Contract Analysis
Overview
Contract law governs enforceable agreements. This skill covers formation requirements, essential clauses, and common risk areas for business contracts. It is educational guidance, not legal advice — always consult a qualified attorney for specific situations.
Framework
IRON LAW: A Contract Requires Offer + Acceptance + Consideration + Legality
All four elements must be present for a valid contract. Missing any one
means no enforceable contract exists — regardless of how formal the document
looks. A signed document without consideration (exchange of value) is
not a contract.Contract Formation
| Element | Definition | Test |
|---|---|---|
| Offer | Clear, definite proposal with intent to be bound | Would a reasonable person understand this as a binding proposal? |
| Acceptance | Unqualified agreement to the offer's terms | Mirror image rule: acceptance must match the offer exactly |
| Consideration | Something of value exchanged by both parties | Each side gives up something (money, services, rights, promises) |
| Legality | Subject matter must be legal and parties must have capacity | No illegal purpose; parties must be competent adults or authorized entities |
Essential Contract Clauses
| Clause | Purpose | Red Flags |
|---|---|---|
| Parties | Who is bound | Incorrect entity name, no authority to sign |
| Scope/Subject | What is being exchanged | Vague deliverables, undefined terms |
| Payment terms | When and how payment occurs | No payment schedule, no late payment consequences |
| Term & Termination | Duration and exit conditions | Auto-renewal without notice, no termination for cause |
| Liability & Indemnity | Who bears risk | Unlimited liability, one-sided indemnification |
| Confidentiality (NDA) | Information protection | Overly broad definition, no time limit |
| IP ownership | Who owns created work | Ambiguous ownership of work product |
| Non-compete | Restrictions after termination | Overly broad scope/geography/duration |
| Dispute resolution | How conflicts are resolved | Foreign jurisdiction, mandatory arbitration without consent |
| Force majeure | Excused performance for unforeseeable events | Too narrow or too broad definition |
Contract Review Steps
- Identify the parties: Who is agreeing? Are entity names correct?
- Understand the deal: What is each side giving and receiving?
- Check formation elements: Offer, acceptance, consideration, legality — all present?
- Review essential clauses: Use the table above as a checklist
- Flag risk areas: Unlimited liability, one-sided terms, vague scope, auto-renewal
- Check governing law: Which jurisdiction's law applies? Is the dispute resolution mechanism acceptable?
Output Format
# Contract Review: {Agreement Type}
## Parties
- Party A: {name, role}
- Party B: {name, role}
## Deal Summary
{What is being exchanged — in plain language}
## Clause Review
| Clause | Present? | Assessment | Risk Level |
|--------|---------|-----------|-----------|
| Scope | Y/N | {notes} | 🟢/🟡/🔴 |
| Payment | Y/N | ... | ... |
| Termination | Y/N | ... | ... |
| Liability | Y/N | ... | ... |
| IP | Y/N | ... | ... |
| Non-compete | Y/N | ... | ... |
## Red Flags
1. {specific concern with clause reference}
## Recommendations
1. {suggested modification}Examples
Correct Application
Scenario: SaaS service agreement review
- Red flag: "Vendor may modify pricing with 30 days' notice" → One-sided price change clause. Should be: pricing locked for contract term, changes only at renewal.
- Red flag: "Client indemnifies Vendor against all claims" → One-sided indemnification. Should be mutual.
- Missing: No SLA (service level agreement) defined → No recourse if service goes down. Recommend adding uptime commitment with credits ✓
Incorrect Application
- "This contract looks fine because both parties signed it" → Signature doesn't make every clause fair or enforceable. Must review individual clause terms. A signed contract with an unconscionable clause may still be challenged.
Gotchas
- "Standard contract" doesn't mean fair: Vendor-drafted "standard" contracts are drafted in the vendor's favor. Everything is negotiable.
- Taiwan-specific: Taiwan's Civil Code governs contracts. Key differences from common law: no consideration requirement (promise for promise is sufficient), mandatory provisions in certain contract types (labor, consumer).
- Auto-renewal traps: Many contracts auto-renew unless notice is given 30-90 days before expiry. Calendar the notice deadline.
- This skill is NOT legal advice: It provides educational analysis of contract concepts. Always consult a licensed attorney for binding legal decisions.
References
- For Taiwan-specific contract law (Civil Code), see
references/taiwan-contract-law.md - For common contract templates, see
references/contract-templates.md