Contract Red Flag Scanner
As a first pass on any contract before detailed review — catches the biggest issues quickly.
Most contracts arrive with a deadline attached, and the riskiest terms are rarely the ones that announce themselves. A red-flag scan is the disciplined first pass that catches the issues that actually move risk: one-sided indemnities, uncapped liability, evergreen renewals, and venue clauses quietly written for the other side. Done well, it tells you within minutes where to spend the next hour of detailed review.
This is a task Claude handles efficiently. Tell it which party you represent, the contract type, and the deal value, and it surfaces a prioritized list of problem clauses with the offending language quoted, the practical risk explained, a severity rating, and suggested redline language. Because severity depends entirely on which side you are on, the prompt makes you state your client's role first, which sharpens every judgment that follows.
Treat the scan as triage, not a verdict. The output is a starting point that orients your review, but you remain responsible for confirming each flag against the full document, the governing law, and the commercial deal your client actually struck. It is attorney work product to verify and refine, not legal advice and not a substitute for reading the contract yourself.
The Prompt
Review the following contract and identify red flags: My client is the: [BUYER/SELLER/LANDLORD/TENANT/LICENSOR/LICENSEE/etc.] Contract type: [e.g., SaaS agreement, supply contract, employment agreement] Industry: [CLIENT'S INDUSTRY] Deal value: [APPROXIMATE VALUE] Analyze for: 1. One-sided indemnification or hold-harmless provisions 2. Unlimited liability exposure 3. Missing limitation of liability or damages cap 4. Broad termination rights for one party but not the other 5. Auto-renewal or evergreen clauses without easy opt-out 6. Broad IP assignment or license grants beyond what's needed 7. Non-compete or exclusivity restrictions 8. Unreasonable cure periods (too short or none) 9. Governing law or venue that disadvantages my client 10. Missing provisions that should be included for this contract type For each red flag: - Quote the specific language - Explain the risk in plain English - Rate severity: HIGH / MEDIUM / LOW - Suggest alternative language Contract: [PASTE CONTRACT TEXT]
Example Output
A prioritized list of 5-15 issues with quoted language, risk ratings, and suggested revisions for each.
Illustrative example — names, figures, and facts are fictional.
CONTRACT RED-FLAG SCAN Agreement: Master SaaS Subscription Agreement Client represents: Customer (buyer) | Deal value: ~$240,000/yr | Industry: healthcare tech 1. UNCAPPED LIABILITY FOR CUSTOMER DATA BREACHES — Severity: HIGH Language: "Customer shall indemnify Provider for any and all losses arising from Customer Data, without limitation." Risk: Carves Customer's biggest exposure out of the liability cap entirely; potentially unlimited. Suggested fix: Make the indemnity mutual and subject it to the general cap, with a separate (negotiated) super-cap for data incidents. 2. LIABILITY CAP FAVORS PROVIDER ONLY — Severity: HIGH Language: "Provider's aggregate liability shall not exceed fees paid in the prior three (3) months." Risk: 3-month cap (~$60K) is far below annual spend and one-directional. Suggested fix: Mutual cap at 12 months' fees; exclude confidentiality and IP-infringement breaches from the cap. 3. AUTO-RENEWAL WITH 90-DAY OPT-OUT — Severity: MEDIUM Language: "This Agreement renews for successive 12-month terms unless notice is given 90 days prior." Risk: Long notice window makes accidental renewal likely. Suggested fix: Reduce to 30 days; add a calendar-reminder obligation or month-to-month tail. 4. GOVERNING LAW / VENUE — Severity: MEDIUM Language: "Governed by the laws of Delaware; exclusive venue in Provider's home county." Risk: Inconvenient and costly forum for Customer. Suggested fix: Negotiate neutral venue or each party's home forum for enforcement. 5. MISSING — No service-level/uptime commitment or remedy. Recommend adding an SLA with service credits. Priority order for negotiation: Items 1 and 2 are deal-shaping; 3-5 are standard asks. Note: Figures and parties are illustrative. Verify every quoted clause against the executed text before relying on this scan.
Tips
- •Always specify which party you represent — red flags differ by side.
- •Include the deal value to calibrate the severity assessment.
- •Use this as a first pass, then do a detailed review of the flagged sections.
Frequently Asked Questions
When should I run a red-flag scan instead of a full contract review?
Use it as the very first pass on any incoming contract, especially under time pressure or when triaging a high volume of agreements. It quickly tells you where the material risk concentrates so you can focus your detailed, clause-by-clause review on the sections that matter. It complements a full review rather than replacing it.
Can I rely on the scan instead of reviewing the contract myself?
No. The scan is a first-pass aid that surfaces likely issues and proposes language; it is not a substitute for attorney judgment. AI can miss context-specific risks, misread cross-references, or flag non-issues. You remain responsible for confirming each finding against the full document, the deal terms, and the governing law before advising your client.
How do I get the most accurate red-flag results?
State which party you represent, the contract type, the industry, and the approximate deal value. Side and value calibrate severity ratings, an uncapped indemnity reads very differently for a buyer than a seller. Paste the complete contract, including exhibits and incorporated terms, so the analysis does not miss provisions buried in attachments or referenced documents.
Is it ethical to paste a client's contract into an AI tool?
Proceed carefully. ABA Formal Opinion 512 and Model Rule 1.6 require you to protect client confidentiality and understand a tool's data handling. Avoid pasting sensitive or privileged client material into consumer AI without appropriate confidentiality protections, consider an enterprise or zero-retention configuration, and where prudent obtain informed client consent before submitting their documents.
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