Extract Every Redline Obligation from a Contract in One Prompt Session

The task

Associate or in-house counsel gets a counterparty's redline back and needs a clean inventory of every obligation, risk flag, and open issue before a partner call or a negotiation session. This workflow pulls that inventory from pasted contract text — no SaaS, no uploads, no new vendor review.

Before AI

You read the redline twice. First pass with a highlighter for obligations and defined-term shifts; second pass for indemnity, limitation of liability, and anything that touches privilege or IP. Then you type a summary memo. For a 20-page MSA with ~40 redlined clauses, 90-120 minutes is normal, and you still miss the occasional cross-reference the other side quietly broke.

Big firms are now building this into tooling — Sullivan & Cromwell developed Agreement Analyzer, an AI tool for identifying issues in a draft agreement, and the tool runs contracts through multiple automated review cycles to flag issues, check language against the firm's own negotiating playbooks, and identify potential litigation risks. You can get a lot of that value today, in a plain ChatGPT or Claude session, if your prompts are structured. Here's one that works. See the S&C/OpenAI write-up for context on how a dedicated tool handles the same job.

The workflow

Step 1 — Extract the obligation inventory. Paste the full clean+redlined contract text (or the relevant sections) at the end of the prompt below. The model returns a structured table of every obligation, who owes it, trigger, deadline, and whether the counterparty's redline changed it.

You are a senior transactional lawyer reviewing a counterparty redline. Below the line marked "CONTRACT TEXT" is the agreement, with counterparty edits shown as either [INSERTED: ...] or [DELETED: ...].

Produce a single markdown table with these columns:
| # | Clause ref | Obligor | Obligee | Obligation (plain English) | Trigger / Deadline | Redline change? (Y/N + 1-line summary) | Risk tier (High/Med/Low) |

Rules:
- One row per discrete obligation. Split compound clauses.
- Include conditional obligations (e.g., "upon notice of a Claim...").
- "Risk tier" = your view of commercial/legal risk to our side, assuming WE are the party named first in the preamble.
- Do not summarize. Do not add commentary before or after the table. Table only.

CONTRACT TEXT:

MASTER SERVICES AGREEMENT

This Master Services Agreement ("Agreement") is entered into as of November 1, 2026, between Northwind Analytics, Inc., a Delaware corporation ("Customer"), and Larkspur Data Systems LLC, a California limited liability company ("Provider").

1. SERVICES. Provider shall provide the data-engineering services described in each Statement of Work ("SOW"). Provider shall [INSERTED: use commercially reasonable efforts to] deliver each SOW milestone by the dates set forth therein.

2. FEES. Customer shall pay undisputed invoices within [DELETED: thirty (30)] [INSERTED: sixty (60)] days of receipt. Late amounts bear interest at [INSERTED: the lesser of 1% per month or] the maximum rate permitted by law.

3. CONFIDENTIALITY. Each party shall protect the other's Confidential Information with the same degree of care it uses for its own, but not less than reasonable care, for a period of [DELETED: five (5)] [INSERTED: two (2)] years following disclosure. Trade secrets are protected for so long as they remain trade secrets under applicable law.

4. INDEMNIFICATION. 
(a) Provider shall indemnify, defend and hold harmless Customer from any third-party claim arising from Provider's gross negligence or willful misconduct [DELETED: , or breach of this Agreement].
(b) [INSERTED: Customer shall indemnify Provider for any third-party claim arising from Customer Data provided to Provider, including claims of IP infringement.]
(c) The indemnified party shall give prompt written notice of any Claim and [INSERTED: shall permit the indemnifying party to control the defense and settlement, provided that no settlement admitting liability of the indemnified party shall be made without its consent].

5. LIMITATION OF LIABILITY. Except for breaches of Section 3 (Confidentiality) [DELETED: and Section 4 (Indemnification)], each party's aggregate liability shall not exceed [DELETED: 2x] [INSERTED: 1x] the fees paid in the twelve months preceding the claim. Neither party shall be liable for consequential, incidental or punitive damages.

6. IP OWNERSHIP. Customer owns all Deliverables upon payment. Provider retains ownership of its pre-existing tools and [INSERTED: any generally applicable improvements, methodologies and know-how developed in connection with the Services].

