legalcode-contract-review

Legalcode Contract Review

Legalcode MCP Access

Use Legalcode MCP for source lookup while keeping documents and matter context in the user's agent environment.

• Public MCP: https://mcp.legalcode.md for anonymous laws and case law.
• Pro MCP: https://mcppro.legalcode.md for stronger search, up to 20 results per query, guidance, agreements, downloads, and authenticated higher-throughput access.
• Send only legal source lookup queries to Legalcode; keep client documents local to the agent.

Disclaimer: This skill provides a framework for AI-assisted contract review. It does not constitute legal advice. All outputs should be reviewed by a qualified legal professional licensed in the relevant jurisdiction before use. Laws change; verify current applicability before relying on any provision described here. Statutory and case law references cited from memory carry hallucination risk — verify against authoritative sources before relying on them.

Purpose and Scope

This skill reviews existing contracts against an organization's negotiation playbook or general commercial standards. It identifies deviations, classifies their severity, generates actionable redline suggestions, and produces a confidence-scored, auditable analysis.

Covers:

• Clause-by-clause analysis of any commercial agreement
• Deviation classification (GREEN / YELLOW / RED)
• Redline generation with fallback positions
• Missing clause detection
• Business impact assessment and negotiation strategy
• Quality-verified output with Glass Box audit trail

Does not:

• Draft new contracts (see drafting-specific skills)
• Provide legal advice or replace qualified counsel
• Apply to one jurisdiction exclusively — jurisdiction-agnostic with [JURISDICTION-SPECIFIC] markers

Jurisdiction and Governing Law

This is a jurisdiction-agnostic skill. The contract's own governing law clause determines which legal framework applies. The review identifies the governing law early and adapts the analysis accordingly.

[JURISDICTION-SPECIFIC] When localizing, research and apply:

• Mandatory consumer protection rules (if any consumer party is involved)
• Statutory limits on exclusion or limitation of liability
• IP ownership defaults (work-for-hire, employee works, assignment formalities)
• Data protection regime (GDPR, UK GDPR, CCPA, LGPD, PIPA, etc.)
• Penalty clause enforceability rules
• Dispute resolution norms (jury availability, class actions, arbitration culture)
• Contract formation requirements (writing, notarization, witnesses)
• Anti-bribery, sanctions, and export control regimes

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Interactive Clarification

This skill uses interactive clarification at key decision points. Rather than assuming the user's intent, the workflow pauses and asks when:

• The answer would change the direction of the analysis
• Multiple valid approaches exist and the user's preference matters
• Ambiguity in the contract creates a fork that only the user can resolve
• Risk tolerance or business context is needed to classify severity correctly

Use the ask-user-question pattern (structured options with descriptions) wherever marked with ⟁ CLARIFY below. If the user has already provided the information (e.g., in the initial prompt or prior conversation), skip the question and proceed.

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Workflow

Step 1: Accept the Contract

Accept the contract in any of these formats:

• File: PDF, DOCX, or other document format
• URL: Link to a contract in a CLM, cloud storage, or document system
• Pasted text: Contract text pasted directly into the conversation

If no contract is provided, prompt the user to supply one.

Step 2: Gather Context

⟁ CLARIFY — Before beginning the review, ask the user these questions. Present them as a structured set of options where possible:

1. Which side are you on?

   • Options: Vendor/Supplier, Customer/Buyer, Licensor, Licensee, Partner, Other
   • Why this matters: The entire analysis flips depending on which side you represent. What protects a vendor harms a customer and vice versa.

2. Deadline: When does this need to be finalized?

   • Options: Urgent (days), Standard (1-2 weeks), Flexible (no hard deadline)
   • Why this matters: Affects how many issues to surface vs. focus only on critical ones.

3. Focus areas: Any specific concerns?

   • Options: Data protection, IP ownership, Liability exposure, Termination flexibility, Payment terms, No specific focus — full review
   • Allow multiple selections.
   • Why this matters: Lets the analysis lead with what the user cares about most.

4. Deal context: Relevant business context?

   • Free text. Prompt with examples: deal size, strategic importance, existing relationship, whether this is a template or one-off negotiation.
   • Why this matters: A $10K vendor contract gets different treatment than a $10M strategic partnership.

If the user provides partial context, proceed with what you have but state your assumptions explicitly (e.g., "I'm assuming you are on the customer side — let me know if that's wrong and I'll re-run the analysis"). Do not silently assume.

Step 3: Load the Playbook

Check for the organization's contract review playbook in local settings (e.g., legal.local.md or similar configuration files).

The playbook should define:

• Standard positions: Preferred terms for each major clause type
• Acceptable ranges: Terms that can be agreed without escalation
• Escalation triggers: Terms that require senior counsel or decision-maker sign-off

If no playbook is configured:

⟁ CLARIFY — Inform the user that no playbook was found, and ask which approach to take:

• Option A: Set up a playbook now — Walk through defining the organization's standard positions for key clauses (limitation of liability cap, indemnification approach, IP ownership default, data protection requirements, termination preferences). This takes time upfront but makes this and all future reviews more precise.
• Option B: Proceed with general commercial standards — Use widely-accepted market standards as the baseline. Faster, but the review may not reflect the organization's specific risk appetite or negotiation history.
• Option C: I'll provide positions as we go — Start the review and I'll ask about your preferred position when it matters for each clause.

