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Contract risk spotter

Scans contract text for high-risk clauses across privacy, IP, AI/data, liability, and commercial terms, flags each as Standard / Non-Standard / Missing with severity ratings, and provides negotiated fallback language…

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Purpose

Rapidly triage a contract for the clauses that actually create legal and business exposure for a technology company — privacy, IP ownership, AI/data use, liability, and key commercial terms — and return a prioritized risk register with severity ratings and specific fallback language you can drop into a redline. Turns a two-hour manual read into a structured first pass an in-house lawyer can act on immediately.

When to Use

Invoke this skill when the user asks to:

  • Review an inbound vendor, customer, SaaS, or reseller agreement for risk
  • Check a DPA, data processing addendum, or privacy terms against a company baseline
  • Flag non-standard or one-sided clauses before starting a redline
  • Assess AI/ML, data training, or model output clauses in a technology contract
  • Identify uncapped liability, indemnity, or IP assignment exposure
  • Prepare a risk summary to escalate to a business owner or GC

Inputs Required

Before starting, collect:

  • Contract text: The full agreement or the clauses to be reviewed (paste or attach)
  • Contract type: Vendor/procurement, customer/sales, DPA, NDA, SaaS, reseller, etc.
  • Which side we're on: Are we the customer, the vendor, the data controller, or the processor?
  • Company risk posture: Conservative / balanced / deal-hungry (affects how aggressively to flag)
  • Non-negotiables: Any known dealbreakers (e.g., "we never accept uncapped liability," "no training on our data")
  • Governing standard: Applicable framework(s) — GDPR, CCPA/CPRA, HIPAA, SOC 2, EU AI Act, or "none specified"
  • Deal size / strategic weight: Rough contract value or importance (affects fallback aggressiveness)

If risk posture or governing standard is missing, assume a balanced posture and flag both GDPR and CCPA/CPRA obligations, noting the assumption.

Instructions

Step 1: Classify the Agreement and Set the Baseline

Identify the contract type, which party the user represents, and the corresponding "standard" market position for that role. A liability cap of 12 months' fees is standard for a customer buying SaaS but aggressive for a vendor selling it — calibrate every flag to the user's side of the table.

Step 2: Scan Across Five Risk Domains

For each domain, locate the relevant clauses (or confirm their absence) and evaluate against market-standard positions.

Domain 1 — Privacy & Data Protection

  • Data processing roles (controller vs. processor) correctly assigned
  • Sub-processor rights, notice, and objection mechanism
  • Cross-border transfer mechanism (SCCs, DPF adequacy) present and current
  • Breach notification window (flag anything above 72 hours or "reasonable time")
  • Data return/deletion obligations on termination
  • Missing DPA where personal data is clearly processed → severity High

Domain 2 — Intellectual Property

  • Ownership of pre-existing IP, work product, and derivatives
  • Broad or perpetual license grants to the counterparty (flag "irrevocable," "perpetual," "sublicensable" combinations)
  • Feedback/suggestions clauses assigning improvements to the counterparty
  • IP indemnity scope, carve-outs, and whether it survives termination
  • Missing IP indemnity where the vendor provides software → severity High

Domain 3 — AI, ML & Data Use

  • Rights to use customer data or inputs to train models (flag any training right absent explicit opt-out)
  • Ownership and IP status of AI-generated outputs
  • Warranties or disclaimers on output accuracy, bias, or hallucination
  • Restrictions on submitting confidential or personal data to AI features
  • EU AI Act / emerging-regulation allocation of compliance responsibility
  • Silent-training clauses or ambiguous "improve our services" language → severity High

Domain 4 — Liability & Indemnity

  • Liability cap amount and structure (aggregate vs. per-claim; multiple of fees)
  • Uncapped or super-capped carve-outs (confidentiality, IP, data breach, gross negligence)
  • Mutuality of caps and carve-outs
  • Consequential/indirect damages exclusion and its exceptions
  • One-sided indemnity, absence of a cap on indemnity → severity High
  • Uncapped liability with no carve-out justification → severity Critical

Domain 5 — Key Commercial & Exit Terms

  • Auto-renewal and notice-to-cancel windows (flag >30 days notice or auto-renew without notice)
  • Termination for convenience rights and asymmetry
  • Price increase / uplift caps
  • Assignment, change-of-control, and most-favored-nation clauses
  • Governing law / venue that is unfavorable or foreign

Step 3: Assign a Status and Severity to Each Flag

For every clause reviewed, assign:

  • Status: Standard / Non-Standard / Missing / Absent-but-Not-Required
  • Severity: Critical (dealbreaker/uncapped exposure) / High (material, negotiate hard) / Medium (negotiate if leverage exists) / Low (note, accept if needed)
  • Our exposure: One sentence stating the concrete business or legal risk in plain language

Step 4: Provide Fallback Positions

For each Critical, High, and Medium flag, supply a negotiation ladder:

  • Ideal ask: The redline you'd prefer, with sample clause language
  • Acceptable fallback: The compromise most counterparties will accept
  • Walk-away line: The point past which the term should be escalated or rejected

Fallback language must be drop-in ready — specific numbers, real clause phrasing, not "negotiate a reasonable cap."

Step 5: Build the Escalation Summary

Produce a 3-5 bullet executive summary for a business owner or GC: the top risks, the recommended overall posture (sign / redline / escalate), and any non-negotiables triggered.

Output Format

  • Structure: Executive summary → risk register table → fallback ladders for Critical/High/Medium flags → overall recommendation
  • Length: 900–1,400 words depending on contract complexity
  • Format: Risk register as a table (Clause | Status | Severity | Exposure); fallback ladders as structured bullets per flag
  • Sections: Executive Summary → Risk Register (grouped by the 5 domains) → Fallback Positions → Overall Recommendation
  • Tone: In-house counsel to a colleague — precise, plain-English, decisive; names the risk without hedging and states a recommended action

Quality Checklist

Before delivering output, verify:

  • [ ] All five risk domains are addressed, including any where the finding is "no material risk"
  • [ ] Every flag has a Status AND a Severity rating — none left unrated
  • [ ] Missing-clause risks are flagged, not just problems in existing clauses
  • [ ] Every Critical and High flag has drop-in fallback language with specific terms — no "negotiate a reasonable X"
  • [ ] Severity is calibrated to the user's side of the table (customer vs. vendor)
  • [ ] Executive summary states a clear sign / redline / escalate recommendation

Notes

  • This is a first-pass triage, not a legal opinion — flag that final positions should reflect jurisdiction-specific advice and the actual deal context.
  • The highest-value finds in tech contracts are usually silent AI training rights and uncapped indemnities buried in carve-outs — scan those first.
  • When the contract text is partial, review what's provided and explicitly list which standard clauses could not be assessed because they weren't included.
  • If a non-negotiable from the intake is triggered, surface it at the very top of the executive summary regardless of severity ranking elsewhere.

How to use this skill

This file is a Claude Code skill in Anthropic's standard format — markdown with YAML frontmatter at the top.

Installing in Claude Code:

  • ~/.claude/skills/<folder-name>/SKILL.md — auto-loads in every session anywhere on your machine (recommended for skills you'll use across multiple projects)
  • <your-project>/.claude/skills/<folder-name>/SKILL.md — auto-loads only when working in that project (recommended for project-specific skills)

Restart Claude Code or open a new session to register.

Using in Claude.ai, ChatGPT, Gemini, or other AI tools:

  1. Drag this file into a new chat, or copy and paste its contents
  2. Send your task or request as your next message — the AI will apply the skill where it fits

For Claude Code skill details: https://docs.anthropic.com/en/docs/claude-code/skills