Liability clause comparison for negotiation

Nothing here is legal advice. A draft is a starting point for a qualified person, not a substitute for one.

Use this workflow to turn three sources into a short, traceable negotiation position note: the counterparty draft, approved fallback wording and your internal playbook. It is for commercial lawyers preparing a negotiation, not for replacing legal judgement. Nothing here is legal advice. A draft is a starting point for a qualified person, not a substitute for one.

Prepare the review pack

1. Create one working folder and save immutable copies of:

   • The counterparty draft, including schedules and any incorporated terms.
   • The current approved fallback wording for liability, indemnity and insurance.
   • The relevant internal playbook, approval matrix and deal-specific instructions.
   • Any prior term sheet, redline, email concession or insurance certificate that changes the commercial context.

2. Record the document details at the top of your review note:

   • Contract name and version or date.
   • Counterparty name.
   • Transaction type and your client entity.
   • Governing law and dispute forum, if stated.
   • Deal owner, legal reviewer and deadline.
   • The exact fallback and playbook versions used.

3. Convert the counterparty draft into searchable text if needed. Keep page numbers, clause numbers and defined terms intact. For a scanned document, check the extracted text against the original around every liability, indemnity and insurance clause.

4. Remove or mask information that your organisation does not permit you to submit to an external tool. Check your organisation's approved use policy first. Product behaviour and available controls can vary, so check the xAI documentation overview before using the model with contract material.

Build a clause map before comparing words

Create a table with one row per issue. Do not begin by asking the model whether the contract is acceptable. Give it an extraction job first.

Issue	Counterparty clause	Fallback clause	Playbook position
Liability cap	Clause and page reference	Clause and version reference	Standard, approval route, rationale
Excluded loss	Clause and page reference	Clause and version reference	Required exclusions and permitted carve-outs
Indemnities	Clause and page reference	Clause and version reference	Trigger, scope, process and limits
Insurance	Clause and page reference	Clause and version reference	Required cover, evidence and duration

Use this prompt with the model you are using:

Create a clause map from the attached counterparty draft. Extract only clauses concerning liability, limitations or exclusions of liability, indemnities, defence obligations, insurance, and related definitions or schedules.

For each item, give: clause number, heading, page, exact operative wording, defined terms relied on, cross-references, and a one-sentence neutral description. Do not assess acceptability. If a clause is absent, say "not found". Quote short passages only and identify anything uncertain.

Read the map against the draft. Add clauses that sit outside the obvious headings, such as a service credit provision described as an exclusive remedy, a confidentiality carve-out, or an obligation to maintain insurance in a schedule.

Compare the clauses against approved positions

5. Give the model the verified clause map, fallback wording and relevant playbook extracts. Ask for a structured comparison, not a free-form summary.

Compare the verified counterparty clause map with the fallback wording and internal playbook extracts below.

For each issue, produce a table with these columns: counterparty position, fallback position, playbook position, material difference, negotiation consequence, proposed position, approval needed, and source references.

Use neutral drafting. Do not give legal advice or state that a term is enforceable. Mark any point that depends on missing facts, definitions, schedules, governing law, insurance evidence, or internal approval as "requires lawyer review". Do not infer a playbook position where none is provided.

6. Review each stated difference yourself. Focus on the interaction between clauses, not isolated wording. For example, a stated cap may be altered by uncapped indemnities, carve-outs, exclusive remedies, a limitation applying only to one party, or a claim procedure that changes the practical burden.

7. Classify each point for negotiation. Use labels that match your internal process, such as:

   • Accept: within the stated playbook position.
   • Request: seek the fallback wording or a specified compromise.
   • Escalate: outside authority, commercially material or dependent on missing facts.
   • Clarify: unclear drafting, missing definition, inconsistent cross-reference or absent schedule.

Draft the negotiation position note

8. Produce a note that the deal team can use in a call. Keep it short enough to scan, but include source references so the legal reviewer can verify every point. Use this structure:

• Matter details: contract, parties, version, reviewer and date.
• Overall position: two or three sentences describing the main departures from the playbook and the items needing approval.
• Negotiation table: issue, counterparty wording, requested position, fallback or compromise, commercial rationale supplied by the team, approval status and clause reference.
• Dependencies: facts or documents still needed, such as the service scope, data handling allocation, insurance evidence or a missing schedule.
• Open questions: points for the client, deal owner, insurance contact or supervising lawyer.
• Handover: next drafter, approver, negotiation owner and deadline.

Ask the model to draft only from the checked comparison:

Draft a negotiation position note from the approved comparison table. Preserve clause references and approval labels. Separate confirmed positions from questions and assumptions. Do not add legal conclusions, market practice claims, or terms not present in the source material. Use concise bullet points suitable for a commercial negotiation call.

Check the note before handover

The output is wrong if it smooths over uncertainty. Treat any confident statement without a clause reference, playbook reference or named assumption as unverified. It is also wrong if it treats a missing insurance schedule as evidence that no insurance is required, or if it compares a cap without checking the carve-outs and linked indemnities.

If you see this	Do this
A clause reference does not match the draft	Re-open the source, correct the map and regenerate only that row.
The model invents a playbook rule	Delete it. Add the actual extract or mark the issue for internal review.
Two clauses appear inconsistent	Quote both clauses in the note and mark the point as requiring lawyer review.
A commercial rationale is missing	Ask the deal owner. Do not create one from the drafting alone.

Hand over and retain the record

9. Send the negotiation position note with the clause map and source list to the supervising lawyer or approved reviewer. State clearly which items require approval and which assumptions remain open.

10. Save the checked note, marked draft and approval record together. After the negotiation, update the note with agreed departures and the reason for each concession. This creates a usable record for the next draft and the next review.

When the workflow does not work

If the source documents are incomplete, stop comparison at the missing point and list what is needed. If the output loses clause references or merges separate issues, reduce the task: extract one clause family at a time, verify it, then compare it. If the playbook does not cover the deal structure, do not force a standard answer. Escalate the gap with the relevant contract excerpts and a short list of commercial facts needed for a decision.