contract-analyzer

# Contract Analyzer

## Overview

Transform contract review from legal bottleneck into structured business analysis. This skill encodes the frameworks for extracting key terms, identifying risks, and comparing against standard positions—enabling faster deal velocity while escalating appropriately. This is business analysis, not legal advice.

## When to Use This Skill

- **Vendor contract review** — Analyzing contracts from vendors or partners
- **Customer agreement analysis** — Reviewing customer-proposed terms
- **Risk identification** — Flagging non-standard or problematic clauses
- **Comparison analysis** — Comparing terms across multiple agreements
- **Negotiation preparation** — Identifying positions and fallback options
- **Clause standardization** — Assessing deviation from your templates

**Important:** This skill supports business analysis. Legal review from qualified counsel is required before signing agreements.

## Contract Review Framework

### The 3-Phase Review Process

```
Phase 1: EXTRACT         Phase 2: ASSESS           Phase 3: RECOMMEND
─────────────────        ─────────────────         ─────────────────
Identify key terms  →    Compare to standard  →    Prioritize issues
Locate obligations       Flag deviations           Suggest positions
Map timelines            Categorize risk           Escalate as needed
```

### Key Terms Extraction Checklist

For every contract, extract and document:

#### Commercial Terms
| Term | Location | Finding | Standard |
|------|----------|---------|----------|
| Contract value | § | $X total / $Y recurring | — |
| Payment terms | § | Net 30 | Net 30 |
| Term length | § | 12 months | 12-36 months |
| Auto-renewal | § | Yes, 12-month | Prefer month-to-month |
| Price increases | § | CPI + 3% annually | CPI cap only |
| Volume commitments | § | Minimum $X/year | Avoid minimums |

#### Liability & Risk Terms
| Term | Location | Finding | Standard |
|------|----------|---------|----------|
| Liability cap | § | 12 months fees | 12 months fees |
| Indemnification | § | Mutual, limited | Mutual, limited |
| Insurance requirements | § | $2M cyber | Match requirements |
| Warranty | § | 90 days | 12 months preferred |
| IP ownership | § | Vendor owns all | Customer owns data |

#### Operational Terms
| Term | Location | Finding | Standard |
|------|----------|---------|----------|
| SLA commitments | § | 99.9% uptime | 99.9% minimum |
| SLA credits | § | 10% of monthly | 10-25% of monthly |
| Data handling | § | Standard DPA | DPA required |
| Termination for convenience | § | 90 days notice | 30-60 days |
| Termination for cause | § | 30 days to cure | 30 days to cure |
| Data return/deletion | § | 30 days post-term | Within 30 days |

## Risk Assessment Framework

### Risk Categories

#### High Risk (Requires Legal Review)
- Unlimited liability exposure
- Broad indemnification obligations
- IP assignment or work-for-hire language
- Non-compete or exclusivity clauses
- Unusual governing law or venue
- Automatic renewal with no cap
- Uncapped price increases

#### Medium Risk (Requires Business Approval)
- Liability cap below 12 months fees
- Extended cure periods (>30 days)
- Limited termination rights
- Data retention requirements
- Audit rights with short notice
- Most favored customer clauses
- Unusual payment terms

#### Low Risk (Note and Proceed)
- Minor deviations from template
- Administrative/operational variances
- Formatting or structural differences
- Terms more favorable than standard

### Risk Scoring Matrix

| Factor | Score 1 (Low) | Score 3 (Medium) | Score 5 (High) |
|--------|---------------|------------------|----------------|
| **Financial exposure** | Within budget, limited liability | Over budget, standard liability | Unlimited or uncapped |
| **Operational impact** | Minimal workflow change | Process changes required | Core operations affected |
| **Legal complexity** | Standard terms | Some non-standard | Novel or unusual |
| **Reversibility** | Easy exit | Moderate exit barriers | Significant lock-in |
| **Strategic importance** | Tactical | Significant | Strategic/critical |

**Total Score Interpretation:**
- 5-10: Low risk — Business approval sufficient
- 11-17: Medium risk — Legal review recommended
- 18-25: High risk — Legal review required

## Clause-by-Clause Analysis

### Limitation of Liability

**Standard Position:**
> Neither party's liability shall exceed the greater of (a) the fees paid in the 12 months preceding the claim or (b) $[amount]. This limitation does not apply to breaches of confidentiality, indemnification obligations, or willful misconduct.

**Red Flags:**
- ❌ Unlimited liability for either party
- ❌ Liability cap below 6 months fees
- ❌ Carve-outs that effectively eliminate the cap
- ❌ One-sided limitation (only protects vendor)

**Yellow Flags:**
- ⚠️ Liability cap for annual vs. rolling 12-month fees
- ⚠️ Carve-outs for "all damages" vs. specific categories
- ⚠️ Caps that don't scale with deal size

**Negotiation Guidance:**
- Push for mutual caps tied to contract value
- Limit carve-outs to truly catastrophic scenarios
- Ensure cap covers direct damages at minimum

### Indemnification

**Standard Position:**
> Each party will indemnify the other against third-party claims arising from (a) breach of representations and warranties, (b) violation of applicable law, (c) infringement of intellectual property rights. Indemnification is subject to the liability cap above.

