# Worked Examples

**User**: "Review this freelance contract"
**Response**: Identify contract type (independent contractor) -> Extract payment terms, IP ownership, termination -> Flag unlimited indemnification clause -> Note missing late payment terms -> Compare to standard freelance agreements -> Recommend specific negotiations

**User**: "Is this NDA reasonable?"
**Response**: Analyze confidentiality scope (overly broad, includes "residual knowledge") -> Check duration (perpetual - concerning) -> Review reciprocity (one-way NDA) -> Flag concerning terms -> Suggest mutual NDA with 3-year term

**User**: "What should I look out for in this employment agreement?"
**Response**: Review compensation, benefits, IP assignment -> Flag broad non-compete (entire industry, 2 years) -> Note missing remote work provisions -> Check termination clauses -> Identify one-sided provisions -> Provide negotiation priorities

# Best Practices

- Always include the legal disclaimer
- Quote specific problematic language
- Provide section/clause numbers
- Explain why something is concerning (not just that it is)
- Offer specific alternative language
- Prioritize issues (must-fix vs. nice-to-have)
- Compare to industry standards when possible
- Note missing standard protections
- Consider the user's leverage and circumstances
- Provide negotiation talking points
- Be specific with recommendations
- Highlight positive terms too (not just negative)
- Use clear risk indicators ([CRITICAL] [REVIEW] [OK])
- Make output scannable and actionable

# Key Terms to Extract

## Financial Terms
- Payment amount and schedule
- Rate increases or bonuses
- Expense reimbursement
- Late payment penalties
- Price adjustments

## Duration and Termination
- Contract length
- Renewal terms (automatic or manual)
- Termination conditions
- Notice period required
- Termination fees or penalties

## Intellectual Property
- Work-for-hire provisions
- IP ownership (who owns what)
- IP assignment clauses
- License grants
- Pre-existing IP protections

## Liability and Indemnification
- Liability caps
- Indemnification obligations
- Insurance requirements
- Warranty disclaimers

## Other Critical Terms
- Non-compete clauses
- Confidentiality obligations
- Dispute resolution (arbitration, jurisdiction)
- Governing law
- Amendment procedures

# Output Template

Use risk indicators consistently: [CRITICAL] for red flags, [REVIEW] for yellow flags, [OK] for acceptable terms.

```markdown
# Contract Analysis Report

**Legal Disclaimer**: This is informational analysis only, not legal advice. Always consult with a qualified attorney for legal matters.

## Contract Overview
- **Type**: [Contract type]
- **Parties**: [Your company] & [Other party]
- **Effective Date**: [Date]
- **Term**: [Duration]

---

## Red Flags (Critical Issues)

### 1. Unlimited Personal Liability (Section X)
**Clause**: "[Quote problematic language]"

**Risk**: You could be personally liable for unlimited damages, even beyond insurance coverage.

**Standard Alternative**: Liability should be capped at contract value or insurance limits.

**Recommendation**: Negotiate liability cap of $X or insurance policy limit.

---

## Yellow Flags (Concerning Terms)

### 2. 2-Year Non-Compete (Section Y)
**Clause**: "[Quote]"

**Concern**: Prevents working in your field for 24 months.

**Industry Standard**: 6-12 months is more typical for this role.

**Recommendation**: Negotiate reduction to 6 months and narrower geographic/industry scope.

---

## Financial Terms

| Term | Details | Assessment |
|------|---------|------------|
| Payment | $X,XXX/month | [OK] Reasonable |
| Payment Schedule | Net 60 | [REVIEW] Long (Net 30 preferred) |
| Late Fees | None | [REVIEW] Consider adding |
| Rate Increases | Annual 3% | [OK] Good |

---

## Key Terms Summary

### Intellectual Property
- **Ownership**: [Who owns work product]
- **Assessment**: [REVIEW] Clause X assigns all IP, including pre-existing work
- **Recommendation**: Add carve-out for pre-existing IP

### Termination
- **Notice Period**: 30 days
- **Termination for Convenience**: [Yes/No]
- **Assessment**: [OK] Reasonable terms

### Confidentiality
- **Duration**: 3 years post-termination
- **Scope**: [Broad/Narrow]
- **Assessment**: [OK] Standard

### Dispute Resolution
- **Method**: Mandatory arbitration (JAMS rules)
- **Jurisdiction**: [State]
- **Assessment**: [REVIEW] Limits court access; may favor large company

---

## Balance Assessment

**Overall Balance**: [REVIEW] Somewhat one-sided

**Favors**: [Party name]

**Issues**:
- Termination rights are one-sided (they can terminate for convenience, you cannot)
- Indemnification obligations only apply to you
- They can amend terms with 30 days notice

---

## Positive Terms

1. Clear payment schedule
2. Reasonable confidentiality duration
3. Insurance requirements are standard
4. IP ownership for pre-existing work protected

---

## Negotiation Recommendations

### Must Negotiate (Deal Critical)
1. **Liability Cap**: Add cap of $XXX,XXX or insurance limits
2. **Non-Compete**: Reduce to 6 months

### Should Negotiate (High Priority)
3. **Payment Terms**: Request Net 30 instead of Net 60
4. **Mutual Termination**: Add for-convenience termination rights for both parties

### Consider Negotiating (Nice to Have)
5. **Arbitration**: Add option for small claims court
6. **Amendment Rights**: Require mutual consent for material changes

---

## Questions to Ask

1. "Can we cap liability at the contract value of $X?"
2. "Would you consider reducing the non-compete period to 6 months?"
3. "Can we adjust payment terms to Net 30?"
4. "Is the mandatory arbitration clause negotiable?"

---

## Missing Clauses

Standard provisions not included:
- Force majeure clause (pandemic, natural disasters)
- Data protection/GDPR compliance
- Insurance requirements
- Warranty of authority

---

## Overall Recommendation

**Risk Level**: [REVIEW] Medium-High

**Action**: Do NOT sign as-is. Negotiate key terms (liability cap, non-compete, payment terms) before signing. Consult attorney for review.

**Deal Assessment**: [Acceptable if concerns addressed / Proceed with caution / Significant concerns]
```

# Risk Flags

## Red Flags (High Risk)
- Unlimited liability
- Perpetual non-compete
- Automatic renewal without notice
- Unreasonable indemnification
- One-sided termination rights
- Unclear payment terms
- Overly broad IP assignment
- Waiver of legal rights
- Mandatory arbitration (in some contexts)

## Yellow Flags (Review Carefully)
- Long non-compete duration
- Broad confidentiality scope
- Short termination notice
- Net 60+ payment terms
- Restrictive exclusivity clauses
- Unilateral amendment rights

## Comparison to Industry Standards
- Note terms that deviate from typical agreements
- Identify unusually favorable or unfavorable terms
- Flag missing standard protections
- Note one-sided provisions

## Balance Assessment Questions
- Is the contract heavily favoring one party?
- Are obligations reciprocal?
- Are penalties balanced?
- Are protections mutual?

## Commonly Missing Standard Clauses
- Force majeure clause (pandemic, natural disasters)
- Data protection/GDPR compliance
- Insurance requirements
- Warranty of authority