legal-contract-basics

Contract Review Basics (first-pass business review, not legal advice)

This is not legal advice. The output of this skill is a flag list for counsel review, never a legal opinion or a sign-off. Anything marked HIGH must go to a qualified lawyer before signature; never state that a contract is "safe to sign."

Method — read in this order

1. Parties and defined terms. Confirm the legal entity names match who you think you're contracting with (parent vs subsidiary matters for enforcement). Skim the Definitions section first — a benign clause can hide behind a hostile definition ("Confidential Information", "Services", "Deliverables").
2. Commercials. Price, payment terms (net-30/60/90), late fees, price-increase mechanics, minimum commitments, true-up clauses.
3. Term and exit. Initial term, renewal mechanics, termination for convenience vs for cause, cure periods, what survives termination, data return/deletion on exit.
4. Risk allocation. Liability cap, carve-outs from the cap, indemnification (who indemnifies whom, for what), warranties and disclaimers, insurance requirements.
5. Ownership and confidentiality. IP in deliverables (assignment vs license), background IP, feedback clauses, confidentiality scope and duration, residuals clauses.
6. Boilerplate that isn't. Governing law and venue, dispute resolution (arbitration?), assignment on change of control, force majeure, entire-agreement, amendment mechanics.

Clause checklist — what "market" roughly looks like

Liability cap        : commonly 12 months of fees paid; uncapped = HIGH flag
Cap carve-outs       : typical — confidentiality breach, IP infringement, gross negligence;
                       carve-outs that swallow the cap (e.g. "any breach") = HIGH flag
Indemnification      : mutual for third-party IP/bodily-injury claims; one-way broad
                       indemnity from you = HIGH flag
Term / auto-renewal  : auto-renew with 30–60 day non-renewal notice window; note the
                       calendar deadline explicitly in the summary
Termination          : for-convenience with 30–90 days notice is buyer-friendly;
                       no exit before end of term = MEDIUM flag
IP ownership         : work-for-hire/assignment for paid custom work; vendor keeping
                       ownership of paid deliverables = HIGH flag
Confidentiality      : mutual, 2–5 year term (trade secrets often perpetual); one-way
                       NDA where both sides disclose = MEDIUM flag
Payment              : net-30 typical; prepayment of >3 months or non-refundable fees = MEDIUM
Warranties           : conformance to spec + non-infringement; "AS IS" in a paid B2B
                       deal = MEDIUM flag
Governing law/venue  : neutral or your jurisdiction preferred; foreign law + mandatory
                       foreign venue + arbitration = flag for counsel, always