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name: contract-risk
description: "Extract real financial and operational risks from a contract and produce a prioritized negotiation brief — so you walk in knowing what to fight for and what to concede."

/contract-risk

Reading every clause in sequence takes 3 hours and produces a highlighted document with 30 issues of equal apparent importance. Then you walk into negotiation without a priority order and either capitulate on everything or dig in on the wrong things. The blank review process fails because it treats all contractual language as equally risky — it isn't. This skill forces you to extract the specific categories that create actual exposure, quantify them where possible, and sequence the negotiation so you spend capital on the items that matter.

Financial Exposure — Find the Numbers

• Minimum commitment: is there a minimum purchase or usage obligation? What's the dollar amount and over what period?
• Auto-renewal: what are the terms? When is the notice window to cancel? (Buried 60-day windows on annual contracts are the single most common expensive surprise)
• Price escalators: is there a built-in annual increase? Fixed percentage or CPI-linked? What does that cost over 3 years?
• Termination for convenience: can you exit early? What's the penalty? (Termination for cause is almost never available when you need it)
• Payment terms: net 30 vs. net 60 vs. upfront annual? Does early payment get a discount, or is upfront the only option?

Operational Obligations Baked In

• What are you required to do as a counterparty? (Provide data, maintain integrations, designate contacts, complete onboarding by a specific date?)
• What happens if you don't meet those obligations? Is there a cure period or are you immediately in breach?
• Are there usage limitations that could become operational constraints? (API call limits, seat caps, geographic restrictions)
• What implementation or integration work is excluded from the contract and therefore your cost to bear?

Liability Assumed

• What's the cap on vendor liability? Is it limited to fees paid in the prior 12 months? (Standard, but know the number)
• Are there carve-outs to the liability cap — indemnification, IP infringement, data breach — where the cap doesn't apply?
• What indemnification are you providing? (Broad IP indemnification can create open-ended exposure)
• Is there a mutual limitation of liability or is it one-directional?

Data Ownership and Security Obligations

• Who owns the data you put into the platform? Is that explicitly stated?
• What rights does the vendor have to use your data — for product improvement, benchmarking, or resale?
• What are your data deletion rights upon termination? What's the timeline for data return or destruction?
• What security certifications does the vendor warrant? What notification obligations do they have in case of breach?
• If you're in a regulated industry: does this contract create HIPAA, GDPR, or SOC 2 compliance obligations that require specific addenda?

Precedent Implications

• Is this contract a template that will be used across multiple agreements? If so, every concession you make here becomes the baseline.
• Does this vendor have an MFN clause — most favored nation — that could affect pricing you give to others?
• Does accepting this vendor's paper mean accepting their dispute resolution venue, governing law, or arbitration clause? What does that cost if you ever need to use it?

The 4-5 Items to Negotiate — In Order

• List the items that create the most financial or operational exposure, ranked by severity
• For each: what are you asking for? What's your fallback? What would you concede in exchange?
• What's the one item you will not move on, and why?
• What would you accept as a concession that costs the vendor little but reduces your risk? (Shorter auto-renewal notice window, data deletion SLA, liability cap exception carve-out)

Rules

1. Financial exposure must be quantified — "auto-renewal is risky" is not actionable; " committed with 30-day notice window that passed 3 weeks ago" is
2. The negotiation priority list must be ordered — equal-weight lists produce unfocused negotiation
3. Data ownership language must be reviewed for every SaaS contract — it is never safe to skip this section
4. Your fallback position must be defined before the negotiation call — you cannot improvise under pressure
5. If you're not the decision-maker, the brief must identify who approves each concession before you walk in

This brief gives you a 30-minute negotiation preparation instead of a 3-hour document review — with a ranked priority list, quantified exposure, and a clear fallback on each item.