Contract Review With AI — and When to Actually Call a Lawyer

End-of-lesson check

15 questions · take it digitally for instant feedback at tendril.neural-forge.io/learn/quiz/end-biz2-contract-review-ai-adults

1. A solo founder uses Claude to review a vendor agreement. What is the main value they gain from this first pass?

   1. Automatic removal of unfavorable contract clauses
   2. Identification of potential issues to research before paying a lawyer
   3. A definitive legal opinion that can be used in court
   4. A guarantee that the contract complies with their specific state law

2. In most US states, a contract signed by a minor is described as what?

   1. Null and void ab initio
   2. Subject to double liability
   3. Automatically valid and enforceable
   4. Voidable at the minor's discretion

3. What does an assignment clause control in a contract?

   1. Whether one party can transfer their rights or obligations to another party
   2. Who receives payment under the agreement
   3. How intellectual property is divided between parties
   4. The process for resolving disputes through arbitration

4. A SAFE agreement is best described as:

   1. An automatic renewal provision for service contracts
   2. A standardized liability insurance policy
   3. A government-mandated safety inspection certificate
   4. A simple equity financing instrument used by startups

5. Why is Claude described as 'not excellent' at predicting how a contract clause will play out in court?

   1. Claude lacks the intelligence to understand legal documents
   2. Courts always rule against AI-assisted contracts
   3. AI cannot account for specific state laws, unique cap table circumstances, or judicial interpretation
   4. Claude refuses to analyze contracts due to liability concerns

6. In contract language, what does 'indemnity' typically mean?

   1. An automatic fee increase after one year
   2. A requirement to maintain insurance
   3. A cap on total liability
   4. A promise to compensate the other party for certain losses or damages

7. Based on the lesson's guidance, at what contract value threshold should a founder strongly consider hiring a lawyer?

   1. Contracts exceeding six months of revenue
   2. Anything purchased online
   3. Any contract over $500
   4. Only contracts over $1 million

8. What does 'diffing' a contract against a known-good template accomplish?

   1. Highlights deviations from standard, trusted contract language
   2. Automatically rewrites the entire contract
   3. Files the contract with the appropriate government agency
   4. Eliminates all non-standard clauses instantly

9. A non-compete clause in a founder's employment agreement typically restricts:

   1. Discussing salary with colleagues
   2. Using the company's coffee machine
   3. Working for competitors or starting similar businesses within a specified period
   4. Taking vacation time during certain seasons

10. What is the danger of an auto-renewal clause that a founder should watch for?

    1. The contract may silently renew, trapping the founder in unwanted terms or fees
    2. It prevents the founder from canceling at any time
    3. Auto-renewal makes the contract void in most states
    4. The contract automatically becomes more favorable over time

11. Why does the lesson recommend writing down questions before calling a lawyer?

    1. It saves billable hours by focusing the conversation
    2. Written questions are required by state bar associations
    3. Lawyers will not answer questions without written submission
    4. It allows the founder to avoid speaking to the lawyer directly

12. What does it mean when a contract specifies 'indemnity caps'?

    1. The contract has no limits on liability
    2. There is a dollar limit on how much one party must indemnify the other
    3. Indemnification is completely prohibited
    4. The cap automatically increases each year

13. In contract terminology, what does 'IP' or 'intellectual property' refer to?

    1. Creations of the mind such as inventions, designs, and artistic works
    2. Initial public offering procedures
    3. Internet Protocol addresses
    4. Legal documents related to internet businesses

14. A teenage founder signs a services contract independently. What is the primary legal risk?

    1. The other party can enforce it immediately without consequence
    2. The contract may be voidable, and the founder's parent or guardian may need to co-sign
    3. The contract is automatically void everywhere
    4. The founder will face criminal penalties

15. What does ACV stand for in the context of contract review, and why is the $25k threshold significant?

    1. Advanced Contract Verification; it certifies the document is legally sound
    2. Annual Contract Value; contracts above this amount warrant lawyer review
    3. Attorney Consultation Visit; the cost of initial legal advice
    4. Automatic Contract Validation; it triggers required government filing