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Artificial intelligence (AI) has become a prominent tool for improving daily work. AI tools, particularly generative AI and large language models, promise increased efficiency and the ability to handle routine tasks. As such, your business may wonder if you can use AI tools such as ChatGPT to draft your contracts. While AI advancements present clear benefits, there are also significant risks associated with AI contract drafting that you should be aware of. This article explores critical risks to watch out for when you use AI tools to draft a contract.
Why Might You Use AI for Your Contracts?
If your business wants to save time and resources, AI contract drafting may be a valuable asset. AI technology, particularly AI systems like ChatGPT and other AI chatbots, can automate the drafting process, handling tasks such as generating contract templates and standard legal documentation. Sometimes, these tools can be free of charge and help you reduce legal costs.
However, you should consider the risks of relying on AI for critical tasks.
What Are the Risks of Using AI for Contract Drafting?
Despite any potential benefits, there are several risks you should consider when using AI for contract drafting. These risks arise from the limitations of AI technology, the potential for human error, and the complexities of legal contracts.
Risks include the following:
Risks of Inaccuracy
One of the most significant risks in using AI for your contracts is the potential for inaccuracies and non-compliance with English law.
Legal contracts must be clear and accurate; even a tiny error can have significant consequences. If your AI-generated agreements fail to include essential clauses or misunderstand the legal context, the document may not protect your interests or be unenforceable.
AI tools rely on their training data. If this data is outdated, incomplete, or irrelevant to your legal context, the contracts produced might be flawed. This is particularly important in the UK, where various legal rules can apply to contracts. Without careful oversight, you might end up with contracts that do not meet the necessary legal requirements. For instance, will AI pick up if your business is a data processor and needs data processing clauses in your contract?
Risks of Relying Too Much on AI
Another significant risk is an overreliance on AI without sufficient human lawyer oversight. While AI can draft contracts quickly, it lacks the human judgement necessary to evaluate the broader implications of specific terms. An AI-generated contract might meet basic legal standards but fail to consider the strategic interests of the parties involved. This could result in agreements that do not adequately protect your business or leave you vulnerable to unforeseen issues.
The quality of AI-generated contracts also depends heavily on the input you provide. Poorly formulated prompts can lead to risky or poorly drafted contracts. This can create a false sense of security, where you believe you have a solid contract when, in reality, it might be full of significant gaps and errors.
Using AI-generated contracts with various issues and holes could also alarm your business customers and make them question your reputation.
Lack of Legal Risk Understanding
AI tools may efficiently process large amounts of data and generate standardised content but need help with the nuance often required in legal drafting.
In complex situations where you need bespoke clauses, AI may produce contract drafts that are not correctly tailored to the specific circumstances and fail to account for unique risks that a human lawyer would recognise. This lack of flexibility and insight can result in less effective contracts or leave your business vulnerable to unforeseen legal risks.
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What Are the Benefits of Legal Advice in Contract Drafting?
Given these risks, it is crucial to remember the value of legal advice when drafting contracts. A qualified lawyer can provide your business with the expertise needed to ensure that your agreements are legally sound and strategically advantageous.
Download this free Commercial Contracts Checklist to ensure your contracts will meet your business’ needs.
Lawyers can identify potential issues that AI might miss, such as ambiguous language or clauses vital to protecting your business from risk. They can also tailor contracts to fit your business’s specific needs and goals, something AI tools may not be able to do with the necessary depth and insight.
Key Takeaways
While AI tools may seem efficient and cheap, you should approach these tools with caution. AI might be able to churn out contracts quickly and efficiently, but it is not a substitute for qualified legal expertise. Legal contracts are complex documents that require careful consideration and a solid understanding of the relevant legal context and commercial business background. Your business should seek legal advice to ensure your contracts are robust and legally sound rather than over-rely on AI tools.
If you need help with a contract, LegalVision’s experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently asked questions
1. What are the risks of using AI to draft a contract?
You need to be aware of several risks when using AI for any type of contract drafting. The risks include:
- potential inaccuracies;
- non-compliance with legal rules; and
- missing key clauses which your business needs to protect itself.
These issues can result in contracts that do not adequately protect your interests or account for specific legal requirements.
2. How can a lawyer help me draft my contract?
A qualified lawyer can ensure that your contracts are legally sound, tailored to your needs, and cover the relevant risks. They can identify and address potential issues that AI might miss, provide you with clarity on complex legal terms, and ensure your contracts are drafted correctly and are enforceable.
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