If proceeding without a playbook, clearly label the review: "Based on general commercial standards — not organizational positions"

Step 4: Gather Jurisdiction-Relevant Legal Authority

Read the contract's governing law clause and identify the applicable jurisdiction. Then use legalcode-mcp to build a working legal reference file for this review.

legalcode-mcp is the Legalcode law, regulatory, and case law database with powerful search. Use it to gather the legal authority you need before analyzing clauses.

Research process:

1. Identify the governing law from the contract (e.g., "laws of the State of Delaware," "English law," "Polish law under the Kodeks cywilny").

   ⟁ CLARIFY — If any of the following are true, ask the user before proceeding:

   • No governing law clause found: Ask which jurisdiction the user expects to apply, and flag the absence as a RED deviation.
   • Multiple governing law clauses (e.g., different schedules reference different laws): Ask which governs the main body and note the conflict.
   • Governing law is unusual or unexpected for the deal type (e.g., a US-to-US SaaS contract governed by the laws of the Cayman Islands): Confirm the user is aware and ask whether to analyze under the stated law or flag as an issue.

2. Search legalcode-mcp for jurisdiction-relevant authority across these categories:

   • Statutes governing exclusion and limitation of liability clauses
   • IP ownership defaults and assignment formality requirements
   • The applicable data protection regime and transfer mechanisms
   • Penalty / liquidated damages enforceability rules
   • Anti-bribery and sanctions regime
   • Mandatory contract terms that cannot be excluded by agreement
   • Leading case law on contract interpretation, limitation clauses, indemnification, and penalty enforceability in this jurisdiction

3. Save the most relevant results into a local temporary reference file (e.g., /tmp/legalcode-review-authority.md). Structure it as:

   # Legal Authority Reference — [Contract Name]
   ## Governing Law: [Jurisdiction]
   ## Date Gathered: [date]
   
   ### Statutes & Regulations
   - [Statute name, section, current text or summary]
   - [...]
   
   ### Case Law
   - [Case name, citation, key holding relevant to this contract]
   - [...]
   
   ### Regulatory Guidance
   - [Regulator, guidance title, relevance]
   - [...]
   

4. Use this reference file throughout the analysis. When citing a statute or case in your clause analysis, pull from the verified reference file rather than from memory. Mark any citation sourced from legalcode-mcp as VERIFIED in the Glass Box audit trail.

If legalcode-mcp is not connected:

• Mark every statutory and case law reference with [VERIFY]
• Note in the Glass Box audit trail: external_tools_used: "None — manual verification required"
• Proceed with the analysis using general commercial knowledge, but flag that legal authority has not been independently verified

[JURISDICTION-SPECIFIC] For each jurisdiction, the research should cover at minimum:

• Statute governing exclusion/limitation clauses
• IP ownership and assignment formalities
• Data protection regime and transfer mechanisms
• Penalty/liquidated damages enforceability rules
• Anti-bribery and sanctions regime
• Mandatory contract terms that cannot be excluded by agreement

Step 5: Clause-by-Clause Analysis

Analyze the contract systematically. Read the entire contract before flagging issues — clauses interact with each other (e.g., an uncapped indemnity may be partially mitigated by a broad limitation of liability).

⟁ CLARIFY — For long or complex contracts (50+ pages, or with multiple schedules, exhibits, or incorporated documents):

• Ask the user whether to perform a full review of all 14 clause categories, or a priority review focused on the user's stated focus areas (from Step 2) plus any RED items discovered.
• If the contract incorporates external documents by reference (e.g., "subject to Vendor's Standard Terms at [URL]"), ask whether the user wants those incorporated documents reviewed as well, or only the main agreement.

Cover all 14 clause categories below (unless the user opted for a priority review). For each, assess against the playbook (or general standards) and note whether the clause is present, absent, or unusual.

#	Clause Category	Depth	Key Review Points
1	Limitation of Liability	Deep	Cap amount, carveouts, mutual vs. unilateral, consequential damages
2	Indemnification	Deep	Scope, mutual vs. unilateral, cap, IP infringement, data breach, procedure
3	Intellectual Property	Deep	Pre-existing IP, developed IP, assignment, license grants, moral rights
4	Data Protection	Deep	DPA requirement, processing terms, sub-processors, breach notification, transfers
5	Term & Termination	Deep	Duration, renewal, convenience termination, cause termination, wind-down
6	Governing Law & Disputes	Deep	Jurisdiction, venue, arbitration vs. litigation, escalation
7	Confidentiality	Standard	Scope, term, carveouts, return/destruction obligations
8	Representations & Warranties	Standard	Scope, disclaimers, survival period, remedies for breach
9	Insurance	Standard	Coverage requirements, minimums, evidence of coverage
10	Assignment	Standard	Consent requirements, change of control, exceptions
11	Force Majeure	Standard	Scope of events, notification, mitigation, termination rights
12	Payment Terms	Standard	Net terms, late fees, taxes, price escalation, disputed invoices
13	Compliance & Regulatory	Standard	Anti-bribery, sanctions, export control, modern slavery, regulatory approvals
14	Definitions & Boilerplate	Standard	Entire agreement, severability, waiver, notices, counterparts, amendments

Step 6: Missing Clause Detection

After analyzing the clauses that are present, check for important clauses that are entirely absent from the contract. A missing clause can be as significant as a problematic one.

