Using ChatGPT to draft your legal terms of business may seem like a quick and cost-effective solution, but relying solely on AI tools comes with significant risks.
While ChatGPT can assist in generating initial drafts, its limited legal nuance and contextual understanding often mean it fails to address the complexities of specific situations. Our commercial law solicitors can help you strike a balance between the efficiency of AI and tailored legal advice, ensuring your terms of business are robust, compliant, and fully aligned with your unique needs.
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Why are terms of business important?
Terms of business are vital legal documents designed to protect a supplier or purchaser of goods and/or services, irrespective of size or sector. They help to establish the rights and obligations of each party to a contract, to manage the expectations of each party, to prevent misunderstandings, and to help avoid disputes. Businesses should draft their terms of business carefully, covering specific contract details such as fees, payment terms, delivery timeframes, and contract termination rights.
Perhaps most importantly, terms of business should address the issue of limitation of liability to ensure an appropriate allocation of risk. The approach will vary, depending on whether the business is a supplier or a purchaser. In this context, the supplier will want an express limit of liability which is as low as possible, and the customer will be looking for reserve the right to recover as many losses as possible. As a result, legal documents like terms of business should always be drafted clearly and tailored to safeguard the business interests of the party seeking to base a contract on its standard terms of business.
Can you use ChatGPT to draft your terms of business?
ChatGPT can be hugely beneficial to your business. The standard version of ChatGPT is currently free and can deliver instant research that can be used to gain business insights, for marketing purposes, or to build knowledge.
However, as with most technology, it should always be used with caution. There is ongoing debate as to its effectiveness as a source of legal advice, and we believe that it is not a substitute for the legal expertise of a solicitor. ChatGPT is an AI tool, not a lawyer, and relying solely on it in relation to your terms of business is a risky approach.
You can use ChatGPT to:
- Conduct background research to understand the concepts behind the terms of business and their benefits.
- Make suggestions as to what you should consider including in your terms of business, taking account of the specifics of your sector.
- Explore common clauses or contracts in your sector.
- Generate a list of questions you can use when speaking to a specialist solicitor about your terms of business.
For businesses with limited knowledge or budget for legal costs, using ChatGPT can help you reduce the time that you spend with your lawyer.
What are the risks when using ChatGPT when drafting your terms of business?
ChatGPT has a vast knowledge base, but you need to be aware of the risks associated with relying on it exclusively to produce your terms of business (or indeed any legal documents):
- The information provided by ChatGPT, or any other AI tool, may not be up-to-date or accurate, which could lead to commercial disputes, reputational damage, or litigation.
- The outputs from ChatGPT may not be appropriate or applicable to English and Welsh law or a UK business.
- ChatGPT’s ability to draft contracts is uncertain, and there could be quality assurance issues with its output. A document generated using ChatGPT could alarm your customer (or supplier) and trigger unnecessary negotiation times, potentially leading to a loss of trust.
- ChatGPT may well lack the specialist knowledge and understanding of your business necessary to draft a robust set of terms.
- ChatGPT cannot anticipate specific risks or 'future-proof' your terms in the way that a solicitor would.
ChatGPT is not a substitute for proper legal advice.
The crucial role of a solicitor
Our commercial team specialise in helping you to draw up your terms of business. We ensure clarity and certainty and reduce litigation risk by tailoring your terms of business to your business, considering the following:
- The nature of your customers: are they consumers or businesses (or both)?
- The laws and regulations which are relevant to your business.
- The specific objectives and concerns of your business.
Our solicitors add value in the following ways:
- Protecting your business from potential risks and liabilities, including reducing the potential for litigation.
- Bringing a wealth of experience and a thorough understanding of the law.
- Supporting you in navigating the law and identifying current and future risk areas for your business.
- Drafting watertight, enforceable terms of business tailored to your needs and commercial objectives.
- Supporting you in streamlining your contracting processes and reducing the time spent on negotiation.
How to balance AI tools and legal advice?
As a forward-thinking law firm, we understand the value of using innovative technologies like ChatGPT to draft your legal terms of business, enhance business efficiency, expand knowledge, and save costs. However, while AI tools offer potential advantages, they come with risks that require careful consideration. Balancing these benefits with tailored legal advice is vital to ensure your business is protected.
AI lacks the nuanced understanding and foresight that a qualified solicitor brings, skills developed through years of managing complex legal issues. A solicitor doesn’t just draft robust and future-proof terms of business; they provide insightful explanations, anticipate potential risks, and deliver advice that’s tailored to your specific circumstances in ways AI cannot replicate.
By working with our expert commercial law solicitors, you’ll gain the confidence to navigate ChatGPT’s outputs effectively, ensuring they complement your business strategy while protecting you from unintended consequences and safeguarding your long-term success.
