--- name: review-unusual-terms-detector-sboghossian title: Unusual / Atypical Terms Detector description: Use when scanning a contract for clauses that deviate materially from market norms for that document type and jurisdiction. Identifies atypical provisions — including below-market liability caps, IP ownership reversals, disproportionate termination fees, retroactive most-favored-customer clauses, currency-risk shifts, and non-standard arbitration seat selection — and contrasts them with market-standard alternatives. Severity-rated output with a caution against treating atypical as automatically wrong. author: sboghossian author_url: https://github.com/sboghossian/mini-claude-for-legal/tree/main/skills/review/review-unusual-terms-detector license: MIT version: 0.1.0 execution_mode: open jurisdiction: general practice: contracts language: en --- # Unusual / Atypical Terms Detector ## When to use this Use this skill when: - A contract has been submitted by a counterparty and you want to identify provisions that are out of the ordinary before investing time in a full review - A client asks "is there anything weird in this contract?" - You are reviewing against a market standard for a specific contract type and jurisdiction - Prior to price negotiation — to understand which unusual terms are commercially motivated and which may be errors or overreach This skill identifies deviations from market norms; it does not assess whether those deviations are legally problematic (for that, use [[review-risk-flagging]]). An unusual term may have a legitimate commercial explanation — always investigate before redlining. ## Inputs | Input | Why it matters | Default | |---|---|---| | Contract text | The full document | Required | | Document type | Calibrates the market norm baseline | Infer from contract; ask if unclear | | Jurisdiction | Geographic and legal-system market norms differ | From governing-law clause | | Deal type and value | Size matters — what is unusual for a USD 100K contract may be standard for a USD 10M deal | Infer; ask if unclear | ## Patterns to Surface ### 1. Liability Caps Materially Below Market **Market reference**: - Commercial services / SaaS: 12-month fees is standard Provider position; 24-month or 2× annual fees is a common negotiated outcome - Construction: linked to contract price - M&A representations: 20–30% of transaction value for general reps **Flag as atypical**: - Cap less than 6-month fees for a meaningful-value services contract - Cap expressed as a fixed amount (e.g., USD 10,000) on a USD 500,000 annual contract - Cap applies to all categories of damages including IP infringement and data breach with no carve-outs - No cap at all for the Client (asymmetric — Client has unlimited liability; Provider capped) ### 2. IP Ownership Terms Reversed from Norm **Market norm for services for hire (custom development)**: - Client pays → Client owns the deliverables - Provider retains its background IP; grants license back - Foreground IP is assigned to Client on creation **Atypical**: - Provider retains ownership of all deliverables including custom code written for Client's specifications — "Client receives a license only" when the contract is a pure bespoke-for-hire engagement - Client assigned background IP (pre-existing tools, libraries, frameworks) that the Provider has been using for years - No license-back at all — Client cannot use the deliverables outside the scope of the agreement **Commercial reason investigation**: sometimes a vendor retains IP ownership as a deliberate business decision (e.g., the deliverable becomes a standard product feature). Ask before redlining. ### 3. Term Lengths Far Outside the Market Band **What is typical**: - SaaS subscriptions: 1–3 years initial term - Commercial leases: 3–10 years for commercial; up to 99 years for some ground leases - NDA confidentiality term: 2–5 years - Employment non-compete: 12–24 months post-termination **Atypical**: - SaaS contract: 10-year initial term with auto-renewal and no T4C (locks client in for a decade) - NDA: perpetual obligations for all categories of information (not just trade secrets) - Post-employment non-compete: 5 years (likely void in most jurisdictions) - Lease: 1-year term with monthly break rights — very short for a commercial tenant who has invested in fit-out ### 4. Non-Compete Beyond Market Band | Context | Market range | Atypical threshold | |---|---|---| | Senior executive (employer-side) | 12–24 months | >3 years | | Mid-level employee | 6–12 months | >18 months | | M&A (seller non-compete) | 3–5 years | >5 years | | VC / investor (founder non-compete) | 12–24 months | >3 years | | Commercial agency / distribution | 1–3 years | >5 years | Geographic and functional scope must also be proportionate. A global non-compete for a regional business is atypical. A non-compete covering "any business" is overbroad for most employment contexts. **MENA note**: UAE Labour Law limits post-employment non-competes to 2 years maximum; anything longer is void. KSA courts apply proportionality but have upheld 3-year commercial non-competes in appropriate circumstances. DIFC/ADGM: English-law restraint of trade test — must be reasonable in scope, geography, and duration. ### 5. Termination Fees Disproportionate to Value **Market norm**: - Early termination fee: typically a portion of fees that would have been earned over the remaining term; rarely more than 6–12 months of remaining fees - Liquidated damages clauses in commercial services: must represent a genuine pre-estimate of loss **Atypical**: - Termination fee equals 100% of the