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---
name: legal-contract-review
description: Review contracts for risk, extract key clauses, triage NDAs, and score compliance exposure. Use when evaluating vendor agreements, reviewing customer contracts, assessing NDA terms, or performing contract due diligence.
tags: [legal, contracts, compliance, risk-analysis]
---

# Legal Contract Review

Structured contract analysis framework for extracting key terms, scoring risk, triaging NDAs, and identifying compliance exposure. Provides repeatable, evidence-based contract review — not legal advice.

> **Disclaimer:** This skill provides structured analysis patterns and checklists. All output should be reviewed by qualified legal counsel before making binding decisions.

## Use this skill when

- Reviewing vendor, customer, or partner agreements for risk
- Triaging NDAs (mutual or unilateral) for quick risk classification
- Extracting key commercial terms into a structured summary
- Scoring compliance exposure across regulatory dimensions
- Preparing contract summaries for executive or board review
- Conducting due diligence on a portfolio of contracts

## Do not use this skill when

- You need binding legal opinions (consult qualified counsel)
- Drafting new contracts from scratch (use legal templates instead)
- Reviewing highly regulated instruments (securities, insurance policies) requiring specialized expertise
- The contract is in a language you cannot fully parse

## Instructions

1. **Identify contract type** — classify as vendor, customer, partnership, NDA, employment, or licensing agreement.
2. **Run the 10-Point Checklist** — extract each element into the Clause Extraction Template.
3. **Score compliance risk** — apply the Compliance Risk Score across all applicable dimensions.
4. **Check Red Flags** — scan for the 8 critical red flag patterns.
5. **For NDAs** — apply the NDA Triage Matrix for rapid classification.
6. **Generate output** — produce a Contract Summary Brief with risk heat map.

---

## 10-Point Contract Review Checklist

Every contract review must extract and evaluate these 10 elements:

| # | Element | What to Look For | Risk Level if Missing |
|---|---------|------------------|----------------------|
| 1 | **Parties** | Legal entity names, jurisdiction of incorporation, authorized signatories | High — wrong entity = unenforceable |
| 2 | **Term & Renewal** | Start date, end date, auto-renewal clauses, notice periods for termination | Medium — auto-renewal traps |
| 3 | **Termination Rights** | For cause, for convenience, cure periods, termination triggers | High — inability to exit |
| 4 | **Liability Cap** | Aggregate cap, per-incident cap, carve-outs from cap | Critical — unlimited exposure |
| 5 | **Indemnification** | Mutual vs. one-sided, scope of indemnified claims, defense obligations | High — asymmetric risk |
| 6 | **IP & Ownership** | IP assignment, license grants, work-for-hire provisions, background IP protections | Critical — loss of core IP |
| 7 | **Confidentiality** | Scope, duration, permitted disclosures, return/destruction obligations | Medium — over-broad scope |
| 8 | **Governing Law & Disputes** | Jurisdiction, arbitration vs. litigation, venue, class action waiver | Medium — unfavorable venue |
| 9 | **Data & Privacy** | Data processing terms, DPA requirements, breach notification, data residency | High — regulatory exposure |
| 10 | **Force Majeure** | Defined events, notice requirements, performance relief, termination rights | Low — unless critical supply chain |

---

## Clause Extraction Template

Use this structure to summarize any contract:

```markdown
## Contract Summary

**Contract Type:** [Vendor/Customer/NDA/Partnership/Employment/License]
**Parties:** [Party A] ↔ [Party B]
**Effective Date:** [YYYY-MM-DD]
**Term:** [Duration] | **Auto-Renewal:** [Yes/No — notice period]
**Governing Law:** [Jurisdiction]

### Key Commercial Terms
| Term | Value | Notes |
|------|-------|-------|
| Contract Value | $ | Annual/total |
| Payment Terms | Net [X] days | |
| Liability Cap | $ or [X]x fees | Carve-outs: [list] |
| Termination Notice | [X] days | For convenience / for cause |

### Risk Summary
| Risk Area | Score (1-5) | Key Finding |
|-----------|-------------|-------------|
| Financial Exposure | | |
| IP Risk | | |
| Compliance Risk | | |
| Operational Risk | | |
| **Overall Risk** | **[avg]** | **[summary]** |
```

