By Peter Kouwenberg on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs
In an era where artificial intelligence (AI) is being used to write everything from emails to entire legal documents, it’s tempting for small and medium-sized business owners to rely on these tools to draft their commercial contracts. But is it a smart business decision or a costly legal risk?
As a solicitor, I regularly review contracts that have clearly not been drafted or even reviewed by a legal professional. Whether it’s a Non-Disclosure Agreement, Shareholders Agreements, or general Terms and Conditions, these documents rely on precise legal language and an understanding of current legislation and case law. Relying on AI for this carries significant risk.
While AI will undoubtedly become more sophisticated in the years ahead, it is no replacement for specialist legal expertise. Here are some of the key risks that businesses face when relying on AI to draft commercial contracts. Risks that could lead to unenforceable agreements, disputes, or even litigation through the courts.
1. Inaccurate or misleading legal content
AI tools, particularly free or publicly available models, often generate content that appears legally sound but may include:
Incorrect references to foreign jurisdictions. I’ve been sent contracts