Adversarial Contract Review

CONTRACTOR “DEATH-TRAP” CLAUSE MAP
(what can be weaponised → concrete red-line rewrite → why the original is dangerous)

1. Scope-change-without-compensation (Clause 1)
   Exploit: Client can triple the workload or change the tech stack overnight while freezing the rate.
   Rewrite:
   “Scope may be modified only by written Change Order signed by both parties stating (i) the new deliverables, (ii) revised schedule, and (iii) any adjustment to fees or hourly rate. Contractor may refuse any change that increases the hours by more than 10 % without proportional fee increase.”
   Legal reason: Consideration must move both ways; a unilateral right to demand extra work for no extra pay is unenforceable in most common-law jurisdictions for lack of mutuality.

2. Unlimited withholding of payment for “unsatisfactory” deliverables (Clause 2)
   Exploit: Client can accept the code, deploy it, then invent a subjective complaint and never pay.
   Rewrite:
   “Payment is due within 30 days of undisputed portions of each invoice. Client must provide a written list of concrete, objective defects within 10 business days after receipt of deliverables. If defects are not cured within 15 business days, Client may withhold only a reasonable percentage of the invoice proportionate to the impaired value. All other amounts are payable.”
   Legal reason: Covenant of good-faith and fair dealing; courts will not allow a party to use subjective discretion to escape its own obligation to pay.

3. Assignment of pre-existing IP (Clause 3)
   Exploit: Client acquires contractor’s personal toolkit, open-source wrappers, or entire codebase used on multiple clients.
   Rewrite:
   “Contractor grants Client a perpetual, worldwide, royalty-free licence to use, modify and distribute any deliverables. Pre-existing IP (identified in Exhibit A) remains Contractor’s property; Client receives a non-exclusive, royalty-free licence limited to use within the compiled software delivered under this Agreement.”
   Legal reason: Courts construe IP clauses narrowly; over-broad assignment of tools not specifically created for the project can fail for lack of clarity or be deemed an unreasonable restraint.

4. Industry-wide 24-month non-compete (Clause 4)
   Exploit: Contractor who builds a fintech API cannot work in any “software for financial services” for two years.
   Rewrite:
   “During the term and for six (6) months after termination Contractor shall not, without Client’s prior written consent, directly solicit any employee or contractor of Client to leave their position. There is no industry or client non-compete.”
   Legal reason: Non-competes must be reasonable in duration, geographic scope, and activity; a blanket industry ban is routinely struck down as an illegal restraint of trade (CA bans them outright; other states blue-pencil).

5. One-way termination & no kill-fee (Clause 5)
   Exploit: Client can walk away the day before go-live; contractor bears 60 days of sunk cost.
   Rewrite:
   “Either party may terminate without cause on 15 days’ written notice. Upon termination by Client without cause, Contractor shall be paid for all work performed up to the effective date plus a kill-fee equal to the next two weeks of scheduled hours. Upon termination by Contractor for Client’s material breach, all amounts become immediately due.”
   Legal reason: Promotes mutuality and limits damages; kill-fee is standard in professional-service contracts.

6. Unlimited warranty & consequential damages (Clause 6)
   Exploit: A latent bug that causes $5 million lost profits is 100 % on contractor.
   Rewrite:
   “Contractor warrants that deliverables will conform to the written specifications for 90 days after acceptance. Client must notify Contractor of any non-conformity in writing during the warranty period; Contractor’s sole obligation is to repair or replace at no charge. Except for gross negligence or wilful misconduct, Contractor’s aggregate liability shall not exceed the total fees paid under this Agreement. Neither party is liable for indirect, incidental or consequential damages.”
   Legal reason: Economic-loss doctrine & proportionate liability; courts uphold negotiated damage caps.

7. No-fault indemnity (Clause 7)
   Exploit: Client gets sued by a third party for any reason (e.g., Client’s own misuse) and hands the entire defence bill to contractor.
   Rewrite:
   “Contractor shall indemnify Client against third-party claims alleging unlicensed IP infringement or personal injury caused by Contractor’s wilful misconduct or gross negligence, provided Client (i) promptly notifies Contractor in writing, (ii) allows Contractor to control defence and settlement, and (iii) cooperates at Contractor’s expense. Client shall indemnify Contractor against claims arising out of Client’s data, instructions, or combination of deliverables with items not supplied by Contractor.”
   Legal reason: Indemnity must be tied to the indemnitor’s fault; broad “regardless of fault” clauses are often unenforceable as violations of public policy.

8. Five-year non-disclosure of agreement terms (Clause 8)
   Exploit: Contractor cannot even list the engagement on a résumé or website for five years.
   Rewrite:
   “Confidential Information means non-public technical or business information expressly marked ‘confidential.’ Obligations expire three (3) years after termination. The existence and general nature of the engagement are not Confidential Information.”
   Legal reason: NDAs must be limited to legitimately protectable information; blanket gag on the fact of the contract can be struck down as prior restraint.

9. One-sided arbitration venue & cost-shifting (Clause 9)
   Exploit: Client is in Delaware, contractor in Oregon; arbitrator awards $50k legal fees against contractor for losing a $5k invoice claim.
   Rewrite:
   “Any dispute arising under this Agreement shall be resolved by confidential binding arbitration under the JAMS Comprehensive Rules in the county where Contractor’s principal office is located. Each party bears its own attorneys’ fees and costs; the arbitrator may award fees to the prevailing party only if a statute or contract clause specifically provides for fee-shifting for that type of claim.”
   Legal reason: Forum-selection and cost-shifting clauses are enforceable only if not adhesive; home-court advantage plus loser-pays is unconscionable for an individual contractor.

FAST CHECKLIST TO SEND BACK
[ ] Cap liability at fees received
[ ] Delete industry non-compete
[ ] Require written change-orders & kill-fee
[ ] 30-day payment, objective acceptance criteria
[ ] Limit IP assignment to project-specific code
[ ] Mutual indemnity, fault-based
[ ] 3-year NDA, allow resume use
[ ] Neutral arbitration venue, each side bears own costs

Strike any clause that fails the above = you remove 90 % of the weaponised risk.