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Turn a contract clause into plain English
Rewrites a dense clause into something your client can act on in thirty seconds: every number preserved, every condition intact, and no verdict on whether the deal is fair smuggled in.
Your prompt
2
Pressure-test it
3
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Before you run it
What to gather first
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What comes back
See an example of what you’ll get
*(Clause: § 9.3 of an $18M stock purchase agreement, buyer-side, translated for the CFO deciding whether to sign Friday.)*
Plain English
Seller pays for losses caused by anything that was wrong in her representations, but only after those losses add up to more than $250,000. Once you cross $250,000, Seller pays the full amount from the first dollar, up to a total of $5,000,000. You must tell Seller in writing about a claim within 30 days after you learn about it. The $250,000 threshold and the $5,000,000 ceiling do not apply to claims about taxes, title to the shares, or fraud; those are unlimited. Claims must be brought within 18 months of closing, except tax claims, which run until the tax authority's assessment period expires.
*Obligations, conditions, and exceptions found in the original: 5. Carried into the translation: 5.*
What this means for you
- Your real exposure floor is $250,000. Anything smaller than that is your problem, and small problems are the common kind.
- Above $250,000 you recover from dollar one, not just the excess. That "tipping basket" is worth roughly $250,000 to you and is not the usual deductible structure.
- The 30-day notice clock is yours to manage. It runs from when you learn of the claim, not from when you decide it is serious, and missing it can cost you the claim entirely.
Numbers to remember
- Threshold before Seller pays anything: $250,000 (tipping, not a deductible)
- Ceiling on Seller's total liability: $5,000,000 (27.8% of purchase price)
- Notice deadline: 30 days from discovery
- General survival period: 18 months from closing
- Uncapped: taxes, title to shares, fraud
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Assumptions I made. "Losses" carries the § 1.1 definition, which I could not see. If it excludes consequential damages, the practical value of the $5,000,000 cap is materially lower [verify]. I read "Indemnified Party" as Buyer and its affiliates [safe - § 9.1]. I assumed the 18-month period is calendar months from the closing date [verify].
Where this is weakest. The sentence "Seller pays the full amount from the first dollar" is my reading of a tipping basket, and the drafting is not perfectly clear. If the clause is actually a true deductible, your recovery drops by $250,000 on every claim. Second, "within 30 days after you learn about it" compresses "promptly, and in any event within thirty (30) days of becoming aware of facts giving rise to a claim," which is a lower and earlier trigger than most CFOs will assume.
What only you can decide. You can send the version above (the CFO reads all of it and decides tonight, but the notice trigger reads softer than the contract does) or a version that quotes the notice language verbatim (precise, defensible if this ever gets argued about, and he will skim it and call you anyway). Second call: whether this goes out in writing at all. A written restatement is what people rely on later, and if § 1.1 turns out to narrow "Losses," your email is the document that gets forwarded, not the agreement.
What would make this materially better. (1) The § 1.1 definition of "Losses": it decides whether the $5,000,000 cap is real. (2) Confirmation whether § 9.3(a) is a tipping basket or a deductible; one word in the proviso settles it. (3) The escrow or holdback terms, since a cap with no funded escrow behind it is worth what the seller is worth in 18 months.
Why this prompt is built the way it is
## Framework
1. **Count first.** Break the clause into discrete obligations, conditions, and exceptions before writing. The translation must carry the same count.
2. **One sentence per obligation, and conditions stay conditions.** Active voice, named actor, stated deadline. No semicolons, no "provided, however," no sentence doing two jobs. An obligation that triggers only on notice, on closing, or after a cure period must read that way. A conditional obligation rendered as absolute is the expensive failure here.
3. **Numbers are copied, not restated; defined terms are handled, not dissolved.** Caps, baskets, deductibles, percentages, notice and cure periods, and the event each runs from. Translate a defined term only where the contract's definition matches the ordinary meaning; where it does not, keep the term and add one sentence saying what it actually covers.
4. **Three things that matter, and no verdict on the deal.** What the reader will be asked to do, what could cost them money, what deadline belongs to them. Whether the clause is fair, market, or negotiable is a separate conversation; mixing it in makes the translation useless as a reference document.