**Red Flags:**
- ❌ Unlimited indemnification
- ❌ One-sided indemnification (you indemnify, they don't)
- ❌ Indemnification for "any and all claims"
- ❌ Customer indemnifies for vendor's IP infringement

**Yellow Flags:**
- ⚠️ Broad indemnification categories
- ⚠️ Short notice periods for claims
- ⚠️ No right to control defense

**Negotiation Guidance:**
- Ensure mutual indemnification
- Tie to liability cap
- Require prompt notice and cooperation
- Retain right to participate in defense

### Termination Rights

**Standard Position:**
> Either party may terminate: (a) for convenience with 30 days written notice, (b) for material breach if not cured within 30 days of notice, (c) immediately upon the other party's insolvency.

**Red Flags:**
- ❌ No termination for convenience
- ❌ Automatic renewal without reasonable exit window
- ❌ Termination penalties exceeding remaining contract value
- ❌ Long cure periods (>60 days) with continued payment

**Yellow Flags:**
- ⚠️ Termination for convenience only during renewal window
- ⚠️ Short notice requirements (<30 days)
- ⚠️ "Wind-down" periods with continued fees

**Negotiation Guidance:**
- Insist on termination for convenience
- Ensure cure periods are reasonable
- Clarify what happens to data and fees upon termination

### Data Protection & Privacy

**Standard Position:**
> Vendor shall process personal data only as directed by Customer and in compliance with applicable data protection laws. A Data Processing Agreement is incorporated by reference.

**Red Flags:**
- ❌ Vendor claims ownership of customer data
- ❌ Right to use data for vendor's own purposes
- ❌ No DPA or data protection terms
- ❌ Data stored in non-compliant jurisdictions
- ❌ No breach notification requirements

**Yellow Flags:**
- ⚠️ Vague data deletion timelines
- ⚠️ Limited audit rights
- ⚠️ Subprocessor changes without notice
- ⚠️ Non-standard DPA terms

**Negotiation Guidance:**
- Require compliant DPA as attachment
- Ensure clear data ownership language
- Specify deletion/return timeline
- Include breach notification requirements

### Intellectual Property

**Standard Position:**
> Customer retains all rights in Customer Data and pre-existing materials. Vendor retains all rights in the service and any improvements. Any custom development is owned by [specify] with license to [specify].

**Red Flags:**
- ❌ Vendor claims ownership of customer data
- ❌ Work-for-hire language on customer inputs
- ❌ Broad license grants to vendor
- ❌ Vendor can use customer logo without consent

**Yellow Flags:**
- ⚠️ Unclear ownership of custom development
- ⚠️ Feedback becomes vendor's IP automatically
- ⚠️ Non-exclusive license to customer data

**Negotiation Guidance:**
- Be explicit about data ownership
- Clarify custom development ownership before work begins
- Limit vendor's rights to anonymized/aggregated data

## Comparison Analysis Template

When comparing multiple vendors or agreement versions:

| Term | Vendor A | Vendor B | Vendor C | Our Standard |
|------|----------|----------|----------|--------------|
| **Contract value** | $50K/year | $45K/year | $60K/year | — |
| **Term** | 36 months | 24 months | 12 months | 12-24 months |
| **Auto-renewal** | Yes (annual) | Yes (annual) | No | Month-to-month |
| **Liability cap** | 12 months | 6 months | Unlimited | 12 months |
| **Termination** | 90 days | For cause only | 30 days | 30 days |
| **Data rights** | Clear | Vague | Clear | Clear ownership |
| **SLA** | 99.9% | 99.5% | 99.99% | 99.9%+ |
| **Risk Score** | 8 (Low) | 15 (Medium) | 6 (Low) | — |

## Contract Review Workflow

### Intake Checklist

Before starting review:
- [ ] Identify contract type (vendor, customer, partner, etc.)
- [ ] Confirm business owner and urgency
- [ ] Gather context (why this vendor, what alternatives)
- [ ] Obtain our standard template for comparison
- [ ] Check if vendor is approved/known

### Review Output Format

**Executive Summary:**
> This is a [contract type] with [counterparty] for [purpose]. Overall risk assessment: [Low/Medium/High]. Key concerns: [1-3 bullet summary]. Recommendation: [Proceed as-is / Negotiate changes / Escalate to legal].

**Key Terms Summary Table:**
[Insert extracted terms table]

**Risk Assessment:**
- Overall Score: [X/25]
- High Priority Issues: [List]
- Medium Priority Issues: [List]
- Accepted Deviations: [List]

**Recommended Actions:**
1. [Specific change needed, with suggested language]
2. [Specific change needed, with suggested language]
3. [Item to escalate to legal with rationale]

**Approval Routing:**
- [ ] Business Owner: [Name] — by [date]
- [ ] Legal Review: [Required/Not required]
- [ ] Finance Approval: [Required/Not required]

## Resources

### references/
- **standard-clauses.md** — Library of acceptable clause language by category
- **risk-matrix.md** — Detailed risk assessment criteria
- **negotiation-playbook.md** — Fallback positions for common terms
- **regulatory-requirements.md** — Compliance requirements by jurisdiction

### scripts/
- **term-extractor.py** — Extracts key terms from contract text
- **comparison-generator.py** — Generates comparison tables

### assets/
- **review-template.docx** — Contract review output template
- **tracking-spreadsheet.xlsx** — Contract tracking and status
- **clause-library.xlsx** — Standard clause database