“I used AI to draft the contract.”
- Danielle Dudai
- Aug 4
- 3 min read
I’ve heard this phrase a lot lately. And no surprise—tools like ChatGPT, Claude, and legal-specific AI platforms can produce a decent-looking agreement in seconds.
I’ve even had clients proudly say, “I just needed a simple agreement, so I used AI to knock it out. It looked and sounded good!”
Here’s the thing: I get it. AI is fast. It's convenient. And it’s tempting to lean on when you’re juggling a dozen things as a founder, manager, or business owner.
But here's what I’ve actually seen lately—real examples from real contracts created (or heavily edited) by AI:
A vendor agreement with no termination clause and generic payment terms. Meaning the business was locked into an indefinite relationship… with no exit, and unfavorable payment terms. Under these terms, the client is going to be obligated to pay a penalty fee to get out of the contract.
An NDA that failed to define or protect the actual business purpose. No clear purpose of what the relationship was going to be in order to make the agreement terms applicable to that specific exchange of information, and no survival clause. This means it will be increasingly difficult to enforce this NDA against the other side if they utilize confidential information of the client, and no survival clause means that the obligations under the agreement end when the relationship ends. A survival clause helps protect your interests by extending the obligations of confidentiality past the termination of the relationship.
A services agreement that lacked a dispute resolution provision, choice of law, or any limitations on liability. In practice? That meant if anything went wrong, the business could be dragged into court without limiting their exposure on damages (money to be paid to the other side), and the location of the dispute may need to be brought where the other party is and not where my client is located. Considering that most of my clients service nationwide, that is a huge hole in the agreement.
These aren’t horror stories from careless clients. These are smart, resourceful business owners just trying to move fast.
And to be fair: AI can work faster than I can. But it can’t do what I do.
It doesn’t know what’s market for your industry.
It doesn’t know your specific deal goals.
It doesn’t understand risk tolerance.
It doesn’t litigate when things go sideways.
Here’s a truth I think we need to say more often in the legal world:
AI is a powerful assistant. But it’s not a lawyer.
It doesn't understand nuance. It doesn’t ask follow-up questions. And it doesn’t know what you actually need to protect.
When I review a contract, I’m not just checking boxes. I’m thinking:
“What happens if this deal falls apart?”
“Where is this language ambiguous?”
“Is this clause enforceable in your state?”
“Will this protect you if your customer doesn’t pay… or worse, sues you?”
“What is the worst possible outcome for my client?”
It’s not about being alarmist. It’s about building agreements that work in the real world—where cash flow matters, expectations shift, and people don’t always do what they say they will. As a lawyer who also handles litigation maters in business law, I know what courts will look at and what is needed to win your case – something AI can’t do for you.
AI can create content. It can suggest templates. It can draft first passes.But it’s not building you a strategy—and contracts are strategy. They strategically protect you and act like an insurance policy.
So here’s what I tell clients:If you’re going to use AI in your deal flow, great. Happy to have you start the process with something that reflects your general ideas. But before you finalize and sign anything, let me review it.
Sometimes it takes me just 30 minutes to flag issues that would cost you $80,000 (or more) to clean up later. Ask me about the clients who spent $200 on LegalZoom operating agreements and how well that worked out for them (spoiler alert: it didn’t).
This isn’t about fear.It’s about ensuring you appreciate risk management, leverage, and making sure your documents actually do what you think they do and what you need them to do.
The speed of AI is a gift.But don’t confuse fast with good or effective.
Curious whether your AI-generated agreement is solid? I’m happy to review or gut-check what you’re working with. Just reach out. At Dudai Legal, we are always Navigating Complexity, Delivering Results.™
Danielle Dudai
Attorney; DUDAI LEGAL
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