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AI tools like ChatGPT are making it easier for business owners to draft contracts, non-competes, and other legal agreements. With a short prompt, you can generate a document that looks professional and complete.
That convenience can be helpful. It can also create risk if business owners assume the document does more than it actually does.
At MacGregor Lyon, we regularly speak with Atlanta small business owners who ask whether AI-generated agreements are good enough to rely on. The answer is not that AI has no value. The issue is knowing where its limits begin.
AI-Drafted Agreements Are Not a New Concept
From a legal perspective, AI-generated agreements are not fundamentally different from contracts downloaded online or copied from another business. For years, business owners have relied on templates and borrowed language.
Sometimes that works. Other times, it fails when the agreement is tested.
AI is simply a more efficient starting point. It does not replace legal judgment or context.
The Real Risk Is Assuming the Agreement Fits Your Business
The biggest problem with AI-drafted agreements is not poor writing. Many of these documents are clear and well organized.
The risk comes from assumption.
Business owners may assume the agreement accounts for Georgia law. They may assume it reflects how their business actually operates. They may assume it covers what happens when a relationship changes or ends.
Those assumptions are often wrong.
Contracts rarely cause problems when everyone is getting along. Problems arise when expectations differ, payments stop, or circumstances change. That is when unclear or incomplete language becomes expensive.
Where AI Falls Short for Georgia Businesses
AI tools do not understand your specific business, your goals, or your risk tolerance. They also do not evaluate enforceability under Georgia law.
Common issues include:
- Missing termination or exit provisions
- Vague definitions that lead to disputes
- One-sided liability clauses copied from large company templates
- Provisions that conflict with Georgia law or local practice
- Agreements that do not match how the parties actually work together
These issues often go unnoticed until a disagreement arises.
AI Can Be a Starting Point, Not the Final Answer
For some business owners, AI can help organize ideas or create an initial draft. That can save time.
What it cannot do is determine whether the agreement truly protects your interests.
That final step requires reviewing how the document functions in real-world scenarios, including what happens if the relationship breaks down. That is where many agreements fail.
Why Review Matters Even If You Drafted the Document
Some business owners come to an attorney with an AI-generated agreement and ask for a quick review. That approach can work if the goal is not surface-level approval.
A meaningful review focuses on substance, not formatting. It evaluates whether the agreement:
- Reflects how the business actually operates
- Allocates risk intentionally
- Anticipates problems before they occur
- Is enforceable under Georgia law
Without that review, business owners may rely on language that gives them less protection than they expect.
A Practical Approach for Atlanta Small Businesses
AI is not something businesses need to avoid entirely. It simply should not replace informed decision-making.
A practical approach looks like this:
- Use AI as a drafting tool, not a decision maker.
- Treat the output as a starting point, not a finished agreement.
- Have agreements reviewed with your specific business and Georgia law in mind before relying on them.
This approach balances efficiency with protection.
Protect Your Business Before Issues Arise
Contracts shape your business relationships and define your leverage when things do not go as planned. Relying on an unreviewed AI-generated agreement can leave gaps you only discover when it is too late.
If you are using AI to draft business agreements or considering it, the most important step is making sure the final document actually works for your business.Contact MacGregor Lyon right now to schedule a consultation and get clarity before problems arise.
On Behalf of MacGregor Lyon
Principal Partner
Glenn M. Lyon is a distinguished business attorney recognized for his exemplary service to small and medium-sized, privately-held businesses, and start-up companies.
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