If you run a growing business, you sign more contracts than you comfortably have time to read: supplier terms, customer agreements, leases, employment offers, software licences. A new generation of AI tools promises to read them for you — flagging risky clauses, summarizing obligations, even suggesting redlines. Some of that promise is real. Some of it deserves a closer look before you rely on it.
Where AI contract review genuinely helps
- Triage. AI is good at sorting a stack of routine documents and flagging the ones that deviate from a standard template. That is a real time-saver for high-volume, low-variance paperwork.
- First-pass summaries. Getting a plain-language summary of a 40-page agreement in minutes helps you decide where to focus — and what to ask your lawyer about.
- Consistency checks. Machines are reliable at spotting mechanical problems: undefined terms, conflicting dates, missing schedules, clauses that reference sections that do not exist.
The blind spots that matter
The risks show up exactly where contracts matter most — in context the algorithm cannot see:
- Your leverage and your goals. A clause can be "market standard" and still be wrong for your situation. Whether a non-compete, an indemnity, or a termination right is acceptable depends on your business plans, not on what most contracts say.
- Jurisdiction. Many tools are trained predominantly on one jurisdiction's documents. A clause that is routine in a U.S. agreement may operate very differently — or be unenforceable — under Ontario law.
- What is missing. AI is far better at critiquing the text in front of it than at noticing the protective clause that should be there and is not. Omissions are where deals go wrong.
- Confident errors. Like all generative AI, contract tools sometimes state things that are simply incorrect, in fluent and persuasive prose. Without review, those errors travel straight into your decision-making.
An algorithm can tell you what a contract says. It takes judgment — and a conversation about your business — to tell you what the contract will do to you.
Confidentiality deserves a moment's thought
Before uploading an agreement to any online tool, it is worth asking where that document goes, who can access it, and whether it is used to train someone else's model. Contracts routinely contain pricing, trade secrets, and personal information, and many contain confidentiality clauses that restrict sharing them with third parties at all. A consumer-grade AI tool may itself put you in breach.
A sensible division of labour
Our view is pragmatic: let software do what software does well, and keep human judgment where the risk lives. For entrepreneurs, that usually means using AI-style tools (if at all) for triage and summaries of routine paperwork, and involving counsel for anything with meaningful money, long duration, personal liability, intellectual property, or an unfamiliar counterparty. That is also how we keep our own work efficient — routine layers move quickly, so advice time is spent on the terms that genuinely affect you, with billing you can see and understand.