For each of the 14 clause categories:

• If the clause category is entirely absent, flag it
• Assess whether the absence is acceptable (e.g., no force majeure in a short-term contract may be fine) or a material gap (e.g., no limitation of liability is always a RED flag)
• Classify the absence as GREEN (not needed for this contract type), YELLOW (should be added), or RED (must be added)

Common missing clause issues:

• No DPA when personal data is processed (RED)
• No limitation of liability clause (RED)
• No termination for convenience in a long-term contract (YELLOW)
• No force majeure in a multi-year engagement (YELLOW)
• No anti-bribery provisions in a cross-border contract (YELLOW)
• No change-of-control assignment restriction (YELLOW)

⟁ CLARIFY — When the severity of a missing clause depends on business context that hasn't been provided, ask rather than guess:

• "This contract has no data processing addendum. Will personal data be processed under this agreement? If yes, this is a RED gap. If no personal data is involved, it's fine."
• "There's no force majeure clause. Given the term length and nature of the engagement, is this a concern for your organization?"
• "No insurance requirements are specified. Does your organization require vendors to carry specific coverage for this type of engagement?"

Step 7: Flag Deviations

Classify each deviation from the playbook using the three-tier system defined in the Deviation Severity Classification section below. For each deviation:

• GREEN: Note for awareness.
• YELLOW: Generate specific redline language, provide a fallback position, and estimate business impact of accepting vs. negotiating.
• RED: Explain the specific risk (citing the legal basis where possible), provide market-standard alternative language, estimate exposure, and recommend an escalation path.

⟁ CLARIFY — For borderline classifications where reasonable minds could differ, ask the user rather than assuming:

• YELLOW vs. RED borderline: When a clause is aggressive but might be acceptable depending on the organization's risk appetite, present both interpretations and ask: "This liability cap at 3 months' fees is below market standard. Should I treat this as YELLOW (negotiate) or RED (escalate)? It depends on your organization's risk tolerance for this deal."
• GREEN vs. YELLOW borderline: When a clause is slightly off-standard but might be acceptable given the deal context: "The confidentiality term is 1 year — shorter than the usual 2-3 years. Is this a concern for this deal, or acceptable given the relationship?"
• Risk tolerance check: If the contract has several borderline items trending in the same direction (all slightly favoring the counterparty), ask whether the user wants a conservative classification (flag more) or pragmatic (flag only material items).

Step 8: Generate Redlines

⟁ CLARIFY — Before generating redlines, ask the user about negotiation posture if not already clear from context:

• Relationship dynamic: Is this a new counterparty, an existing partner, or a must-have vendor with leverage? This affects tone — redlines for a strategic partner should be collaborative; redlines for a commodity vendor can be firmer.
• Volume of redlines: If there are many YELLOW items, ask: "I've found [N] items worth negotiating. Do you want redlines for all of them, or should I focus on the top [X] most impactful ones?" Too many redlines can overwhelm a negotiation.

For each YELLOW and RED deviation, generate a redline using the format in Redline Format below. Follow the Redline Best Practices to ensure redlines are specific, balanced, and professionally rationed.

Step 9: Business Impact Summary

Provide a summary section covering:

• Overall risk assessment: High-level view of the contract's risk profile
• Top 3 issues: The most important items to address, with severity and priority
• Negotiation strategy: Recommended approach — which issues to lead with, what to concede, how to sequence
• Timeline considerations: Any urgency factors affecting the negotiation approach

⟁ CLARIFY — If the deal context is unclear and it would materially affect the negotiation strategy, ask:

• Walk-away option: "Can you walk away from this deal, or is this vendor/partner essential?" This determines whether the strategy is assertive or accommodating.
• Internal approval chain: "Who needs to sign off on the final terms? Legal only, or also business/procurement/executive?" This determines how to frame the escalation recommendations.
• Prior negotiation history: "Have you negotiated with this counterparty before? Did they move on similar issues?" Past behavior predicts which redlines will land.

Step 10: Quality Verification

Before delivering the analysis, run the quality checks defined in the Quality Assurance Framework section:

1. Run the 5 Citation Quality Gates silently. Revise any failures before delivery.
2. For every RED-classified item, run the 3-pass Self-Interrogation. Revise if any pass reveals a weakness.
3. Assign a Confidence Score to each material clause analysis.
4. Verify completeness: confirm all 14 clause categories have been addressed (present or flagged as missing).
5. Generate the Glass Box Audit Trail and append it to the output.

Step 11: CLM Routing

If a Contract Lifecycle Management system is connected via MCP:

• Recommend the appropriate approval workflow based on contract type and risk level
• Suggest the correct routing path (standard approval, senior counsel, outside counsel)
• Note any required approvals based on contract value or risk flags

If no CLM is connected, skip this step.

