AI Contract Review: Spot Risky Clauses Faster in Word

Contracts shouldn’t take hours to “decode.” With the right AI workflow, you can spot risky clauses faster, turn vague legal language into plain English, and draft cleaner negotiation edits—without losing control of the final decision. This guide covers: Method 1 (a manual copy-paste workflow using any AI chat tool) and Method 2 (a faster, more automated AI Contract Review directly inside Word with Kutools).

Best for: NDAs, vendor agreements, SaaS terms, employment clauses

What AI contract review is (and isn’t)

In real workflows, AI contract review is most useful for:

• Summarizing the deal in plain English (who, what, when, how much, how to end).
• Spotting risky or unusual clauses (one-sided terms, missing limits, unclear obligations).
• Drafting revision options (minimal edits vs stronger protections) to speed negotiation.

What AI does not do reliably: guarantee enforceability, ensure jurisdiction-specific compliance, or replace your organization’s legal judgment.

Method 1: Review Contracts With Any AI Using Manual Copy-Paste

You can use any AI chat tool by manually copying and pasting contract sections, then applying the changes back in Word.

Manual Workflow — Step-by-step guide

1. (Optional) Extract key terms first using AI: use the Key Terms Prompt to create a quick deal snapshot for your Word document (parties, term, payment, liability cap).
2. Turn on redlines: click Review > Track Changes in Word.
   
3. Pick a section to review: start with high-risk areas (liability, indemnity, termination, renewal, confidentiality).
4. Copy-paste one section into AI: work section-by-section to reduce noise and improve accuracy.
5. Run a risk scan: use the Risk Scan Prompt and require clause quotes. Then cross-check coverage with the Clause Checklist.
   
6. Rewrite only what you’ll negotiate: use the Rewrite Prompt to generate two options (minimal change vs stronger protection).
   
7. Apply edits as redlines: paste the selected wording back into the document with tracked changes.
   

Prompts (what to ask AI)

Use these prompts as reusable templates. They are not “steps” — they are instructions that help AI produce consistent outputs.

Prompt 1: Key terms extraction (table-friendly)

You are a contract analyst. Extract the contract’s key terms in a table with columns:
Term | What it says | Where it appears (section) | Risk/Notes

Include: parties, effective date, term, renewal, payment, termination, liability cap, indemnity,
governing law, confidentiality, IP, data/security, dispute resolution.
If a term is missing, write: Not specified.

Prompt 2: Clause risk scan (must quote the clause)

Review the contract section-by-section. For each section, output:
1) Risk level: Low / Medium / High
2) Plain-English meaning
3) Why it may be risky (one-sided, ambiguous, missing limit, unusual obligation)
4) Negotiation note: what to ask for or change
5) Quote the exact sentence(s) you are commenting on

Prompt 3: Draft safer alternatives (two rewrite options)

Rewrite the clause below to be clearer and more balanced while preserving the intent.
Provide two versions:
(A) Conservative edit (minimal change)
(B) Stronger protection for the reviewing party

Keep the clause formatting similar. Avoid changing unrelated concepts.
Clause text:
[PASTE CLAUSE HERE]

Clause Checklist (what to verify)

This checklist is your coverage guide. It helps you verify that you didn’t miss common risk areas during manual review.

Method 2: Automated AI Contract Review Inside Word with Kutools for Word 👍

Method 1 works, but it still involves switching between reading, prompting, and applying edits. If you review contracts frequently in Word, you may prefer an in-document workflow to reduce context switching. Kutools for Word's AI Contract Review can underline risky clauses in the document and show Risk Description, Revision Suggestion, and Suggested Text in a review pane. Then you can Insert, Replace, or Dismiss each item.

After downloading and installing Kutools for Word from the official website, do the following:

Step 1: Start the analysis

1. Open the Word document that contains your contract. Go to the Kutools tab, and in the AI Law group, click AI Contract Review
   .
2. In the AI Contract Review pane on the right, set:
   • ① Review position: Party A, Party B, or Neutral
   • ② Precision level: Standard, Detailed, or Comprehensive
   • ③ Additional requirement (optional): choose a preset or add your own requirement.
     
3. Click one analysis button:
   • Analyze selected content
   • Analyze current paragraph
   • Analyze entire document

Step 2: Review and handle risks

1. After analysis, all risks appear in the pane, each with a clear Risk Description, a practical Revision Suggestion, and ready-to-use Suggested Text. And the corresponding clauses in the document are automatically highlighted.
2. The total number of identified risks is displayed at the bottom of the pane.
3. Click any risk item in the pane to jump to the related clause in the document.
4. For each risk, choose one action:
   • Insert – insert content after the clause (useful for negotiation notes)
   • Replace – replace the original clause with the suggested text
   • Dismiss – ignore the item if you decide it’s acceptable.
   
   

Best Practices

The best results come from AI-assisted review, not “AI decides.” Let AI accelerate your first pass, then use human judgment to validate context, intent, and risk before you change any wording.

• Keep an audit trail: always work in Track Changes / Suggesting mode so every edit is reviewable.
• Force evidence: require the AI to quote the exact clause it’s discussing, then compare the quote with the original text.
• Review in chunks: analyze one section at a time and include any related definitions or exceptions to avoid “out-of-context” suggestions.
• Ask for two rewrite levels: a conservative edit for clarity, and a stronger edit for negotiation—then choose based on your risk tolerance.
• Double-check high-risk zones: liability cap, indemnity, termination, renewal, confidentiality, IP, and data/security deserve a second pass.
• Don’t trust “not specified”: treat it as a signal to search the document manually—contracts often hide terms in definitions, exhibits, or boilerplate.

FAQ