ChatGPT for contracts – friend or foe?

Laura Crowe, Associate

Guidance for Business Owners

With the use of ChatGPT and other AI tools increasing at a rapid rate, it is important to understand that whilst its use can be beneficial it also has its limitations.

Most business owners understand the need for Terms and Conditions and other contractual documents to ensure that it is clear what each party’s expectations and obligations are in the business relationship. However, it is sometimes the reality that cash-flow and budgets are tight, and decisions must be made on where to prioritise spend.

Historically, businesses may have been inclined to adopt terms used by others operating in similar businesses such as competitors and searching company websites for copies of terms and conditions. This often meant that the terms were not reflective of the business they were adopted for, and the business adopting them could unwittingly be in breach of its own terms without realising. Key terms could also be missing.

Why does this matter? One reason why some businesses adopt existing terms is to save legal costs. However, doing so could very well end up costing more eventually when problems arise. As the saying goes “prevention is better than cure.”

Is ChatGPT / AI any better? Yes and no…

Whilst ChatGPT can and will produce a document based on the information and prompts inputted – this can be both a positive and a negative.

• The output is only as good as the input / questions asked. If the prompt is not precise enough or you do not understand the issue enough yourself to know exactly what you need – the output will reflect that.
• Linked to the first point, differently phrased prompts can lead to completely different and sometimes opposite answers.
• Someone who is hoping / looking for a particular response may unwittingly phrase a prompt in a biased way that encourages AI to confirm that view – AI likes to please!
• AI can hallucinate and has been known to fabricate caselaw – some of which has been relied on in legal submissions in Court!

Whilst AI tools can be useful to assist and provide inspiration and ideas, they should not be relied on in isolation, and ought to viewed as an aid and not a replacement for real expertise.

So, if you require Terms and Conditions or any other contracts for your business, and would like to speak to a real person who can work with you to understand your business requirements – please get in touch with a member of our friendly commercial law team who will happily assist.