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Clause Analysis Reference

1. Limitation of Liability

Key elements to review:

• Cap amount (fixed amount, multiple of fees, or uncapped)
• Whether the cap is mutual or applies differently to each party
• Carveouts from the cap (what liabilities are uncapped)
• Whether consequential, indirect, special, or punitive damages are excluded
• Whether the exclusion is mutual
• Carveouts from the consequential damages exclusion
• Whether the cap applies per-claim, per-year, or aggregate

Common issues:

• Cap set at a fraction of fees paid (e.g., "fees paid in the prior 3 months" on a low-value contract)
• Asymmetric carveouts favoring the drafter
• Broad carveouts that effectively eliminate the cap (e.g., "any breach of Section X" where Section X covers most obligations)
• No consequential damages exclusion for one party's breaches

[JURISDICTION-SPECIFIC] Key variations:

• Common law jurisdictions: Check whether statutory reasonableness tests apply to exclusion clauses (e.g., UCTA in England, unconscionability in the US) [VERIFY]
• Civil law jurisdictions: Check whether liability for intentional fault (dolus/Vorsatz/wina umyslna) can be excluded — many civil codes prohibit this [VERIFY]
• Consumer contracts: Additional mandatory protections typically apply [VERIFY]

2. Indemnification

Key elements to review:

• Whether indemnification is mutual or unilateral
• Scope: what triggers the obligation (IP infringement, data breach, bodily injury, breach of representations)
• Whether indemnification is capped (subject to the overall liability cap, or uncapped)
• Procedure: notice requirements, right to control defense, right to settle
• Whether the indemnitee must mitigate
• Relationship between indemnification and the limitation of liability clause

Common issues:

• Unilateral indemnification for IP infringement when both parties contribute IP
• Indemnification for "any breach" (too broad — effectively uncaps liability)
• No right to control defense of claims
• Indemnification obligations that survive termination indefinitely

[JURISDICTION-SPECIFIC] Key variations:

• Common law: Indemnity is a primary obligation distinct from damages for breach. Different remoteness rules and limitation periods may apply [VERIFY]
• Civil law: Indemnification (indemnity) is not a native concept in many civil law systems. It is used under freedom of contract but may be interpreted differently. Distinguish from suretyship/guarantee [VERIFY]

3. Intellectual Property

Key elements to review:

• Ownership of pre-existing IP (each party should retain their own)
• Ownership of IP developed during the engagement
• Work-for-hire or assignment provisions and their scope
• License grants: scope, exclusivity, territory, sublicensing rights
• Open source considerations
• Feedback clauses (grants on suggestions or improvements)
• Moral rights waivers (where applicable)

Common issues:

• Broad IP assignment that could capture the customer's pre-existing IP
• Work-for-hire provisions extending beyond the deliverables
• Unrestricted feedback clauses granting perpetual, irrevocable licenses
• License scope broader than needed for the business relationship

[JURISDICTION-SPECIFIC] Key variations:

• US: Work-for-hire doctrine applies to certain categories of works. Copyright assignment does not require specific formalities beyond a signed writing [VERIFY]
• England & Wales: No work-for-hire doctrine. Copyright assignment must be in writing (CDPA s.90(3)). Moral rights can be waived but not assigned [VERIFY]
• Civil law (EU): Many jurisdictions require specifying fields of exploitation for copyright transfers. Moral rights are often inalienable [VERIFY]

4. Data Protection

Key elements to review:

• Whether a Data Processing Agreement/Addendum (DPA) is required
• Data controller vs. data processor classification
• Sub-processor rights and notification obligations
• Data breach notification timeline
• Cross-border data transfer mechanisms
• Data deletion or return obligations on termination
• Data security requirements and audit rights
• Purpose limitation for data processing

Common issues:

• No DPA when personal data is being processed
• Blanket authorization for sub-processors without notification
• Breach notification timeline longer than regulatory requirements
• No cross-border transfer protections when data moves internationally
• Inadequate data deletion provisions

[JURISDICTION-SPECIFIC] Key variations:

• EU (GDPR): 72-hour breach notification to supervisory authority. SCCs or adequacy decisions for transfers. Art. 28 processor requirements [VERIFY]
• UK: UK GDPR + DPA 2018. UK IDTA or UK Addendum to EU SCCs for transfers. ICO is the supervisory authority [VERIFY]
• US: Patchwork of state laws (CCPA/CPRA, state breach notification). No single federal data protection law [VERIFY]
• Brazil (LGPD): ANPD is the authority. Transfer mechanisms differ from GDPR [VERIFY]

5. Term and Termination

Key elements to review:

• Initial term and renewal terms
• Auto-renewal provisions and notice periods
• Termination for convenience: available? notice period? early termination fees?
• Termination for cause: cure period? what constitutes cause?
• Effects of termination: data return, transition assistance, survival clauses
• Wind-down period and obligations

Common issues:

• Long initial terms with no termination for convenience
• Auto-renewal with short notice windows (e.g., 30-day notice for annual renewal)
• No cure period for termination for cause
• Inadequate transition assistance provisions
• Survival clauses that effectively extend the agreement indefinitely

[JURISDICTION-SPECIFIC] Key variations:

