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

1. Identify the parties: Who is agreeing? Are entity names correct?
2. Understand the deal: What is each side giving and receiving?
3. Check formation elements: Offer, acceptance, consideration, legality — all present?
4. Review essential clauses: Use the table above as a checklist
5. Flag risk areas: Unlimited liability, one-sided terms, vague scope, auto-renewal
6. 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