7. TERM AND TERMINATION. The initial term is two (2) years. Either party may terminate for material breach on [DELETED: 15] [INSERTED: 30] days' written notice if the breach remains uncured.

8. GOVERNING LAW. This Agreement is governed by the laws of the State of [DELETED: New York] [INSERTED: California], without regard to conflicts principles.

Step 2 — Pull the redline-only risk memo. The model now has the obligation table in context. Ask it to isolate the moves the counterparty made and tell you what they're doing commercially.

Using the table you just produced and the contract text already in context, write a redline risk memo for the partner. Format:

## Headline (one sentence: the single biggest shift in this redline)

## Material counterparty moves
For each INSERTED/DELETED change that matters, give:
- **Clause** — short name
- **What changed** — before → after, in plain English
- **Why they likely want it** — one sentence, commercially honest
- **Our exposure** — one sentence
- **Suggested counter** — one sentence; if you'd accept, say "accept"

## Open issues to raise on the call
Bulleted list of items that need a human decision (business terms, cross-references that broke, defined terms that drift, anything you flagged High risk).

## Issues NOT addressed in this redline that should have been
Short list of things a careful reviewer would expect to see edited but weren't (e.g., insurance, data-protection addendum, audit rights, assignment).

Keep the whole memo under 500 words. No throat-clearing. No disclaimers about not being a lawyer.

Step 3 — Privilege and sensitivity sweep. One more pass, cheap and worth it. Catches the things that will embarrass you if missed.

Final pass. Using everything in context, output three short lists:

1. **Defined-term drift** — any defined term whose meaning or scope changed because of a redline elsewhere (e.g., "Confidential Information" period shortened affects Section X).
2. **Broken cross-references** — any clause that now points to a section whose numbering, scope, or carve-outs no longer match.
3. **Privilege / sensitivity flags** — anything in the agreement (not just the redline) that could create privilege issues, waive protections, or expose work product (e.g., audit rights that reach legal files, broad cooperation clauses, discovery obligations).

If a list is empty, write "None identified — recommend human spot-check." Do not invent issues to fill space.

Gotchas

• Context window. Paste the full contract, not screenshots. If the agreement is over ~30 pages, split it by Article and run Step 1 twice, then concatenate tables before Step 2.
• The model will hallucinate clause numbers if the input isn't clearly structured. Keep section headers intact when you paste. If a row cites a clause that doesn't exist, assume the whole row is suspect.
• Risk tiering is directional, not legal advice. It reflects what a careful associate would flag, not firm policy or client-specific playbook positions. The S&C tool works because Agreement Analyzer integrates Sullivan & Cromwell's workflows, curated firm precedents, negotiating playbooks and ChatGPT Enterprise — you don't have that. Treat output as a first-draft issues list.
• Privilege. Do not paste client-identifying details or anything that could be a privileged communication into a consumer model. Use an enterprise instance with zero-retention terms, or redact party names and sensitive facts before pasting.
• "Issues not addressed" is the most useful section and the one most prone to generic filler. If it reads like a checklist from a textbook, re-prompt with "only flag omissions that matter given THIS deal type."
• Cross-reference checks are weak when the contract uses "Section 4(b) above" style pointers. Spot-check these by hand.

Time saved

Roughly 45-90 minutes per mid-length agreement review, based on replacing the first-pass issue-spotting and memo-drafting on a 15-30 page redlined MSA. The partner conversation still happens; the negotiation still happens; you just walk in with the inventory already built. On short NDAs the savings shrink to 15-20 minutes — not worth the setup unless you're reviewing a stack of them.

What we got when we ran it

We executed every prompt above, in order, against the sample input (model: claude-sonnet-4-6). Outputs below are real and unedited apart from length truncation.