• Common law: Termination for breach generally requires a "material" or "repudiatory" breach. Contractual termination clauses supplement common law rights [VERIFY]
• Civil law: Termination rights may be governed by specific code provisions. Open-ended obligations often have a statutory right to terminate on notice [VERIFY]
• Early termination fees: Check whether the jurisdiction's penalty/liquidated damages doctrine constrains these (e.g., UK penalty doctrine, civil law miarkowanie) [VERIFY]

6. Governing Law and Dispute Resolution

Key elements to review:

• Choice of law (governing jurisdiction)
• Dispute resolution mechanism (litigation, arbitration, mediation, expert determination)
• Venue and jurisdiction for litigation
• Arbitration institution, rules, and seat (if arbitration)
• Escalation provisions (negotiation, mediation before formal proceedings)
• Costs and fees provisions

Common issues:

• Unfavorable jurisdiction (unusual or remote venue)
• Mandatory arbitration with rules favorable to the drafter
• No escalation process before formal dispute resolution
• Unclear or "pathological" arbitration clauses

[JURISDICTION-SPECIFIC] Key variations:

• US: Jury waiver, class action waiver, and prevailing party attorney's fees are common and meaningful provisions [VERIFY]
• England & Wales: No jury trials or class actions in commercial disputes. "Loser pays" is the default. Exclusive vs. non-exclusive jurisdiction matters [VERIFY]
• Civil law: Many jurisdictions do not have jury trials or US-style class actions. Concepts like "jury waiver" may be meaningless [VERIFY]
• International: New York Convention governs enforcement of foreign arbitral awards [VERIFY]

7–14. Standard Clause Checklist

For the following clause categories, review presence, reasonableness, and alignment with the playbook. Flag deviations using the same GREEN/YELLOW/RED system.

7. Confidentiality

• Scope of confidential information defined and reasonable
• Term of confidentiality obligations appropriate (typically 2-5 years, or indefinite for trade secrets)
• Standard carveouts present (public domain, independent development, required by law)
• Return or destruction obligations on termination
• Permitted disclosures (affiliates, advisors, under NDA)

8. Representations and Warranties

• Scope appropriate for the contract type
• Disclaimers reasonable (e.g., "AS IS" for software)
• Survival period defined
• Remedies for breach specified (or deferred to indemnification)
• Warranty of authority and enforceability included

9. Insurance

• Coverage types and minimums specified
• Evidence of coverage (certificates) required
• Additional insured status requested where appropriate
• Coverage period extends through the engagement and a tail period

10. Assignment

• Consent required for assignment (or "not to be unreasonably withheld")
• Change of control provisions addressed
• Exceptions for affiliates or corporate restructuring
• Anti-assignment clause is mutual

11. Force Majeure

• Events are specifically enumerated (not just "acts of God")
• Notification and mitigation obligations specified
• Duration threshold for triggering termination rights
• Pandemic/epidemic explicitly addressed or excluded

12. Payment Terms

• Net payment terms specified (Net 30, Net 60, etc.)
• Late payment interest and consequences defined
• Tax responsibilities clearly allocated
• Price escalation or adjustment mechanisms (for multi-year contracts)
• Invoice dispute process defined
• Currency and payment method specified

13. Compliance and Regulatory

• Anti-bribery and anti-corruption representations and obligations
• Sanctions and export control compliance
• Modern slavery / human trafficking statement (where required by law)
• Regulatory approval requirements identified
• Audit rights for compliance verification
• Consequences of compliance breach (typically a termination trigger)

14. Definitions and Boilerplate

• Key terms defined consistently and used throughout
• Entire agreement / integration clause present
• Severability clause present
• Waiver clause (no implied waiver from failure to enforce)
• Notice provisions (method, addresses, deemed receipt)
• Amendment provisions (written amendments only)
• Counterparts clause (if applicable)
• No third-party beneficiary clause (or appropriate third-party rights)
• Order of precedence (if multiple documents form the agreement)

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Deviation Severity Classification

GREEN — Acceptable

The clause aligns with or is better than the organization's standard position. Minor variations that are commercially reasonable and do not materially increase risk.

Examples:

• Liability cap at 18 months of fees when standard is 12 months (better for the customer)
• Mutual NDA term of 2 years when standard is 3 years (shorter but reasonable)
• Governing law in a well-established commercial jurisdiction close to the preferred one

Action: Note for awareness. No negotiation needed.

YELLOW — Negotiate

The clause falls outside the standard position but within a negotiable range. The term is common in the market but not the organization's preference. Requires attention and likely negotiation, but not escalation.

Examples:

• Liability cap at 6 months of fees when standard is 12 months
• Unilateral indemnification for IP infringement when standard is mutual
• Auto-renewal with 60-day notice when standard is 90 days
• Governing law in an acceptable but not preferred jurisdiction

Action: Generate specific redline language. Provide fallback position. Estimate business impact of accepting vs. negotiating.

RED — Escalate

The clause falls outside the acceptable range, triggers a defined escalation criterion, or poses material risk. Requires senior counsel review, outside counsel involvement, or business decision-maker sign-off.

