Get It In Writing

Can I Use ChatGPT to Write a Business Contract? A Lawyer’s Honest Take

Short answer: you can use ChatGPT to write a business contract, the same way you can pull your own tooth. It’ll produce something. Whether that something protects you when a deal goes sideways is a completely different question. As a business attorney, I get paid to answer that question. Sometimes, it is after the fact, when it’s more expensive to fix than it would have been to do it the right way.

Let me tell you what I actually see from clients who use AI to draft contracts. It isn’t always “AI is bad, lawyers are good.”

What an AI-drafted contract usually looks like

I had a client admit he’d used Gemini to create the commercial and residential leases he sent me. What came back looked like a mishmash of ideas about various situations, organized in a way that made no real sense. It read more like an outline and a sales pitch than a contract. It took me over an hour just to work through one of the shorter documents, another hour to talk it through with him, and it will take many more to turn those ideas into something actually enforceable.

This is the pattern AI-generated contracts tend to follow:

  • Confident and comprehensive-looking — lots of headings, defined terms, official-sounding language.
  • Internally inconsistent — clauses that contradict each other, or that were clearly written for a different kind of deal.
  • Missing the things that matter for your situation — because the AI doesn’t know your situation. If it doesn’t know your situation, then it does not know what law applies.

Here’s the deeper problem. Just like people, AI seems to think it can throw words on a page and make legal obligations appear or disappear. It can’t. There are laws, and you can’t always write something into a document to make them go away — even if both sides agree to it. A contract doesn’t consist of magic words; it’s an instrument that has to operate within the boundaries of the law, considering the specific circumstances. AI doesn’t know which of its confident sentences will be meaningless when the law is applied to the facts.

The three mistakes I see most frequently

1. It’s a template pretending to be a deal. One of the most common misconceptions I encounter is that legal documents are just forms to be filled out. AI takes advantage of that situation. It gives you a form. But a legally enforceable contract includes decisions that are reduced to writing — who bears which risks, what happens on default, what the remedies are. A form skips the decision-making, which means you haven’t actually made any decisions.

2. It doesn’t reflect the verbal deal. The most expensive words in business are “we both know what we meant.” I see contracts that don’t match what the parties actually agreed to all the time. If the promise isn’t in the document, it isn’t enforceable. AI writes what’s statistically common, not what you and the other side shook hands on.

3. It’s built for a different transaction. I’ve seen an NDA generated for one kind of deal dropped into a completely different one — so it didn’t cover the type of information that the parties were sharing, which was the entire point. The document looked fine. It just protected the wrong thing.

So when is it fine to use AI?

I’m not going to pretend the tool is useless. It can be helpful for things like:

  • Understanding — asking what a clause generally means, so you walk into a conversation informed.
  • First-draft scaffolding for something low-stakes that a human will then rework.
  • Spotting questions to ask — “what should I be worried about in a lease like this?” is a fine prompt.

I definitely would not use AI output as the contract you sign and rely on, such as a business sale, a partner buy-out, a commercial lease, a loan, or an independent-contractor relationship. If you don’t use a lawyer who understands the deal in the state in which the contract is to be performed, you shouldn’t rely on the contract to protect you. (Before you paste an agreement into a chatbot to check it, verify whether uploading it alone violates the agreement. See: is it safe to upload a contract to ChatGPT? — there’s a privacy trap most people miss.)

The bottom line

Using AI to write your business contract is risky because the whole purpose of a contract is to protect you in the specific situation you’re in. A template addresses generic facts and applies the law based on those facts, leaving a gap between your specific situation, the language necessary to describe it and the protections the contract and the law offer. The effect of those gaps don’t show up until something goes wrong, when you reach for a remedy and find out the document never gave you one.

If it isn’t in writing, it doesn’t exist. But if it’s in writing and it is not written properly, it can create more problems while giving the illusion of protection.

Learn how to find gaps in your business practices with the free Get-It-In-Writing Business Audit — 15 things that should be in writing in your business, but usually aren’t. Get the checklist →

This article is general education, not legal advice, and does not create an attorney-client relationship. Laws vary by state and situation — for your circumstances, talk to a licensed attorney.