How to Handle Contract Issues in Legal Drafting Using AI

Contract disputes are common in the legal industry, as contract law involves many moving parts. Issues often stem from errors and complexities in the drafting, negotiation, and execution stages. 

AI can help speed the lengthy contract drafting, negotiation, and execution process without sacrificing quality in contract outcomes. By balancing AI-powered drafting tools and human oversight, lawyers can avoid common contract issues while improving the legal team’s workflow.

Common Contract Issues and How AI Can Help

Neglecting to address common contract issues puts clients one step closer to a breach or lawsuit. To avoid entering this dangerous territory, it’s important to learn how AI can prevent potential losses and conflicts. Below are some common contract issues you can remedy with AI.

Ambiguity and Vagueness

Ambiguous and vague language can leave too much to interpretation, potentially leading to problems. AI can flag unclear phrases and undefined terms and offer clearer alternatives. 

Spellbook can help your legal team do this by highlighting obscure language and providing suggestions for precise, accurate, and legally sound wording. 

Inconsistent Terminology

Legal documentation can involve hundreds of terms that can easily become confusing. AI tools can detect inconsistent terms, helping to ensure a contract is uniform and that all parties will interpret it similarly.

A comprehensive clause library allows Spellbook to flag inconsistencies in your contracts, helping to keep language and terms consistent across clauses. 

Missing or Misworded Clauses

Missing or misworded clauses can lead to significant damages or costly fines. AI helps to avoid this by comparing contracts against templates to identify omitted clauses. Along with its library of standard clauses, Spellbook uses pre-approved templates to notify you of issues such as missing provisions or misworded termination and indemnification clauses. 

Errors and Omissions

Correct grammar, spelling, and punctuation contribute to the readability and enforceability of agreements. Most AI tools can check for errors, such as typos and incorrect formats. Spellbook also reviews documentation for incomplete terms, incorrect party names, and missing dates.

Compliance Risks

Every contract clause must comply with applicable laws, regulations, company policies, and industry standards. Spellbook mitigates risks by identifying provisions that may not meet regulatory requirements set by the GDPR, CCPA, and other laws, regulations, and standards. 

Negotiation Challenges

Agreements often have room for negotiation, especially if one party feels they’re not getting the value they need. AI tools can act as “negotiators” by identifying areas of potential compromise. If a contract’s terms are contentious, Spellbook can generate alternative, more balanced language. 

How AI Streamlines the Contracting Process

Here’s how AI can help you execute agreements seamlessly:

Automated Contract Drafting

Legal professionals report spending between 40% and 60% of their time drafting legal documents, with 96% believing their existing drafting tools aren’t efficient, according to Thomson Reuters. Tools like Spellbook automatically draft agreements and edit standard clauses to meet your specific needs, helping you save time, reduce errors, and standardize contract creation.

Fast Contract Review and Analysis

Spellbook applies natural language processing (NLP) to review contracts, drastically reducing the time it takes to review and analyze contracts. Built-in tools ensure contracts meet industry benchmarks, reducing errors and enhancing compliance.  

Negotiation Support

Poorly drafted contracts can require lengthy revisions and negotiations, but AI can cut this time in half. Spellbook helps lawyers negotiate terms and amend clauses based on historical data. It takes a side-by-side look at past and new contracts and provides real-time feedback on proposed edits. 

Key Takeaways

As client expectations grow and legal processes become more complex, AI can help lawyers resolve disputes, find remedies for problematic clauses, and produce clear and compliant contracts. 

Whether undergoing contract renewal or drafting one from scratch, AI can help you keep your terms specific, fair, and compliant. With a tool like Spellbook, you can draft contracts faster while reducing common issues. 

Frequently Asked Questions

Can AI Suggest Alternative Wording or Clauses?

Yes, AI can suggest alternative wording or clauses if the contract language is not precise, accurate, or ethical. Tools like Spellbook can tailor suggestions to meet industry standards and organizational preferences, improving clarity and avoiding language that is too ambiguous. 

Do I Still Need Legal Expertise if I Use AI for Contract Drafting?

Yes, you still need legal expertise if you use AI for contract drafting, as legal knowledge helps you draft enforceable terms and respect the rights of every party involved. Experienced lawyers can ensure a legally binding contract by reviewing unique clauses and situations AI may not fully comprehend. 

Can AI Help with Drafting International Contracts with Different Legal Systems?

Yes, AI can assist in drafting international contracts that meet the requirements of multiple legal systems by comparing existing agreements to jurisdiction-specific requirements. It can highlight legal differences and suggest edits to comply with laws from different countries. Still, in many cases, cross-border considerations can be complex, so it’s imperative to consult with legal experts familiar with the jurisdictions involved.