AI drafts fast. Courts care about nuance. Here's what machine-generated contracts regularly miss — and why it matters for your business.
The Four Failure Points
1. Definition Drift
AI-generated contracts often use inconsistent definitions throughout the document. A "deliverable" in section 2 might mean something different than the "deliverable" in section 7. Courts will exploit this ambiguity — usually against the drafter.
2. Governing Law Traps
AI defaults to generic jurisdiction clauses without understanding your specific situation. A Delaware choice of law might seem standard, but if your operations are in Texas and your counterparty is in California, you've just created a litigation nightmare.
3. IP Ownership Leaks
Machine drafting struggles with the nuance of intellectual property assignments. Work-for-hire language that looks solid often contains carve-outs that let contractors retain rights to "pre-existing materials" — a term broad enough to drive a truck through.
4. Integration Clause Gaps
The merger/integration clause is supposed to make your written contract the final word. But AI often drafts versions that inadvertently preserve oral promises or prior agreements — exactly what you're trying to supersede.
The Fix
Prevention is cheaper than cleanup. AI is a great starting point — use it to get the structure down fast. But before you sign:
- ✓Have a human review definitions for consistency
- ✓Verify jurisdiction and venue match your actual risk profile
- ✓Audit IP clauses against your specific deliverables
- ✓Confirm the integration clause does what you think it does
The bottom line: AI is a tool, not a replacement. Use it to move fast, but bring a human in the loop before you sign anything that matters.