includes "all information shared verbally") - Perpetual term with no sunset - Automatic assignment of IP developed using confidential information --- ## Redline Process ### Redline Workflow 1. Receive contract → send to legal (or contract manager) within 24h 2. Legal marks up in track changes with comments explaining each change 3. Internal approval of redline before sending (sales + legal sign-off) 4. Send redline with cover email explaining major positions 5. Counterparty returns counter-redline → repeat 6. Issues list: for complex deals, move to issues list to track open points 7. Signature: collect via DocuSign / e-signature tool ### Negotiation Tiers | Clause | Position | Flexibility | |--------|----------|------------| | Liability cap | 12 months fees paid | May go to 24 months for high-value deals | | IP ownership | Vendor retains all | Non-negotiable for platform IP | | Data return | 30 days post-termination | May extend to 60 days | | Governing law | Vendor's home state | May accept neutral jurisdiction | | Payment terms | Net 30 | May accept Net 45 for enterprise | | Auto-renewal | 60-day opt-out window | May reduce to 90 days | --- ## Contract Lifecycle Management ### CLM Stages 1. **Request**: contract need identified (new customer, vendor, partnership) 2. **Drafting**: use template; customize for specific deal 3. **Review**: legal review; stakeholder approval per authorization matrix 4. **Negotiation**: redline exchange; issues resolution 5. **Approval**: final version approved per signing authority matrix 6. **Execution**: electronic signature; countersignature 7. **Repository**: filed in CLM system with metadata 8. **Obligation tracking**: renewal dates, SLA reviews, reporting requirements 9. **Renewal / amendment**: proactive outreach 90 days before expiration ### Signing Authority Matrix | Contract value | Signing authority | |---------------|-----------------| | < $10K / year | Department head | | $10K–$50K / year | VP + Finance | | $50K–$250K / year | CFO | | > $250K / year | CEO | | Any contract with IP assignment | General Counsel | | Any contract with unlimited liability | General Counsel + CEO | ### Contract Repository Metadata (capture for every contract) - Counterparty name and entity - Contract type (MSA / SOW / NDA / Order Form) - Effective date - Expiration / renewal date - Auto-renewal: yes/no; opt-out notice period - Contract value (annual + total) - Governing law - Notice provision (how to send formal notices) - Owner (internal relationship owner) - Location (CLM system link)