AI Drafting for Contracts: Boilerplate Speed vs. Hidden Risk
AI can generate contracts in seconds. But what looks like polished legalese may hide errors, conflicts, or omissions that cause real problems later. Here’s what small firms, startups, and in-house teams should know.
The appeal of AI contract drafting
AI tools can produce agreements that look professional, filled with standard “boilerplate” language. For routine needs — NDAs, vendor agreements, employment contracts — the speed is tempting. But fast doesn’t always mean safe.
Hidden risks
- Clause drift: AI may reuse language from unrelated contexts, introducing terms that don’t fit your situation.
- Definition mismatches: A contract may define “Confidential Information” one way in one section and use it differently elsewhere.
- Cross-reference errors: AI can insert references to sections or appendices that don’t exist.
- Jurisdiction traps: Governing law and venue clauses may default to irrelevant or unfavorable locations.
- IP assignment gaps: Startups relying on AI-drafted agreements may miss critical protections for ownership of intellectual property.
Why this matters
Courts and counterparties enforce what’s written, not what was intended. A sloppy clause could weaken enforcement, open loopholes, or create liabilities you didn’t plan for.
Practical safeguards
- Always review with a human lawyer: AI drafts should be treated as starting points, not final documents.
- Check defined terms carefully: Ensure consistency across the document.
- Audit cross-references: Verify that each section points to a real, correct clause.
- Tailor governing law: Don’t leave it to defaults — choose the right jurisdiction for your business.
- Protect IP ownership explicitly: Make sure work product, inventions, and software assignments are airtight.
Takeaway
AI speeds up drafting, but it doesn’t replace the careful eye of a lawyer. Treat AI-generated contracts like templates — helpful, but risky if taken at face value. Checking the fine print now avoids disputes later.