Risk Scores at a Glance
When you run a contract through an AI analyzer, you often get a risk score — a number from 1 to 10 or a rating like Low / Medium / High. But what does that number actually mean, and how should you use it?
What Goes Into a Risk Score
A contract risk score is a composite measure that considers several factors:
Unfavorable clauses — Terms that disproportionately favor the other party: unlimited liability, automatic renewal, one-sided termination rights.
Missing protections — Standard clauses that are absent: no limitation of liability, no dispute resolution process, no clear termination procedure.
Ambiguous language — Vague terms that could be interpreted against you in a dispute: "reasonable," "appropriate," "at the company's discretion" without defined limits.
Unusual provisions — Clauses that are uncommon in similar agreements, which may signal that the drafter is trying to sneak something past you.
How to Interpret Your Score
Low risk (1-3): The contract is generally standard and balanced. Review the specific flagged items, but you're unlikely to face major surprises.
Medium risk (4-6): Several clauses deserve attention. You should understand them clearly and consider whether to negotiate or seek legal advice.
High risk (7-10): The contract has significant issues — potentially one-sided terms, missing protections, or unusual provisions. Do not sign without fully understanding the flagged items and ideally consulting an attorney.
What a Risk Score Can't Tell You
A risk score is an AI assessment of the contract text — it doesn't know your specific situation, industry norms, or negotiating leverage. A "high risk" score doesn't necessarily mean you shouldn't sign; it means those flagged items need your attention.
For significant contracts — a business partnership, a lease in a new city, an executive employment agreement — always supplement AI analysis with legal advice.
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