Can contracts be created with AI?

Introduction

In the current climate, many clients are looking for cost-effective alternatives to draft and review their contracts. Using AI in contract drafting seems to be an attractive option in this context, as it is faster and more cost-efficient than working with specialized lawyers.

However, clients should be cautious before turning to AI, especially if they do not have sufficient knowledge of contract law. Because while AI offers a variety of benefits, faulty or incomplete contracts can lead to serious legal consequences, making them more expensive in the long run than working with an experienced attorney.

Using AI to create contracts?

The use of artificial intelligence (AI) in contract drafting has increased dramatically in recent years. The advantages are clear: AI can quickly and cost-effectively create large volumes of contracts and offers high precision and accuracy in the wording of clauses. However, the use of AI also carries risks, especially for clients who do not have sufficient knowledge of contract law. On the one hand, AI can help save time and money by taking over repetitive and time-consuming tasks. By automating contract generation and review, greater efficiency can be achieved, which is particularly beneficial for companies with high contract volumes. The precision of AI generation can also guarantee higher quality contracts.

However, it is important to note that AI generation is only as good as the data it uses. If the AI models are inadequate or flawed, the contracts they generate may also be flawed. This can affect the legal validity of the contract and potentially result in significant financial consequences. Another risk is that AI may not be able to consider all relevant aspects of an agreement. Contracts often contain complex clauses that depend on various legal and factual aspects. If such a clause is not taken into account by the AI generation, this can have serious consequences.

It is therefore critical that clients adequately inform themselves about the relevant legal and factual aspects of the relevant agreement before using AI in contract drafting. For this, they should either have the necessary knowledge of contract law or seek advice from a lawyer who has the necessary expertise. In any event, clients should ensure that contracts created by AI Generation are reviewed by an experienced attorney to ensure that they are in compliance with applicable laws and contract standards. If clients do not have sufficient knowledge of contract law, they should consult an attorney capable of thoroughly reviewing and, if necessary, correcting AI-generated contracts.

Overall, the use of AI in contracting undoubtedly offers many benefits, but it also carries risks. Clients should therefore ensure that they have sufficient knowledge of contract law or seek the assistance of an experienced attorney to ensure that their contracts are accurate and effective.

Result

As an attorney, I’ve been heavily testing AI tools to help with contract generation and review over the past few months. My experience has shown that AI generators can indeed be useful for basic text generation. They can save time and make work easier by automating the writing of contracts.

However, clients and other users of AI generators should note that the result of AI generators should only be used if one has enough experience and knowledge oneself to judge whether the result is correct and sufficient. AI generators are not capable of replacing human intuition and experience. It is important to emphasize that AI generators only hallucinate content and therefore should only be used to facilitate work. A lawyer cannot be replaced by a machine, as the process of contract drafting and review also requires regular feedback opportunities and communication with a lawyer. Only in this way can individual requirements and needs of a client be taken into account.

Overall, the use of AI generators in contract drafting and review is a promising technology that will be further developed in the future. Nevertheless, clients and users of AI generators should be cautious and ensure that they have sufficient knowledge of contract law to evaluate the generated contracts. It remains to be said that AI generators cannot replace the experience of an experienced lawyer, but can only complement and support it.

Author: Marian Härtel

Marian Härtel ist Rechtsanwalt und Fachanwalt für IT-Recht mit einer über 25-jährigen Erfahrung als Unternehmer und Berater in den Bereichen Games, E-Sport, Blockchain, SaaS und Künstliche Intelligenz. Seine Beratungsschwerpunkte umfassen neben dem IT-Recht insbesondere das Urheberrecht, Medienrecht sowie Wettbewerbsrecht. Er betreut schwerpunktmäßig Start-ups, Agenturen und Influencer, die er in strategischen Fragen, komplexen Vertragsangelegenheiten sowie bei Investitionsprojekten begleitet. Dabei zeichnet sich seine Beratung durch einen interdisziplinären Ansatz aus, der juristische Expertise und langjährige unternehmerische Erfahrung miteinander verbindet. Ziel seiner Tätigkeit ist stets, Mandanten praxisorientierte Lösungen anzubieten und rechtlich fundierte Unterstützung bei der Umsetzung innovativer Geschäftsmodelle zu gewährleisten.