Contract Clause Extractor

Extract & classify key clauses from contract PDFs into a structured risk summary — with bilingual (CN/EN) support.

Contract Clause Extractor (合同条款提取器)

Turn dense contract PDFs into structured, scannable clause summaries with risk ratings. Extract key clauses across 12 standard categories, flag hidden risks, compare multiple contracts side-by-side, and generate bilingual clause translations — all without replacing legal counsel.

Core Capabilities

• Multi-format contract ingestion: Parse PDF, DOCX, plain text, or scanned images (OCR) in Chinese and English
• 12-category clause classification: Auto-classify every clause into standard legal categories with hierarchical numbering awareness
• Traffic-light risk annotation: 🔴 High risk | 🟡 Medium risk | 🟢 Low risk per clause with explanatory reasoning
• Hidden risk detection: Flag overly broad indemnities, unilateral termination rights, unreasonable jurisdiction clauses, and missing standard protections
• Multi-contract comparison: Align and diff clauses across 2+ contracts for quick discrepancy spotting
• Bilingual extraction: Extract key clauses in CN→EN or EN→CN with terminology preservation
• Modification suggestion engine: Generate plain-language modification proposals for risky clauses

Workflow (9 Steps)

Step 1: Contract Ingestion

Input: User uploads contract PDF/DOCX, provides URL, or pastes text. Supports single or multiple files for comparison mode. Action: Identify document structure — page layout, clause numbering pattern (1.1 / Article 1 / 第一条), table presence, signature blocks. Output: Parsed document with structural metadata. If scanned/image PDF, trigger OCR pipeline. Logic: Auto-detect language (Chinese, English, or mixed). Handle password-protected PDFs by requesting password.

Step 2: Clause Segmentation

Input: Parsed document. Action: Segment by clause boundaries using numbering patterns, heading styles, and semantic breaks. Preserve parent-child hierarchy for nested clauses. Output: Indexed clause list with numbering + raw text + parent reference. Logic: Handle non-standard numbering (Chinese legal: 一、/（一）/ 1. / (1)). Handle cross-page clause splits.

Step 3: Clause Classification

Input: Segmented clauses. Action: Classify each clause into one of 12 standard categories using LLM semantic matching:

1. Payment Terms (付款条款) — amounts, schedules, milestones, late fees
2. Delivery/Performance (交付/履约条款) — scope, timeline, acceptance criteria
3. Breach & Penalties (违约责任) — liquidated damages, remedies, cure periods
4. Confidentiality (保密条款) — scope, duration, exclusions, return/destruction
5. Intellectual Property (知识产权) — ownership, licensing, work-for-hire, background IP
6. Non-Compete / Non-Solicit (竞业限制) — scope, duration, geographic limits
7. Jurisdiction & Dispute Resolution (管辖权/争议解决) — governing law, venue, arbitration
8. Termination (终止条款) — termination for cause, convenience, effects of termination
9. Force Majeure (不可抗力) — definition, notice, consequences
10. Liability & Indemnity Caps (赔偿上限) — total liability, damages exclusions, indemnification scope
11. Acceptance Criteria (验收标准) — testing, UAT, defect remediation
12. Renewal & Term (续约/期限) — initial term, auto-renewal, notice periods

Output: Clauses grouped by category with confidence scores.

Step 4: Risk Annotation

Input: Classified clauses. Action: Score each clause on risk level:

• 🔴 High Risk: Unlimited liability, one-sided termination, unreasonable jurisdiction, missing standard protections, IP grab, excessive penalty ratios
• 🟡 Medium Risk: Ambiguous language, unbalanced but market-standard terms, narrow cure periods, broad force majeure
• 🟢 Low Risk: Balanced terms, boilerplate with no unusual provisions, standard commercial terms

Output: Each clause tagged with risk level + brief explanation of why.

Step 5: Hidden Risk Detection

Input: Entire contract + risk-annotated clauses. Action: Pattern-based scanning for structural risks:

• Overly broad indemnification (e.g., "indemnify for any and all claims")
• One-way termination rights (only one party can terminate for convenience)
• Unreasonable governing law (e.g., foreign jurisdiction for domestic contract)
• Missing reciprocal provisions (e.g., one party has confidentiality obligations but not the other)
• Liquidated damages exceeding legal limits (e.g., >30% of contract value under PRC law)
• Automatic renewal without notice

Output: "Hidden Risk Alerts" section with specific clause references and severity rating.

