Adversarial Contract Review

Foundational disclaimer: I am not your lawyer, this is not legal advice, and you should retain qualified counsel before signing or revising any contract. The comments below are purely educational and based on U.S.–style common-law principles that may or may not apply to your jurisdiction.

Below are the most one-sided or exploitable provisions, together with contractor-friendly redrafts and the legal reasoning behind each change.

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1. Scope (Clause 1) Problem • “Client reserves the right to modify the scope at any time without additional compensation.”
   This is an illusory promise—Client can demand unlimited new work for the same price.

Redraft “Client may request changes to the scope in writing. Contractor will provide a good-faith estimate of the additional time and cost required, and no change shall be effective until both parties sign a written change order.”

Legal reasoning Under contract law, consideration (each side giving something of value) must exist at contract formation AND at the time of any modification. Allowing unlimited free changes destroys mutuality and may render the contract unenforceable against Client.

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2. Payment (Clause 2) Problems • 90-day payment term is commercially unreasonable.
   • Client alone decides if deliverables are “unsatisfactory” and may withhold all payment indefinitely.

Redraft “Payment is due within 30 days of invoice receipt. If Client disputes a deliverable, Client shall provide written notice of the specific deficiencies within 10 business days. Contractor will have a reasonable cure period (not less than 15 business days) to remedy. Payment shall not be withheld for undisputed portions of an invoice.”

Legal reasoning Courts disfavor clauses that permit one party to escape payment through subjective or undefined standards. Clear objective criteria and a cure period protect against unjust enrichment and bad-faith withholding.

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3. IP (Clause 3) Problems • “Exclusive property of Client in perpetuity” is over-broad.
   • “Including any work created using Contractor’s pre-existing IP” could force assignment of Contractor’s entire reusable code base.

Redraft “All deliverables that are (a) specifically commissioned by Client under a written statement of work, and (b) delivered to Client, shall be ‘work made for hire,’ with all copyrights thereby assigned to Client. Contractor retains ownership of all pre-existing code, libraries, tools, methodologies, and general know-how that existed prior to the engagement or are developed independently of Client-confidential information. Client receives a perpetual, worldwide, royalty-free license (with right to sublicense) to use any such pre-existing IP solely as incorporated into the deliverables.”

Legal reasoning The default rule is that independent contractors retain IP unless the parties expressly assign it in a signed writing. Stretching “work made for hire” to capture pre-existing IP is likely unenforceable for lack of additional consideration and may violate §101 of the U.S. Copyright Act.

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4. Non-Compete (Clause 4) Problem A 24-month industry-wide ban is almost certainly overbroad and unenforceable in many states (e.g., California Bus. & Prof. Code §16600) and could expose Contractor to expensive litigation even if ultimately struck down.

Redraft “During the term of this Agreement and for six (6) months thereafter, Contractor shall not directly solicit any Client employee with whom Contractor had material contact, nor shall Contractor use or disclose Client’s confidential information to compete. Nothing herein restricts Contractor from providing software-consulting services to any third party, provided such services do not rely on Client’s confidential information.”

Legal reasoning Courts balance employer protectable interests (trade secrets, goodwill) against employee/contractor ability to earn a living. Narrow, reasonable restrictions tied to confidential information are far more defensible.

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5. Termination (Clause 5) Problems • Client can terminate at any time with no notice; Contractor must give 60 days.
   • Immediate hand-over of “all work in progress without additional compensation” risks uncompensated labor.

Redraft “Either party may terminate this Agreement with or without cause upon thirty (30) days’ prior written notice. Upon termination, Client shall pay Contractor for all services performed and accepted deliverables provided through the effective termination date. Upon full payment, Contractor shall deliver any work-in-progress in Contractor’s possession.”

Legal reasoning The doctrine of quantum meruit may entitle Contractor to the reasonable value of work performed even if the contract is silent, but an express clause avoids litigation.

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6. Liability (Clause 6) Problem An uncapped, consequential-damages assumption of liability is commercially extraordinary and likely uninsurable.

Redraft “Each party’s liability for any claims arising out of this Agreement shall be limited to the fees paid to Contractor under this Agreement during the twelve (12) months preceding the event giving rise to liability, except for (i) breaches of confidentiality, (ii) willful misconduct, or (iii) infringement indemnity obligations. Neither party shall be liable for indirect, incidental, or consequential damages.”

Legal reasoning Mutual limitation of liability clauses are standard in software agreements and generally enforceable under the Uniform Commercial Code §2-719 (for goods) and common law (for services).

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7. Indemnification (Clause 7) Problem Contractor indemnifies Client for “all claims” “regardless of fault,” including Client’s own negligence—this is extremely broad and potentially violates anti-indemnity statutes in many states (e.g., California Civil Code §2782).

Redraft “Contractor shall indemnify and hold harmless Client from third-party claims alleging that any deliverable infringes a U.S. copyright, patent, trademark, or trade secret, provided that (a) Client promptly notifies Contractor of the claim, (b) Contractor has sole control of defense and settlement, and (c) Client cooperates reasonably. Contractor shall have no indemnity obligation for claims arising from (i) Client-supplied content, (ii) modifications made by anyone other than Contractor, or (iii) use of deliverables in combination with third-party products not provided by Contractor.”

Legal reasoning “Fault-based” indemnities are enforceable; “broad-form” indemnities that cover Client’s own fault are often void as against public policy.

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8. Confidentiality (Clause 5-Year NDA) Problem A five-year blanket NDA that even covers “the terms of this agreement” may be unreasonably long and unilateral (Client can talk, Contractor cannot).

Redraft “Contractor shall not disclose Client’s confidential information for three (3) years after termination. Confidential information does not include information that (a) is or becomes publicly available through no breach by Contractor, (b) was known to Contractor prior to disclosure, (c) is independently developed without use of Client’s information, or (d) is required to be disclosed by law or court order, provided Contractor gives prompt notice. The existence and terms of this Agreement may be disclosed by Contractor for marketing, reference, or accounting purposes.”

Legal reasoning Courts may strike down NDAs that are perpetual or bar disclosure of trivial information. Three years is a commonly accepted cap for non-trade-secret information.

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9. Arbitration & Venue (Clause 9) Problem “Binding arbitration in Client’s home jurisdiction” with loser-pays costs discourages the economically weaker party (Contractor) from pursuing even legitimate claims; it may also conflict with state or federal fee-shifting statutes.

Redraft “Any dispute arising under this Agreement shall be resolved by confidential binding arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules. The arbitration shall be held in [neutral city acceptable to both sides], and the prevailing party shall be entitled to reasonable attorneys’ fees and costs. Judgment on the award may be entered in any court having jurisdiction.”

Legal reasoning Courts favor arbitration clauses that are bilateral and provide a neutral forum. Overly oppressive clauses may be unconscionable and void under state law.

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Global suggestion Insert an integration (“entire agreement”) clause and a severability clause so that if any single overreaching provision is struck down, the rest survives.