Prompt Pack Full Contract Risk Review

Full Contract Risk Review

When to use this

Use this skill when a company needs a systematic, end-to-end legal risk review of a commercial contract before signing. This is a general-purpose review framework that applies to any contract type — supply agreements, service agreements, technology contracts, commercial leases, partnership agreements, and more.

The review is conducted from the perspective of the named company (the client) and produces a structured output that legal counsel or a business team can act on directly.

Typical triggers:

• Legal counsel reviewing a counterparty's draft contract before negotiation
• Business team member who has received a contract and needs a legal risk assessment
• Post-negotiation final check before signing
• Contract audit as part of M&A due diligence
• Annual contract portfolio review to flag contracts approaching renewal or with unusual terms

Required inputs

Optional inputs

• Prior relationship with the counterparty (first contract vs. renewal)
• Prior version of the contract (if this is a revision)
• Any non-negotiable terms already agreed commercially
• Industry-specific regulatory requirements that affect the contract

Review methodology

Work through the contract systematically using the following pass structure:

Pass 1 — Structural completeness check

Confirm the contract contains all essential provisions:

• Parties (correctly named, with registered entity names, not trading names)
• Subject matter and scope (what exactly is being sold, licensed, or provided)
• Price and payment terms
• Term (start date, end date or perpetual, renewal mechanics)
• Intellectual property (ownership, license grant, restrictions)
• Confidentiality
• Representations and warranties
• Indemnification
• Limitation of liability
• Termination (for cause and for convenience)
• Governing law and dispute resolution
• Entire agreement / integration clause

Flag any of these that are absent or materially incomplete.

Pass 2 — High-risk clause identification

Review each clause for risks to the client:

Liability exposure:

• Liability cap: is there one? Is it adequate? (Standard: capped at contract value or 12 months' fees — is the cap reasonable relative to the risks being assumed?)
• Consequential loss exclusion: does it apply? What is excluded (lost profits, lost data, business interruption)?
• Indemnification: what events trigger the indemnity? Is it mutual? Is it limited to third-party claims only or also direct claims?
• Insurance: is the counterparty required to maintain adequate insurance? Are required types and limits specified?

IP and data:

• Who owns IP created during the performance of the contract?
• Is there a broad assignment clause that transfers the client's pre-existing IP inadvertently?
• Data protection obligations: is there a data processing agreement or schedule? Does it comply with applicable PDPL/GDPR?
• Confidentiality: is the definition of "confidential information" appropriate? Are the exceptions (public domain, prior knowledge, legal obligation) included?

Termination risk:

• Can the counterparty terminate for convenience with short notice (e.g., 7–14 days)?
• Are there termination-for-cause provisions that could be triggered by minor technical breaches?
• Change-of-control clause: does it allow the counterparty to terminate if the client is acquired?
• What happens to IP, data, work in progress on termination? Is there a transition or wind-down period?

Payment and financial:

• Price escalation mechanisms: are automatic price increases permitted? Are they capped?
• Late payment interest: is the rate reasonable?
• Set-off rights: can the counterparty withhold payment for unrelated claims?
• Payment on termination: is there a termination fee that would apply? Is it proportionate?

Operational constraints:

• Exclusivity obligations that prevent the client from working with others in the same market
• Minimum purchase commitments with financial consequences for shortfall
• Non-compete obligations (scope, duration, geography — are they reasonable?)
• Change management: can the counterparty change the product, service, or terms unilaterally?

Pass 3 — Ambiguity and drafting issues

Flag clauses that are unclear, ambiguous, or could be read against the client:

• Undefined terms used in key obligations
• Obligations that are qualified by "reasonable efforts" vs. "best efforts" vs. absolute obligations — know which applies to each party
• Clauses where the English text and any Arabic text diverge (in MENA bilingual contracts)
• Force majeure: is the definition appropriate? Does it cover pandemics, regulatory changes, cyber incidents? Are consequences proportionate (suspension vs. termination)?

Pass 4 — Missing protections

Identify protections that the client should have but the draft does not include:

• Service level agreements and remedies for failure
• Business continuity and disaster recovery obligations
• Right to audit the counterparty's performance
• Step-in rights (if the counterparty is performing critical services)
• Benchmarking rights (for long-term contracts: right to compare prices against market)
• Most-favored-nation clause (if commercial parity matters)

Pass 5 — MENA-specific review checklist

For contracts governed by or performed in MENA jurisdictions:

• Penalty clauses: UAE Civil Code (Art. 390), Lebanese Code of Obligations and Contracts, and Egyptian Civil Code all permit courts to reduce or increase penalty clauses to reflect actual loss; penalty clauses are not as certain as in common-law systems.
• Interest: In KSA (Sharia-based), conventional interest provisions may be unenforceable; use late payment compensation (indemnity for actual loss) rather than fixed interest rate.
• Arbitration clause: MENA courts have historically sometimes not recognized jurisdiction clauses selecting foreign courts; a well-drafted arbitration clause (specifying DIAC, DIFC-LCIA, ICC with UAE seat) is more reliable.
• Language: In UAE, the Arabic version of any contract governs if there is a conflict with the English version; in KSA, Arabic is the official language; ensure the Arabic version accurately reflects agreed terms.
• Notarization (Tawtheeq): Some MENA jurisdictions require notarization of certain types of contracts (real estate, constitutional documents); check whether notarization is required for this contract type to be enforceable.

Output format

Structure the review output as follows:

Section A — High-risk clauses

Section B — Unclear or ambiguous language

Section C — Missing protections for [Company Name]

• [Description of missing protection and why it matters]
• Recommended clause: [brief description of the provision to add]

Section D — Clauses that strongly favor the other party

Section E — Suggested revisions (plain English summary)

For each significant issue, provide:

• Current clause: Quote the problematic language
• Issue: One-sentence explanation of the risk
• Suggested revision: Replacement language or alternative approach

Top 3 risks summary

1. [Highest risk issue in one sentence]
2. [Second highest risk]
3. [Third highest risk]

Jurisdictional notes

Common mistakes

• Reviewing only the main body: Many contracts incorporate additional documents by reference (operations manual, service specifications, data processing agreement); these must also be reviewed.
• Ignoring governing law: The same clause can be enforceable in one jurisdiction and void in another; always anchor the review to the specific governing law.
• Accepting "standard" as non-negotiable: Counterparties describe unfavorable terms as "our standard template"; everything is negotiable; identify which issues are dealbreakers and which are preferences.
• Not checking for the entire agreement clause: An entire agreement clause prevents reliance on pre-contractual representations; if the client was promised something that is not in the written contract, it will not be enforceable.
• Failing to check the dispute resolution clause: A dispute resolution clause in a foreign jurisdiction or requiring litigation in a difficult enforcement jurisdiction (such as Lebanon for commercial disputes) can make the agreement commercially worthless for recovery purposes.

Related skills

• [[prompt-pack-disclosure-letter]]
• [[prompt-pack-distribution-agreement]]
• [[prompt-pack-franchise-agreement]]
• [[prompt-pack-employment-contract-compliance-review]]