Examples:

• Uncapped liability or no limitation of liability clause
• Unilateral broad indemnification with no cap
• IP assignment of pre-existing IP
• No DPA offered when personal data is processed
• Unreasonable non-compete or exclusivity provisions
• Clauses that are likely void or unenforceable under the governing law
• Governing law in a problematic jurisdiction with mandatory arbitration
• No anti-bribery provisions in a contract with corruption-risk jurisdictions

Action: Explain the specific risk (with legal basis where possible). Provide market-standard alternative language. Estimate exposure. Recommend escalation path.

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Redline Format

For each redline:

**Clause**: [Section reference and clause name]
**Current language**: "[exact quote from the contract]"
**Proposed redline**: "[specific alternative language]"
**Rationale**: [1-2 sentences explaining why, suitable for external sharing]
**Legal basis**: [Relevant statute, regulation, or principle — or "General commercial practice"]
**Priority**: [Must-have / Should-have / Nice-to-have]
**Fallback**: [Alternative position if primary redline is rejected]

Redline Best Practices

1. Be specific: Provide exact language, not vague guidance. The redline should be ready to insert.
2. Be balanced: Propose language that is firm on critical points but commercially reasonable. Overly aggressive redlines slow negotiations.
3. Explain the rationale: Include a brief, professional rationale suitable for sharing with the counterparty's counsel.
4. Provide fallback positions: For YELLOW items, include a fallback if the primary ask is rejected.
5. Prioritize: Not all redlines are equal. Indicate which are must-haves and which are nice-to-haves.
6. Consider the relationship: Adjust tone based on whether this is a new vendor, strategic partner, or commodity supplier.
7. Reference applicable law: Where the redline addresses a legal risk, cite the relevant statute or principle. If citing from memory, mark with [VERIFY].

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Negotiation Priority Framework

When presenting redlines, organize by negotiation priority:

Tier 1 — Must-Haves (Deal Breakers)

Issues where the organization cannot proceed without resolution:

• Uncapped or materially insufficient liability protections
• Missing data protection requirements for regulated data
• IP provisions that could jeopardize core assets
• Terms that conflict with regulatory obligations
• Clauses void or unenforceable under the governing law
• Absent compliance provisions in regulated or cross-border contexts

Tier 2 — Should-Haves (Strong Preferences)

Issues that materially affect risk but have negotiation room:

• Liability cap adjustments within range
• Indemnification scope and mutuality
• Termination flexibility and cure periods
• Audit and compliance rights
• Change-of-control assignment protections

Tier 3 — Nice-to-Haves (Concession Candidates)

Issues that improve the position but can be conceded strategically:

• Preferred governing law (if alternative is acceptable)
• Notice period preferences
• Minor definitional improvements
• Insurance certificate requirements
• Boilerplate refinements

Negotiation strategy: Lead with Tier 1 items. Trade Tier 3 concessions to secure Tier 2 wins. Never concede on Tier 1 without escalation.

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Quality Assurance Framework

PDCA Quality Cycle

Apply structured discipline to every contract review:

PLAN: Identify contract type, user's side, playbook position. Classify complexity (standard / bespoke / high-value). Identify which statutes, regulations, and legal principles are likely to be engaged.

DO: Execute the clause-by-clause analysis and missing clause detection. Generate redlines. Score severity.

CHECK: Run the Citation Quality Gates. For any RED item, run the Self-Interrogation. Verify all statutory references against authoritative sources where possible. Confirm all 14 clause categories addressed.

ACT: Record any new patterns discovered (novel clause structure, emerging market position). Flag heuristics for future reviews. If the review changes your understanding of a standard position, note it for playbook update.

Citation Quality Gates

Run these 5 gates silently before delivering any output. If any gate fails, revise before delivering.

Gate	Rule	Fail Action
Source	Every legal claim cites a specific statute, regulation, or established principle	Add citation or mark as "[UNVERIFIED — counsel to confirm]"
Format	All citations follow a consistent, recognizable format for the jurisdiction	Fix format
Currency	Every cited provision checked for amendments or repeal against authoritative sources where accessible	Flag as "[CHECK CURRENCY — may have been amended]"
Domain	Analysis stays within the contract's governing law. No assumptions from other jurisdictions leaking in	Remove or flag jurisdictional bleed
Confidence	Uncertainty explicitly stated, not hidden. If you are not certain of a legal position, say so	Add confidence qualifier

Self-Interrogation for RED Items

For any clause classified as RED, apply this 3-pass self-interrogation before delivering:

Pass 1 — Legal Chain Integrity:

• Does the risk assessment follow logically from the statute/principle cited?
• Would a court in this jurisdiction actually reach this conclusion on these facts?
• Is there a counter-argument the counterparty's counsel will make?

Pass 2 — Completeness:

• Have all relevant statutes and regulations been considered?
• Have any relevant cases or principles been missed?
• Are there regulatory dimensions not yet considered?

Pass 3 — Challenge:

• What is the strongest argument that this clause IS acceptable?
• Under what commercial circumstances might a reasonable lawyer accept this risk?
• Is the RED classification proportionate, or is this actually YELLOW with mitigations?

If any pass reveals a weakness, revise the analysis before delivery. Mark the audit trail with self_interrogation: PASS or self_interrogation: REVISED.