Step 6: Clause Summarization

Input: Risk-annotated clauses. Action: Generate a structured extraction table:

#	Clause Category	Original Text (excerpt)	Summary	Risk	Modification Suggestion
1	Payment	"乙方应在收到发票后90日内付款"	90-day payment term	🟡	Negotiate to 30 days standard
2	Liability	"赔偿上限为合同金额的1倍"	Liability cap = 1× contract value	🟢	Standard protection

Output: Complete extraction table. Option to export as CSV/XLSX.

Step 7: Multi-Contract Comparison (if applicable)

Input: 2+ contracts with their extraction tables. Action: Align clauses by category, then:

• Identify clauses present in Contract A but missing in Contract B
• Detect wording differences in matching clauses
• Flag clauses where risk levels differ between contracts

Output: Side-by-side comparison table with diff highlights.

Step 8: Bilingual Extraction (optional)

Input: Extraction table + target language selection. Action: Translate clause summaries and key terms while preserving legal terminology consistency. Build an ad-hoc bilingual term glossary for the document. Output: Bilingual extraction table (Original → Summary in Target Language). Key terms glossary.

Step 9: Report Generation

Input: All analysis results. Action: Compile into a comprehensive extraction report:

1. Executive Summary: Contract type, parties, date, overall risk score
2. Risk Summary: Count of 🔴/🟡/🟢 clauses, top 5 risks
3. Clause Extraction Table: Full categorized table
4. Hidden Risk Alerts: Specific warnings
5. Modification Playbook: Prioritized negotiation recommendations
6. Export: Markdown (editable), PDF (shareable), JSON (API consumption)

Output: Complete extraction report.

Sample Prompts

Prompt 1: Single Contract Quick Scan

User: "帮我快速提取这份合同的关键条款，标出风险点 [upload: supply-agreement.pdf]" Expected Output:

text

Executive Summary: Supply Agreement | Parties: Company A vs Company B | Term: 1 year | Overall Risk: 🟡 Medium

Clause Extraction (18 clauses, 12 categories):
🔴 High Risk (2):
  - Indemnity: "甲方承担一切赔偿责任" — Unlimited indemnity, one-sided
  - Termination: "乙方可随时终止合同" — Unilateral termination without cause

🟡 Medium Risk (5):
  - Payment: Net-90 terms, market standard is Net-30
  - Force Majeure: Overly broad definition includes "market conditions"

🟢 Low Risk (11): Standard commercial terms

⚠️ Hidden Risk Alert: No confidentiality clause for Party A (imbalanced)
Top 3 Modification Priorities: 1. Cap indemnity 2. Add mutual termination 3. Shorten payment to Net-30

Prompt 2: Multi-Contract Comparison

User: "对比这两份合同的关键差异 [upload: contract-v1.pdf, contract-v2.pdf]" Expected Output: Side-by-side comparison table with 7 categories showing differences, highlighting where v2 is more/less favorable than v1, with a "verdict" column indicating which version is preferred per category.

Prompt 3: Hidden Risk Deep-Dive

User: "这份30页的服务合同我不敢签，帮我找找有没有坑 [upload: service-agreement.docx]" Expected Output: Hidden risk report focused on 6 structural risk patterns, each with: the offending clause text, why it's problematic, and suggested alternative wording.

Prompt 4: Bilingual Extraction

User: "提取这份中文合同的核心条款，翻译成英文给海外法务看 [upload: nda-zh.pdf]" Expected Output: Bilingual table with Chinese original + English summary for key clauses. Glossary: 保密信息→Confidential Information, 接收方→Receiving Party, etc. Flag terms where translation may create ambiguity.

Prompt 5: Missing Clause Audit

User: "检查这份合同是否缺少了标准商业合同应该有的条款 [upload: vendor-contract.pdf]" Expected Output: Checklist of 12 standard clause categories with ✓/✗ status. For missing categories, explain the risk of omission and suggest a model clause.

Prompt 6: Negotiation Prep

User: "明天要和供应商谈合同，帮我准备谈判要点 [upload: draft-contract.docx]" Expected Output: Prioritized negotiation playbook: Tier 1 (non-negotiable risks → must fix), Tier 2 (market-standard adjustments → push for), Tier 3 (nice-to-have → concede gracefully), with talking points for each.

Real Task Examples

Example 1: Startup Vendor Contract

Scenario: Early-stage startup receives a 15-page SaaS vendor agreement. No in-house legal. Input: Upload PDF of vendor contract. Concern: "作为小公司，会不会被大厂合同坑？" Steps:

1. Parse → 15 pages, 42 clauses, CN/EN bilingual.
2. Classify → 12 categories covered, missing Acceptance Criteria.
3. Risk → 3 🔴: Unlimited liability clause, vendor can change pricing with 7 days notice, data ownership ambiguous.
4. Hidden risks → Auto-renewal without opt-out notice, vendor indemnity is one-sided.
5. Generate report with modification suggestions and negotiation talking points. Output: "⚠️ 重点风险: 数据归属条款模糊 —— 你的用户数据可能被供应商使用。建议修改为: 'All Customer Data remains Customer's exclusive property.'" Time: ~30 seconds.

