ChatGPT has taken the world by storm. ChatGPT is an AI language platform developed by OpenAI that can answer questions and perform tasks. ChatGPT can be an invaluable asset if used correctly. It helps businesses save time on document preparation, provide personalized and factual answers, and enhance communication with customers who speak multiple languages. Moreover, ChatGPT is easy to integrate into existing business operations and use and can operate 24/7 to offer assistance to customers during regular business hours. As a result, it has quickly gained notoriety among language professionals including lawyers.

Can ChatGPT Write Legal Contracts?

For routine legal issues, the technology offers significant access to justice questions in making legal services available to people of limited means due to low cost and instant accessibility. However, for complex issues requiring a contract, ChatGPT’s consumer law orientation does not fare well. We asked ChatGPT whether it can replace attorneys in drafting legal contracts. Here’s what it said:

  • As an AI language model, I can generate text and assist in writing content, including legal contracts. However, I must emphasize that I am not a licensed lawyer, and I cannot provide legal advice or guarantee the accuracy or validity of any legal document that I generate.
  • Legal contracts are complex documents that require careful consideration and understanding of legal concepts and terminology. While I can generate text based on input, I do not have the legal expertise to determine whether the contract’s terms and conditions are enforceable or valid.
  • Moreover, legal contracts may involve nuances and specific requirements that are unique to a particular jurisdiction or industry, which I may not be aware of. Thus, it is highly recommended to consult a licensed attorney who is knowledgeable in the relevant legal domain to review and provide advice on the legal contracts’ content before finalizing them.
  • In summary, while I can assist in generating the text of legal contracts, I am not a substitute for the advice and guidance of a licensed attorney.

ChatGPT’s response is quite good, but missed a vital point: Confidentiality of Communication.

Confidentiality of Client Communications

Confidentiality is a critical aspect of the attorney-client relationship, and it’s important to maintain the confidentiality of legal communications. However, it’s important to keep in mind that as an AI language model, ChatGPT is not a licensed attorney and cannot be considered part of the attorney-client relationship.

When an individual poses a question to ChatGPT, the information provided is typically not considered confidential, as there is no attorney-client relationship established between the individual and ChatGPT. However, it’s important to be cautious about sharing sensitive information with any third-party service, including ChatGPT.

It’s also worth noting that some companies and organizations that provide language models and other AI tools may have their own privacy policies and terms of service that govern how they handle user data. It’s important to review these policies carefully to understand how the data provided to ChatGPT or other AI tools may be used or shared.

For example, OpenAI’s FAQ states the following:

Can you delete specific prompts?

No, we are not able to delete specific prompts from your history.  Please don’t share any sensitive information in your conversations.

OpenAI’s Privacy Policy also states:

Communication Information: If you communicate with us, we may collect your name, contact information, and the contents of any messages you send (“Communication Information”).

When using ChatGPT to draft legal contracts, users must abide by ChatGPT’s Privacy Policy and Terms of Use. As such, patent attorneys must take care not to disclose confidential information to publicly-accessible large language models like ChatGPT.  

Accuracy and Bias with ChatGPT

ChatGPT has become an innovative new tool in many businesses, but it’s essential to take time and consider its risks and drawbacks before relying on it for any task. This is especially true if the task requires a high degree of expertise or legal knowledge.

First and foremost, chatbots lack the capacity to comprehend human language and conversation. This means they may provide answers which lack precision and accuracy, as well as limited context awareness to explain why certain language was used in crafting the contract.

Second, a chatbot cannot verify the accuracy or up-to-dateness of the information it receives. Therefore, if you use its responses for legal advice to clients or customers, make sure they are accurate and up to date.

Third, chatbots lack filters that prevent them from providing advice from different sides of a contract negotiation. For example, the bias in the training data leads ChatGPT to be able to handle only a single point of view, and despite repeated coaching to the bot to draft an answer favoring a landlord’s petition request, this is what we get from ChatGPT:

the bias in the training data leads ChatGPT to be able to handle only a single point of view.

There are numerous risks involved with relying on ChatGPT to draft a legal contract, such as inaccurate or misleading content and lack of quality control in the output. For instance, ChatGPT can be prone to ‘hallucination’–an error where it makes up information or sources where there simply isn’t enough data–which puts clients at risk for inadequate outcomes.

Potential risks and drawbacks to relying on ChatGPT to generate legal agreements

Lack of Legal Expertise

AI language models lack the legal expertise and knowledge required to draft complex legal agreements. While the model can generate text based on its training data, it may not have the understanding of the underlying legal concepts that a human lawyer would have. As a result, the contract may contain errors or omissions that could render it unenforceable.