Step 1 output

| # | Clause ref | Obligor | Obligee | Obligation (plain English) | Trigger / Deadline | Redline change? (Y/N + 1-line summary) | Risk tier (High/Med/Low) | |---|---|---|---|---|---|---|---| | 1 | §1 (Services) | Provider | Customer | Provide data-engineering services as described in each SOW | Per each executed SOW | N | Low | | 2 | §1 (Services) | Provider | Customer | Deliver each SOW milestone by the dates set forth in the SOW | Per milestone dates in each SOW | Y – "shall deliver" softened to "use commercially reasonable efforts to deliver," reducing Provider's delivery commitment | High | | 3 | §2 (Fees) | Customer | Provider | Pay undisputed invoices | Within [DELETED: 30] 60 days of receipt | Y – Payment period extended from 30 to 60 days, doubling Customer's float at Provider's expense | Med | | 4 | §2 (Fees) | Customer | Provider | Pay interest on late amounts | From the date payment is overdue | Y – Interest capped at lesser of 1% per month or legal maximum, limiting Provider's late-payment remedy | Low | | 5 | §3 (Confidentiality) | Each party | Other party | Protect the other party's Confidential Information with at least reasonable care | Ongoing during Agreement and for [DELETED: 5] 2 years post-disclosure | Y – Confidentiality tail cut from 5 to 2 years, significantly narrowing protection for our Confidential Information | High | | 6 | §3

…output truncated at 250 words.

Step 2 output

Headline Provider has systematically capped its own exposure (halved liability cap, narrowed indemnity, softened delivery obligations) while simultaneously expanding Customer's obligations (new Customer indemnity, extended payment terms, shorter confidentiality tail). --- ## Material counterparty moves - **Clause** — §1 Delivery Standard **What changed** — Hard delivery obligation → "commercially reasonable efforts" **Why they likely want it** — Insulates Provider from milestone-miss damages on complex data-engineering work. **Our exposure** — Milestones become effectively aspirational; no clear breach trigger. **Suggested counter** — Restore "shall deliver"; negotiate a separate force majeure carve-out if Provider needs relief. - **Clause** — §2 Payment Terms **What changed** — 30 days → 60 days to pay **Why they likely want it** — Standard ask from vendors wanting faster cash flow framed as a concession in the other direction. **Our exposure** — Minimal operationally, but signals pattern of one-sided drafting. **Suggested counter** — Accept 45 days as compromise; restore 30-day cure period in §7 as a paired concession. - **Clause** — §3 Confidentiality Tail **What changed** — 5 years → 2 years post-disclosure protection **Why they likely want it** — Provider wants freedom to reuse Customer's data insights sooner. **Our exposure** — Proprietary analytics methodologies and business data exposed after just 2 years. **Suggested counter** — Restore 5 years; accept 3 years only if trade-secret carve-out is explicitly robust. - **Clause** — §4(a) Provider Indemnity Scope **What changed** — Gross negligence/willful misconduct/breach → gross negligence/willful misconduct only **Why they likely want it** — Eliminates indemnity for ordinary

…output truncated at 250 words.

Step 3 output

1. Defined-term drift - **"Confidential Information" (§3)** — The protection period is a functional element of what "Confidential Information" means in practice. Cutting the tail from 5 to 2 years means any downstream clause that relies on continued confidentiality obligations (indemnity triggers under §4(a), IP restrictions under §6) loses its teeth after year 2, even if those clauses do not themselves reference a time limit. - **"Deliverables" (§6)** — Provider's new retained-IP carve-out for "generally applicable improvements, methodologies and know-how developed in connection with the Services" is undefined and unbounded. Because "Deliverables" is never explicitly distinguished from "improvements and methodologies," a dispute could arise over whether a given work product falls inside or outside Customer's ownership right. The term now has an uncertain boundary it did not have before. - **"Customer Data" (§4(b))** — Inserted as an operative term in the new Customer indemnity but defined nowhere in the agreement. Scope is entirely open: could encompass raw inputs, derived outputs, or metadata, which directly determines the breadth of Customer's new indemnity exposure. --- ## 2. Broken cross-references - **§5 cap exclusion → §4 (Indemnification)** — The original agreement excluded both §3 and §4 from the aggregate liability cap. The redline deleted the §4 exclusion. However, the new §4(b) Customer indemnity was inserted without any corresponding cap treatment. The cross-reference structure now creates an asymmetry: Provider's indemnity obligations (§4(a)) are capped at 1x fees, but it is ambiguous whether Customer's new §4(b) indemnity is also capped or sits entirely outside

…output truncated at 250 words.

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This content is for informational purposes only and is not legal advice. Confirm confidentiality, privilege, and jurisdictional rules before using any AI tool with client matters.