Contract Review

Contract Review

When to Use

Activate when a founder has received a contract to sign and wants to understand the risks before proceeding. This includes vendor agreements, customer enterprise agreements, partnership deals, investment documents, employment agreements, NDAs, IP assignment agreements, and any other binding legal document. Also activate when the user says things like "review this contract," "is this agreement fair," "what should I push back on," or "flag anything concerning."

Context Required

• From startup-context: company stage, team size, business model, fundraising status, current revenue, and any existing legal counsel.
• From the user: the contract text (or key sections), who the counterparty is, the business relationship context (are they a customer, vendor, investor, partner), the user's negotiating leverage, and any specific concerns they have. Also helpful: whether this is a template/standard agreement or has been negotiated.

Workflow

1. Contract intake — Receive the contract text. Identify the contract type, parties, effective date, and term. Create a one-paragraph summary of what the contract does.
2. Section-by-section analysis — Walk through each major section, summarizing what it means in plain language and flagging anything noteworthy.
3. Risk flagging — Apply the red/yellow/green flagging system (see below) to each clause. Assign a severity and explain why.
4. Missing protections — Identify standard protections that are absent from the contract but should be present given the contract type and relationship.
5. Negotiation recommendations — For each red and yellow flag, suggest specific alternative language or a negotiation strategy.
6. Summary report — Produce a structured risk assessment with prioritized action items.

Output Format

Contract Summary (top of report)

• Contract type: (e.g., SaaS vendor agreement, MSA, NDA)
• Parties: Company name vs. counterparty name
• Term: Duration, renewal mechanism
• Total value: Financial commitment if applicable
• Overall risk level: Red / Yellow / Green with one-sentence rationale

Clause-by-Clause Analysis Table

Missing Protections Checklist

Bulleted list of protections that should be present but are not.

Prioritized Action Items

Numbered list of what to do, in order of importance.

Frameworks & Best Practices

The Red/Yellow/Green Flagging System

Red Flags — Immediate concern, do not sign without modification:

• Unlimited liability or liability cap below a reasonable threshold
• Broad IP assignment that could capture pre-existing IP or IP unrelated to the engagement
• Non-compete clauses that are overly broad in scope, geography, or duration
• Unilateral termination rights without cure period for one party only
• Automatic renewal with no opt-out window or unreasonable notice requirements
• Indemnification obligations that are uncapped or wildly asymmetric
• Most-favored-nation clauses that constrain your pricing with other customers
• Exclusivity provisions that limit your ability to work with competitors
• Audit rights with unreasonable scope or no notice requirement
• Governing law in an unfavorable or distant jurisdiction with no negotiation

Yellow Flags — Worth negotiating, but not necessarily deal-breakers:

• Liability caps that are low relative to the contract value
• Warranty periods or SLA credits that are below industry standard
• Payment terms exceeding net-60
• Change-of-control provisions that allow termination on acquisition
• Broad confidentiality definitions with long or indefinite survival periods
• Assignment restrictions that prevent assignment in an acquisition scenario
• Force majeure clauses that are overly broad or favor one party
• Data handling terms that are vague about deletion, portability, or sub-processors

Green Flags — Standard and reasonable:

• Mutual confidentiality obligations
• Balanced termination rights with cure periods
• Liability capped at 12 months of fees paid
• Standard representations and warranties
• Clear payment terms (net-30)
• Reasonable non-solicitation (employees only, 12 months)

Negotiation Principles

• Symmetry first. Any obligation imposed on one party should apply to both unless there is a clear business reason for asymmetry.
• Cap everything. Liability, indemnification, and damages should all have explicit caps.
• Cure periods. Both parties should have the opportunity to fix a breach before termination.
• Specificity over breadth. Narrow definitions protect both parties. "Confidential Information means everything" protects nothing.
• Survival clarity. Specify exactly which clauses survive termination and for how long.

Related Skills

• terms-of-service — When reviewing a customer's redlines to your terms of service, use contract-review to assess their proposed modifications.
• privacy-policy — Data processing addendums and DPAs often accompany contracts. Review these for consistency with your privacy commitments.