See What You'll Get
Here's a real example of how we break down contract risks in plain English.
Sample Analysis
Software-as-a-Service Agreement (Vendor Agreement)
Risk Overview
High Risk
Medium Risk
Low Risk
Risk Allocation & Liability
Unlimited Indemnification Clause
Clause Text:
Section 8.2: "Customer agrees to indemnify, defend, and hold harmless Vendor from any and all claims..."
Plain-English Explanation:
You're agreeing to cover the vendor's legal costs with no dollar limit — even if they're partially at fault. This could expose you to liability far beyond the contract value.
Why It Matters:
Unlimited indemnification can expose you to significant financial risk, especially if the vendor is partially at fault for a claim.
Broad Limitation of Liability
Clause Text:
Section 9.1: "In no event shall Vendor be liable for any indirect, incidental, special, consequential, or punitive damages, regardless of cause..."
Plain-English Explanation:
If their software failure causes your business to lose customers or revenue, you can't recover those losses. You're only entitled to a refund of fees paid — nothing more.
Why It Matters:
Broad liability limitations prevent you from recovering significant business losses caused by vendor failures.
Commercial & Financial Terms
Unilateral Price Increases
Clause Text:
Section 4.3: "Vendor reserves the right to modify pricing at any time upon 30 days' notice..."
Plain-English Explanation:
They can raise prices significantly with minimal warning. Combined with the auto-renewal clause, you could face unexpected budget increases.
Why It Matters:
Unpredictable pricing makes budgeting difficult and can lead to unexpected costs.
Intellectual Property & Information Protection
Vague Data Security Obligations
Clause Text:
Section 7.4: "Vendor shall implement commercially reasonable security measures to protect Customer data..."
Plain-English Explanation:
"Commercially reasonable" is subjective and hard to enforce. If your data is breached, proving they failed this standard will be difficult and expensive.
Why It Matters:
Vague security standards make it nearly impossible to hold the vendor accountable for data breaches.
Broad IP Assignment
Clause Text:
Section 6.2: "Customer hereby assigns to Vendor all rights in any feedback, suggestions, or improvements provided..."
Plain-English Explanation:
Any ideas you share about improving the product become their property — they could even patent your suggestion and use it against competitors.
Why It Matters:
You lose ownership of your own ideas and innovations shared with the vendor.
Standard Confidentiality Terms
Clause Text:
Section 5.1: "Each party agrees to maintain the confidentiality of the other party's Confidential Information for a period of three (3) years..."
Plain-English Explanation:
Three years is industry standard, but consider whether your sensitive information needs longer protection, especially trade secrets.
Why It Matters:
Standard confidentiality periods are generally acceptable but may not protect long-term trade secrets.
Contract Lifecycle & Structural Terms
Auto-Renewal with 90-Day Notice
Clause Text:
Section 12.1: "This agreement automatically renews annually unless Customer provides written notice 90 days prior..."
Plain-English Explanation:
Miss the deadline by one day, and you're locked in for another year — even if the service isn't working for you.
Why It Matters:
Long notice periods make it easy to miss the cancellation window, locking you into unwanted renewals.
One-Sided Termination Rights
Clause Text:
Section 11.3: "Vendor may terminate for convenience with 30 days' notice. Customer may only terminate for material breach."
Plain-English Explanation:
They can walk away anytime. You're stuck unless they seriously violate the contract — and you'll need to prove it.
Why It Matters:
Asymmetric termination rights leave you dependent on the vendor's continued willingness to provide service.
Legal Process & Enforcement
Distant Governing Law
Clause Text:
Section 14.1: "This Agreement shall be governed by the laws of the State of Delaware..."
Plain-English Explanation:
If disputes arise, you may need to litigate in Delaware courts, which could increase legal costs if you're located elsewhere.
Why It Matters:
Unfamiliar governing law can increase legal costs and complexity if disputes arise.
Other Important Provisions
Force Majeure Clause
Clause Text:
Section 13.2: "Neither party shall be liable for delays caused by events beyond their reasonable control..."
Plain-English Explanation:
This is a standard and fair clause that protects both parties from liability during unforeseeable events like natural disasters.
Why It Matters:
Standard force majeure clauses protect both parties fairly during unforeseeable events.