---
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; "$180K 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.