Inability to Consider Context

AI language models like ChatGPT generate text based on patterns in their training data, without considering the specific context of the contract. They may not be able to account for the unique circumstances and nuances of the parties involved in the agreement. This could result in the contract failing to address important issues or failing to adequately protect the parties’ interests.

Limited Customization

AI language models like ChatGPT are limited by their training data, which means they may not be able to account for industry-specific terms or unique contractual terms. A contract generated by an AI language model may lack the necessary customization to be effective in a particular industry or for a specific type of transaction.

Lack of Flexibility

AI language models generate text based on their training data, which means that the resulting contract may be rigid and inflexible. Parties may need to negotiate and make modifications to the contract to account for specific circumstances, which an AI language model may not be able to accommodate.

Potential for Bias

AI language models may have a bias in their training data, which could result in biased or discriminatory language in the contract. This could potentially expose the parties to legal liability.

Thus, while AI language models like ChatGPT can assist in generating text for legal agreements, relying solely on them to write contracts could lead to errors, omissions, lack of customization, and potential legal liability. It is essential to have a licensed attorney review and modify the contract to ensure that it meets all necessary legal requirements and effectively protects the parties’ interests.

Businesses using ChatGPT to draft legal contracts should never rely solely on its capabilities; while it can be useful for creating content like simple contract clauses, legal documents should always be written with legal counsel present.

Potential risks and drawbacks to relying on ChatGPT to generate legal agreements

Legal considerations of using an AI language model like ChatGPT to write contracts

There are several legal considerations to be aware of when using an AI language model like ChatGPT to write contracts. Here are some of the key ones:

Contract Formation

In most legal jurisdictions, contracts must meet specific requirements to be legally binding. For example, they must include an offer, acceptance, and consideration. While an AI language model can generate the text of a contract, it cannot determine whether the contract meets the legal requirements for formation. It is, therefore, essential to have a licensed attorney review the contract to ensure it meets all necessary legal requirements for contract formation.

Contract Interpretation

The language used in a contract is critical to its interpretation. The use of vague or ambiguous language can lead to disputes between parties. While AI language models can generate coherent text, they may not be able to accurately convey the intended meaning of complex legal concepts. As a result, a licensed attorney should review and interpret the language of the contract to ensure that the terms accurately reflect the parties’ intentions.

The precision of contract language

Liability: When using an AI language model like ChatGPT to write contracts, it’s important to understand who is responsible for any errors or omissions in the contract. While AI models can assist in generating text, they may not be able to detect errors or inconsistencies that could result in legal liability. As such, it is advisable to include a clause in the contract that addresses liability for any errors or omissions.

If a small business uses ChatGPT or any AI language model to write contracts that are later found to be faulty or unenforceable, there can be several potential consequences including:

  1. Legal Liability: If a contract is found to be faulty or unenforceable, the parties may have legal recourse against the party that drafted and agreed to the contract. For example, a party to the contract may sue the small business for breach of contract, and the business may be required to pay damages or other penalties.
  2. Costly Litigation: If a faulty or unenforceable contract leads to a legal dispute, the small business may have to spend significant amounts of money on legal fees to defend itself in court. This can be especially challenging for small businesses with limited financial resources.

OpenAI website states that ChatGPT shouldn’t be relied upon for advice, and that it “sometimes writes plausible-sounding but incorrect or nonsensical answers.” If a lawyer did that, there could be malpractice consequences — but if ChatGPT steers you wrong, too bad.

While AI language models like ChatGPT can assist in writing contracts, it’s essential to work with a licensed attorney to ensure that the contract meets all necessary legal requirements and addresses any potential liabilities. Small businesses that use ChatGPT or any AI language model to write contracts should be aware of the potential consequences if those contracts are later found to be faulty or unenforceable. It is important for small businesses to work with a licensed attorney to ensure that contracts meet all necessary legal requirements and that any potential issues are addressed before finalizing the contract.

Alternatives to ChatGPT for Contract Drafting

Alternatives to ChatGPT for Contract Drafting

If a client wishes to save money, they should look to specialized contract drafting tools rather than ChatGPT. For example, offers founders-reviewed templates that pass legal muster. Other contract drafting SaaS vendors include:

In sum, ChatGPT is an exciting new tool that can assist businesses in automating some processes and making communication simpler. However, it’s essential to be aware of its limitations before relying on it for all your business requirements.