Confidence Scoring

For each material clause analysis, assign a confidence level:

Level	Range	Meaning	Action
Definite	0.95-1.0	Settled law, clear statute, no ambiguity	State with confidence
High	0.80-0.94	Strong authority, minor interpretation questions	State with brief caveat
Probable	0.60-0.79	Good arguments but reasonable minds could differ	State with explicit reasoning and contra-indicators
Possible	0.40-0.59	Genuinely uncertain, competing authorities	Flag for counsel review with both sides of the argument
Unlikely	0.0-0.39	Weak basis, speculative	Do not assert; flag as "[UNCERTAIN — counsel to advise]"

---

Glass Box Audit Trail

Every contract review output MUST include a Glass Box audit section at the end. This makes the reasoning traceable and auditable:

glass_box:
  contract: "[Contract title and date]"
  contract_type: "[SaaS / Professional Services / License / etc.]"
  user_side: "[Supplier / Customer / Licensor / Licensee]"
  governing_law: "[Jurisdiction identified from the contract]"
  playbook_used: "[Playbook name or 'General commercial standards']"
  review_basis: "[Organizational playbook / General commercial standards]"
  clauses_reviewed: 14
  clauses_present: "[number]"
  clauses_missing: "[number] — [list]"
  legalcode_mcp: "Connected / Not connected"
  authority_reference_file: "[path to temp file or 'Not created']"
  statutes_consulted:
    - "[Statute 1 — VERIFIED (legalcode-mcp) or UNVERIFIED]"
    - "[Statute 2 — VERIFIED (legalcode-mcp) or UNVERIFIED]"
  case_law_consulted:
    - "[Case 1 — VERIFIED (legalcode-mcp) or UNVERIFIED]"
  citations_verified: "[number VERIFIED] / [number UNVERIFIED]"
  self_interrogation: "PASS / REVISED / NOT APPLICABLE (no RED items)"
  confidence: "HIGH / MEDIUM / LOW — [rationale]"
  limitations:
    - "[Any scope limitations, assumptions, or caveats]"
  reviewer: "AI-assisted — requires qualified legal review"

---

Multi-Stakeholder Mapping

For every contract, identify ALL affected stakeholders — not just the two contracting parties:

Stakeholder	Role	Affected Clauses	Impact	Action Required
[Party A]	[Customer]	[All]	Primary	Sign / Negotiate
[Party B]	[Supplier]	[All]	Primary	Sign / Negotiate
[Data subjects]	Third party	Data protection	Indirect	DPA required
[Sub-processors]	Third party	Data protection, liability	Indirect	Notification rights
[Regulator]	Regulator	Data protection, compliance	Compliance	Breach notification
[Employees]	Internal	IP, confidentiality	Indirect	Employment contract alignment

This prevents the common failure of reviewing a contract as a two-party document when it affects multiple stakeholders with different interests and regulatory requirements.

---

Anti-Patterns

Explicit catalogue of what NOT to do in contract review:

1. Single-pass analysis — A contract review that reads each clause once, in order, will miss interactions between clauses (e.g., an uncapped indemnity partially mitigated by a limitation clause). Read the whole contract, then analyze.

2. Citing statutes from memory without verification — Statutes are amended, repealed, and renumbered. Case citations may not exist. If you cannot verify a citation against an authoritative source, mark it [VERIFY] or "[UNVERIFIED — counsel to confirm]." Never present an unverified citation as settled law.

3. Applying jurisdiction-specific concepts universally — Work-for-hire exists in the US but not England or civil law systems. Kary umowne (penalty clauses) are a Polish concept with no direct common law equivalent. UCTA is English law only. Always check whether a concept applies under the contract's governing law.

4. Treating indemnities as equivalent to damages claims — In many common law jurisdictions, an indemnity is a primary obligation with different remoteness rules and limitation periods than a damages claim. In civil law jurisdictions, the concept may not be native at all. Analyze accordingly.

5. Reviewing limitation clauses without checking statutory enforceability — Many jurisdictions impose statutory limits on what liability can be excluded (UCTA in England, unconscionability in the US, mandatory civil code provisions in civil law). Skipping this check is a material omission.

6. Accepting "consequential loss" at face value — The contract may redefine "consequential" or "indirect" differently from the legal default. Always check the definitions clause.

7. Ignoring the penalty doctrine for termination fees — Early termination fees and liquidated damages must be assessed against the governing law's penalty doctrine. Don't just flag the amount — assess proportionality.

8. Redlines without fallback positions — A redline that says "delete this clause" without offering an alternative is a negotiation dead-end. Always provide a fallback.

9. Importing terminology from the wrong jurisdiction — "Attorney's fees," "punitive damages," "class action waiver," and "jury waiver" have no meaning in many jurisdictions. Don't import them into analysis governed by a legal system where they are irrelevant.

10. Confidence without evidence — Never state "this clause is unenforceable" without citing the specific statute, regulation, or principle that renders it so. Confident assertions without authority are more dangerous than expressed uncertainty.

11. Reviewing for one party while assuming the other's interests — The analysis must be from the user's stated side. What protects a vendor harms a customer and vice versa. Confirm the side before analyzing.

12. Skipping the holistic view — Individual clause analysis is necessary but not sufficient. The contract must also be assessed as a whole: is the overall risk allocation balanced? Do the commercial terms make business sense? Are any provisions internally contradictory?

