Contract Scoring: Process and Updates

TermScout continuously monitors and updates its contract scoring to ensure that favorability ratings reflect the most accurate, market-aligned view of contract terms available. With over 1,000 public IT contracts and hundreds of negotiated agreements in our database, our approach combines legal rigor with benchmark-based insights.

This article outlines how we update our scoring framework and the impact of recent changes across key contract categories.

What Favorability Ratings Mean

TermScout’s favorability ratings are built to show how much a contract favors each party—and by how much. These scores are based on responses to hundreds of substantive legal questions extracted from every agreement we analyze.

Each clause is evaluated against legal norms, industry best practices, and real-world negotiation outcomes to determine whether it leans toward the vendor, the customer, or remains balanced.

TermScout Process for Ensuring Accuracy

We employ a multi-layered, statistically informed approach to keep ratings relevant, objective, and defensible. Every contract we evaluate is analyzed using over 800 distinct data points, transforming complex and often subjective legal terms into structured, comparable, and objective outputs.

TermScout employs a rigorous process to ensure scoring accuracy, including but not limited to the following:

1. Analysis of its own database of IT contracts, including hundreds of negotiated contracts and more than 1,000 public contracts. 
2. Analysis of market benchmarks such as the World Commerce and Contracting as a Service Principles, the Bonterms Cloud Terms, and the AWS Marketplace Standard Contract.
3. Consultation with legal experts on TermScout’s product advisory council, including top lawyers from both the buy- and sell-side of some of the largest commercial contracting teams in the world.

Favorability Ratings Are Informed Judgment

Contract scoring isn’t an exact science—it’s a structured, data-driven assessment guided by legal expertise. Our process aims to provide clarity, not replace the advice of a lawyer. As always, we recommend consulting legal counsel for any contract decisions.

What Changed in Our Latest Update

Recent updates to our scoring logic have made many contracts appear roughly 10% more vendor-favorable overall. This shift comes from updated weighting and refinements in how we score certain key clauses, including:

• Vendors accepting unlimited liability (or super caps) for data-related liabilities
• Failures of vendors to provide any exceptions to the cap on their liability
• Failures of vendors to provide any exceptions to the waiver of indirect damages
• Vendors requiring customers to waive one or more forms of direct damages
• Requirements that customers indemnify vendors for breach of any provision in the contract
• Failures of vendors to provide adequate protection of customer’s confidential information
• Provisions from vendors that involve broad licenses to or ownership of customer data or IP
• Non-solicits restricting customer
• Non-competes restricting customer
• Exclusivity clauses
• A number of more minor updates across a variety of clauses

As a result of these changes, some companies moved up or down relative to their peers in our category rankings.

For example, SAP — which accepts unlimited liability for data-related claims in its General Terms and Conditions for SAP Cloud Services, a concession offered by only 1% of vendors reviewed by TermScout — moved into the #1 spot for having the most customer-favorable contract in the Cloud Platform as a Service (PaaS) category. Microsoft Azure, Snowflake, IBM, and Google Cloud are all close behind. 

AWS, notably, slipped down to the bottom quartile of the pack, with a new rating of 70% Vendor Favorable. This is not surprising, considering the AWS Customer Agreement offers no limits on its customers’ liability, no protection of its customers’ confidential information, and requires that customers waive certain direct damages.

Why This Matters

These updates are more than internal calibration—they empower users to:

• Spot contract risk faster

• Benchmark more effectively

• Make better-informed vendor choices

Our goal is to give legal, sales, procurement, and RevOps teams the confidence to act on contract data that’s clear, current, and trusted.