21st July, 2025
Artificial intelligence (AI) is now a familiar part of daily business. From emails to analytics, it supports many tasks across industries. In the legal sector, tools like ChatGPT are gaining traction for document drafting. But can you really rely on AI to write your contracts?
Let’s explore what ChatGPT can do – and why expert legal guidance still matters.
What Is ChatGPT?
ChatGPT is a language model developed by OpenAI. It uses machine learning to generate human-like text based on your input. Many businesses use it to save time on routine tasks such as writing emails, summarising agreements, or drafting reports.
However, ChatGPT doesn’t fully understand the content it creates. Sometimes, it provides incorrect or confusing answers, or it can make things up to fill a gap (this is called a hallucination). OpenAI includes disclaimers to highlight these limitations.
The Risks of Using AI for Contracts
AI tools like ChatGPT are changing how we work. However, when it comes to legal documents, convenience can come at a high cost. These tools can quickly generate contract templates, but they lack the nuance, context, and legal reasoning that real agreements require.
Here are several reasons why relying on AI for contract drafting can be risky for your business.
- AI Predicts Words but Doesn’t Understand Law
ChatGPT doesn’t “know” the law—it predicts words based on patterns. This means it may produce contracts that sound professional but contain serious legal flaws. It cannot interpret statutes, analyse precedents, or apply legal logic to your unique situation.
- Missing Clauses and Misaligned Terms Are Common
AI-generated contracts often omit vital protections. For example, dispute resolution, confidentiality clauses, or renewal terms may be missing. Additionally, the included terms might not actually align with your commercial goals or industry risks.
- No Customisation for Jurisdiction or Strategy
A solid contract isn’t one-size-fits-all. It must reflect local laws, industry standards, and your business strategy. AI tools cannot adjust for regional legal nuances or develop negotiation tactics.
- AI Won’t Spot What’s Missing
AI cannot identify legal loopholes or predict future disputes. It won’t flag absent key clauses or vague terms that could cause trouble later. This is something only a trained legal expert can do.
- No Accountability for Mistakes
If an AI-generated contract leads to a legal dispute, who is responsible? Not the AI and not the platform. Unlike lawyers, AI offers no duty of care, professional indemnity insurance, or legal protection.
- Outdated Content Is a Real Risk
Laws change quickly, especially regarding privacy, employment, and consumer rights. AI models are not updated in real time. Therefore, they may include clauses that are outdated or even unlawful.
- Confidentiality and Data Security Concerns
Sharing sensitive business information with AI tools may breach privacy obligations. Moreover, AI platforms aren’t bound by attorney-client privilege or confidentiality rules.
- AI Can’t Provide Strategic Legal Advice
Good lawyers do more than draft terms. Because they know you and your business personally, they can consider consequences, plan for risks, and protect your interests. AI cannot replace this tailored, strategic guidance.
AI can assist with brainstorming or administrative tasks. Nevertheless, contracts are too important to leave to chance. They require legal expertise, tailored advice, and careful strategy.
Additionally, using AI-generated contracts can expose your business to unenforceable clauses, missing protections, outdated terms, and no accountability if things go wrong.
The safest approach is to work with a qualified lawyer. A legal professional ensures your contracts comply with the law, are customised for your needs, and protect your business.
How We Can Help
At Castrikum Adams Legal, we specialise in drafting and reviewing contracts that stand up to scrutiny. Our team offers personalised legal advice tailored to your business. Whether you’re creating new contracts or reviewing existing ones, we ensure your agreements always protect your interests.
If you found this blog helpful, we invite you to check out our other blog posts.
The content of this Blog does not constitute legal advice, is not intended to be a substitute for legal advice and should not be relied upon as such. You should seek legal advice or other professional advice in relation to any specific matters you or your organisation may have.