13. Ignoring what is missing — Focusing only on clauses that are present and ignoring absent clauses. A contract with no limitation of liability, no DPA, or no termination rights has material gaps that must be flagged.

14. Treating boilerplate as irrelevant — Entire agreement clauses, severability, notice provisions, and order of precedence can have significant legal consequences. A missing entire agreement clause may allow parol evidence; an incorrect order of precedence can invert the deal terms.

15. Assuming instead of asking — Silently assuming the user's side, risk tolerance, deal context, or preferred outcome when it would change the analysis. A liability cap that is RED for a risk-averse enterprise client may be YELLOW for a startup that needs the deal. When in doubt, ask — a wrong assumption produces a confidently wrong analysis.

---

Writing Standards

Apply plain-language discipline to all output:

For redline rationales (shared with counterparty's counsel):

• Plain language. No jargon or filler.
• Active voice: "This clause excludes liability for negligence" not "Liability for negligence is excluded by this clause"
• Short sentences. One point per sentence.
• Name the actor: "The supplier must..." not "It is required that..."
• Specific, not vague: cite the relevant provision rather than saying "this may have enforceability issues"

For internal analysis:

• Same plain-language standards
• May include more technical legal analysis
• Confidence qualifiers where appropriate
• Glass Box audit trail appended

Quality gates before delivery:

1. Can a non-lawyer business stakeholder understand the executive summary?
2. Can the counterparty's counsel understand and respond to each redline?
3. Is every legal claim backed by a specific citation (or flagged [VERIFY])?
4. Are any phrases vague, hedging, or ambiguous? If yes, fix.
5. Could any sentence be shorter without losing meaning? If yes, shorten.

---

External Tool Integration

This skill is designed to work with legalcode-mcp as its primary legal research tool. legalcode-mcp is a law, regulatory, and case law database with powerful search across jurisdictions.

With legalcode-mcp connected (preferred):

• In Step 4, search for jurisdiction-relevant statutes, regulations, and case law
• Save the most relevant results to a local temp file (/tmp/legalcode-review-authority.md)
• Reference verified authority from the temp file throughout the clause analysis
• For RED items, search for additional case law to support or challenge the classification
• Check statutory currency (amendments, repeal, superseding legislation)
• Mark all legalcode-mcp-sourced citations as VERIFIED in the Glass Box audit trail

Without legalcode-mcp:

• Mark all statutory and case law references with [VERIFY]
• Note in the Glass Box audit trail: external_tools_used: "None — manual verification required"
• Include a prominent notice that legal citations require independent verification
• Focus the analysis on commercial risk assessment and structural issues rather than legal certainty
• Do not create the local authority reference file

---

Output Format Template

Structure the final deliverable as:

## Contract Review Summary

**Document**: [contract name/identifier]
**Parties**: [party names and roles]
**Your Side**: [vendor/customer/etc.]
**Governing Law**: [jurisdiction]
**Deadline**: [if provided]
**Review Basis**: [Playbook name / General Commercial Standards]
**Date of Review**: [date]

---

## Key Findings

[Top 3-5 issues with severity flags (RED/YELLOW) and one-line summaries]

---

## Missing Clauses

[List any of the 14 clause categories that are absent, with severity assessment]

---

## Clause-by-Clause Analysis

### [Clause Category] — [GREEN / YELLOW / RED] | Confidence: [level]

**Contract says**: [summary of the provision]
**Standard position**: [playbook or market standard]
**Deviation**: [description of gap]
**Business impact**: [what this means practically]
**Redline** (if YELLOW or RED):
> [Specific proposed language]

[Repeat for each clause category]

---

## Negotiation Strategy

**Tier 1 (Must-Haves)**: [list]
**Tier 2 (Should-Haves)**: [list]
**Tier 3 (Concession Candidates)**: [list]

**Recommended approach**: [sequencing, tone, strategic trades]

---

## Stakeholder Impact Map

[Table per Multi-Stakeholder Mapping section]

---

## Next Steps

[Specific actions to take, with owners and deadlines if applicable]

---

## Glass Box Audit Trail

[YAML block per Glass Box section]

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Localization Notes

This skill is jurisdiction-agnostic by design. To create a jurisdiction-specific variant:

1. Replace [JURISDICTION-SPECIFIC] markers with jurisdiction-specific legal content
2. Replace [VERIFY] tags with verified statutory references
3. Add jurisdiction-specific clause categories (e.g., penalty clauses for civil law, TUPE for UK employment)
4. Add jurisdiction-specific anti-patterns
5. Update the frontmatter name and description to reference the specific jurisdiction
6. Add relevant case law and statutory framework sections

Existing jurisdiction-specific variants:

• England & Wales: imported-uk-legal-plugins--skills-uk-legal-contract-review/SKILL.md
• Poland: imported-iura-plugins--iura-pl-skills-contract-review/SKILL.md

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Provenance

Created by Legalcode (2026-02-27). Original synthesis combining playbook-based review methodology, quality assurance frameworks, confidence scoring, Glass Box audit trails, and jurisdiction-agnostic clause analysis into a single contract review skill.