full remaining contract value (e.g., USD 5M payable on termination of a USD 5M contract in Year 1 of a 5-year term) - Termination fee applies even if termination is for the Provider's material breach - No termination fee at all for a long-term exclusive arrangement — creates no incentive for Provider to maintain service quality **Jurisdictional enforceability**: - UAE (onshore): courts will reduce a penalty clause to reflect actual loss regardless of the agreed amount (Civil Code adjustability) - KSA: similar — Shariah courts apply proportionality - DIFC/ADGM/UK: liquidated damages must be a genuine pre-estimate of loss; penalty clauses are void as penalties ### 6. Most-Favored-Customer Clauses Applied Retroactively **Market norm**: MFC is prospective — if Provider gives a better price to any future customer (or current similarly-situated customers), Provider must give Client the same deal going forward. **Atypical (flag)**: - Retroactive MFC: if Provider has ever given a better price to anyone, Client gets a retroactive refund of the difference. This creates open-ended historical liability and is practically unworkable for any Provider with multiple pricing arrangements. - MFC applied to all terms (not just pricing): "Client shall have terms no less favorable than any other customer" — extremely burdensome. - MFC benchmarked against all customers regardless of size, volume, or negotiated terms — a 1-unit customer claims parity with a 10,000-unit customer. ### 7. Currency Clauses That Shift Exchange-Rate Risk Asymmetrically **Typical**: contract denominated in a single currency; both parties bear the natural exchange-rate risk of their own businesses. **Atypical**: - Contract requires payment in USD but Client is a local entity earning in local currency without any USD revenue — forces Client to bear full FX risk on market movements - Escalation clause tied to USD exchange rate applied retroactively - "Payment in USD or USD equivalent at the rate on the day of payment" — creates uncertainty about actual obligation size **Lebanon note**: given chronic LBP/USD exchange instability, any USD-denominated contract with a Lebanese entity requires explicit acknowledgment of the Banque du Liban regulatory environment, the applicable exchange rate mechanism, and whether Lollars (Lebanese bank-held USD) are acceptable or only "fresh" USD. ### 8. Arbitration in Non-Standard Seats **Standard seats** for MENA commercial contracts: - UAE/GCC: DIAC (Dubai International Arbitration Centre), DIFC-LCIA, ICC (Paris or Singapore), ADGM Arbitration Centre - Saudi Arabia: SCCA (Saudi Center for Commercial Arbitration) - Lebanon: BAC (Beirut Arbitration Center) or ICC - Egypt: Cairo Regional Centre for International Commercial Arbitration (CRCICA) **Flag as unusual**: - Cayman Islands seat for a UAE-UAE commercial contract — ask why; may indicate sophisticated offshore structuring or may be an error - Switzerland seat for a GCC-GCC contract without a specific Swiss nexus - Ad hoc arbitration (no institutional rules) — increases enforceability risk and eliminates administrative support; acceptable in sophisticated M&A contexts but unusual in commercial services - Arbitration in a country that has not acceded to the New York Convention — limits enforcement internationally - Home-court arbitration: arbitration seat in the home city of the stronger party — equivalent of choosing the other party's preferred forum; ask for a neutral seat **Investigations approach**: before flagging as a problem, ask whether there is a commercial or structural reason (e.g., the contract is governed by Swiss law and the Swiss nexus explains the seat choice). ### 9. Other Patterns Worth Surfacing | Pattern | Description | Typical standard | |---|---|---| | Unilateral amendment right | Provider can amend contract terms on 30 days' notice | Mutual amendment by written agreement | | Exclusive territory without minimum purchase | Distributor has exclusive territory but no obligation to sell | Minimum purchase commitment required | | Assignment to affiliates unrestricted | Any affiliate of either party can step in without notice | Assignment to affiliates with notice; change of control requires consent | | Audit rights unlimited in frequency and scope | Counterparty can audit at any time without restriction | Once per year with 30 days' notice; reasonable scope | | Auto-renewal notice window > 90 days | 90+ day notice required to prevent auto-renewal | 30–60 days is standard | | Price adjustment on cost-plus without ceiling | Provider can pass through unlimited cost increases | Cost-plus with cap or budget approval required | ## Output Format For each atypical provision identified: ``` ## Atypical: **Clause**:
**What it says**: **Market standard**: **Severity**: 🔴 Critical / 🟡 Medium / 🟢 Low **Commercial reason inquiry**: **Suggested alternative**: ``` ## Important Caution **Atypical ≠ wrong.** A deviation from market standard may reflect: - A deliberate commercial negotiation (Client paid less in exchange for giving up IP ownership) - Specific regulatory requirements (a regulated industry may impose unusual data-handling terms) - Bespoke deal structure (M&A, outsourcing, or partnership contexts have non-standard norms) Always verify the commercial context before treating an unusual term as a problem. The skill flags deviations; counsel decides whether they are appropriate. ## Related Skills - [[review-risk-flagging]] - [[review-msa-deep-review]] - [[review-liability-cap-reasonableness]] - [[review-ip-ownership-clarity]] - [[review-nda-quick-check]] - [[review-missing-clauses]]