---

## NDA Triage Matrix

Rapid classification for NDAs — takes 10-15 minutes per NDA:

| Dimension | Green (Low Risk) | Yellow (Review) | Red (Escalate) |
|-----------|-----------------|-----------------|----------------|
| **Type** | Mutual | Unilateral (we disclose) | Unilateral (we receive only) |
| **Scope** | Clearly defined to project | Broad but reasonable | "All information" without limits |
| **Duration** | 1-3 years | 3-5 years | Perpetual or >5 years |
| **Non-compete** | None | Narrow (specific market, <1 year) | Broad market, >1 year |
| **Residuals** | Residuals clause included | Silent on residuals | Explicitly excludes residuals |
| **Remedies** | Mutual remedies | Injunctive relief (standard) | Liquidated damages or penalties |

**Triage Decision:**
- All Green → **Sign** (standard terms)
- Any Yellow → **Review** (negotiate specific clauses)
- Any Red → **Escalate** to legal counsel before signing

---

## Compliance Risk Score (0-100)

Weighted scoring across regulatory dimensions:

| Dimension | Weight | Score (0-10) | Weighted |
|-----------|--------|-------------|----------|
| **Data Privacy** (GDPR, CCPA, PDPA) | 25% | | |
| **Export Controls** (ITAR, EAR) | 15% | | |
| **Anti-Bribery** (FCPA, UK Bribery Act) | 15% | | |
| **Sanctions** (OFAC, EU sanctions) | 15% | | |
| **Industry-Specific** (HIPAA, PCI-DSS, SOX) | 20% | | |
| **Employment Law** (non-compete, IP assignment) | 10% | | |
| **Total** | 100% | | **/100** |

**Risk Bands:**
- 0-25: Low risk — proceed with standard review
- 26-50: Moderate risk — require compliance team sign-off
- 51-75: High risk — require legal counsel review
- 76-100: Critical risk — escalate to CLO / outside counsel

---

## Red Flag Checklist

These patterns require immediate escalation:

| # | Red Flag | Why It Matters |
|---|----------|---------------|
| 1 | **Unlimited liability** | No cap on financial exposure |
| 2 | **One-sided indemnification** | Only your company bears risk |
| 3 | **Auto-renewal without notice** | Locked into unfavorable terms |
| 4 | **Broad IP assignment** | Transfers IP beyond project scope |
| 5 | **Non-compete overreach** | Restricts future business operations |
| 6 | **Unilateral amendment rights** | Counterparty can change terms without consent |
| 7 | **No termination for convenience** | Cannot exit without cause |
| 8 | **Jurisdiction in counterparty's home country** | Litigation disadvantage |

If **any** red flag is present, do not approve without legal counsel review.

---

## Common Mistakes

- **Confusing liability cap with indemnification** — a liability cap limits total exposure; indemnification defines who pays for specific losses. Both must be reviewed independently.
- **Ignoring change-of-control clauses** — acquisition or merger can trigger termination or consent requirements.
- **Skipping data processing addendums** — GDPR/CCPA require explicit DPA terms for any contract involving personal data processing.
- **Overlooking survival clauses** — confidentiality, IP, and indemnification often survive termination. Check duration.
- **Accepting "standard terms"** — no contract is truly standard. Always review, even boilerplate.

---

## Additional Resources

- Related skill: `stakeholder-map` — for identifying contract stakeholders and approval workflows
- IACCM (World Commerce & Contracting) — contract management best practices
- Legal design patterns for technology agreements

<!-- Source: .faos/custom/skills/business/legal-contract-review/SKILL.md -->