Example 2: Employment Contract Check (Individual)

Scenario: Job seeker receives offer + employment contract. Wants to understand restrictions. Input: "帮我看看这份劳动合同，重点看竞业限制和知识产权条款 [upload: employment-contract.pdf]" Steps:

1. Focus: Non-compete, IP assignment, termination notice period.
2. Non-compete: 2 years, all competitors in industry (overly broad under PRC law).
3. IP: All IP assigned to company, including pre-existing (background IP — 🔴 risk).
4. Termination: Company may terminate with 30 days notice, employee with 90 days (imbalanced). Output: "竞业限制: 范围过宽，建议限定为直接竞争公司。知识产权: 要求排除入职前已有知识产权。解除通知期: 不对等，建议双方均为30日。"

Example 3: Lease Agreement Quick Check

Scenario: User about to sign a 24-month commercial lease. Input: "租办公室的合同，帮我提取关键信息 [upload: lease-agreement.pdf]" Steps:

1. Classify: Payment (rent + deposit), Termination (early exit penalty), Renewal, Maintenance obligations.
2. Risk: Early termination penalty = 6 months rent (🔴), rent escalation 8%/year (🟡), tenant responsible for all repairs including structural (🔴 — unusual, typically landlord responsibility).
3. Missing: Force majeure clause (risk during pandemic scenarios). Output: Summary with monthly cost projection over 2 years including escalation, highlighted risks with suggested counter-offers.

🚀 First-Success Path (3 Steps)

1. Step 1: Run contract-clause-extractor.sh classify contract.pdf — parses and extracts all clauses into 12 categories
2. Step 2: Run contract-clause-extractor.sh risk contract.pdf — annotates each clause with 🔴/🟡/🟢 risk levels
3. Step 3: Run contract-clause-extractor.sh summarize contract.pdf — see the structured extraction table with modification suggestions

Boundary Conditions

Condition	Behavior
Contract >100 pages	Process in chunks; summarize by chapter, flag time estimate
Scanned/image PDF (no text layer)	Trigger OCR; warn of possible extraction errors
Password-protected PDF	Request password; never attempt to crack
Non-contract document uploaded	Detect and warn: "This does not appear to be a legal contract"
Contract in unsupported language	Attempt processing; flag lower confidence for non-CN/EN languages
Handwritten annotations in PDF	Flag as "may contain markings" — OCR may miss handwritten text
Corrupted/unreadable PDF	Error with suggested fixes (re-export, convert format)
Multiple unrelated contracts in one PDF	Auto-detect and offer to process separately
User asks for legal advice	Redirect: "This is clause extraction + risk flagging, not legal advice. Consult a qualified lawyer."

Error Handling

Error Code	Scenario	Handling
E-PARSE-FAIL	PDF structure cannot be parsed	Offer manual text input; suggest re-exporting PDF from source
E-OCR-FAIL	OCR on scanned document fails	Return images with note; suggest higher-quality scan
E-PASSWORD	Password-protected PDF without password	Prompt for password; never attempt brute-force
E-NO-CLAUSES	Document has no detectable clause structure	Process as paragraph-level; flag as "unstructured document"
E-UNSUPPORTED-FORMAT	Uploaded file is not PDF/DOCX/TXT	List supported formats; suggest conversion
E-AMBIGUOUS-CLASSIFICATION	Clause spans multiple categories	Tag with multiple categories; flag for human review
E-BILINGUAL-CONFIDENCE	Low confidence on legal term translation	Mark with ⚠️ "Translation may need legal review"

Security Requirements

• Document confidentiality: Contract contents processed locally; never sent to external services for storage. Session-only processing.
• No legal advice claim: This tool extracts and flags; it does NOT provide legal advice, opinions, or recommendations that substitute for qualified counsel. Always include disclaimer.
• Explicit disclaimer: Every output must include: "⚠️ This is automated clause extraction for reference only. It is NOT legal advice. Consult a qualified lawyer before making contractual decisions."
• No PII storage: Redact personal identifiers (ID numbers, bank accounts, signatures) from extracted summaries unless explicitly requested.
• Chinese regulation compliance: Do not extract or store content from contracts involving state secrets, military, or other sensitive sectors.
• Third-party API warning: If LLM API is called for clause classification, warn user that contract text will be sent to the LLM provider. Offer local-only mode for sensitive contracts.