July 24, 2024

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ChatGPT Can’t Analyze Your Contract Yet, But There’s Potential

ChatGPT Can’t Analyze Your Contract Yet, But There’s Potential

Visualize automating ChatGPT to retrieve the contract facts you care about—terms like car-renewal, payment phrases, termination rights—instead of inquiring agreement managers or attorneys to flip as a result of contracts to locate the exact details. The possible for price tag price savings is spectacular.

So I experimented with it. Applying GPT-4, I fed ChatGPT a couple publicly out there seller contracts and requested it a bunch of questions that I would commonly question a deal manager or lawyer as portion of a seller agreement evaluate method.

  • Does the contract car renew?
  • Does the contract have late costs?
  • What are the payment terms, internet 30?
  • Does the deal have termination for comfort?
  • Does the deal give any solution warranties?
  • Does the contract transfer IP? Are legal responsibility limitations mutual?
  • Do the legal responsibility restrictions carve out IP indemnity?
  • What is the governing legislation?
  • Does the seller procedure private facts?
  • What does the seller use purchaser info for?

Here’s what I discovered.


The product occasionally finds issues in the deal that aren’t there.

For illustration, when requested what the agreement claims about use restrictions, GPT-4 discovered an “Exhibit B – Satisfactory Use Policy” that was nowhere to be uncovered in the real deal I offered.

When prompted, ChatGPT acknowledged its oversight.


The design occasionally can not uncover factors in the contract when they are there.

For illustration, when requested about governing regulation, GPT-4 claimed that the deal didn’t contain data about governing legislation, even even though the text “governing law” appeared verbatim in the agreement.

When prompted, ChatGPT, again, acknowledged its miscalculation. What follows is our exchange.

Deficiency of Precision

The product at times confuses very similar, but unique phrases or concepts.

For example, where by a agreement legal responsibility limit excludes direct IP statements amongst the get-togethers but not 3rd-celebration IP claims (i.e., IP indemnity obligations), the product cannot different the two. Its evaluation resorts to “general” and “typical” definitions relatively than the real text.

When prompted, ChatGPT regarded its error and refined its evaluation.


In spite of its shortcomings, the design shows possible. It does often reply the right way. When it does, it is rather remarkable and beneficial.

For illustration, when asked about the vendor’s collection and use of information, the design gave accurate and extensive solutions, pulling from and citing unique sections of the deal.

This is worthwhile since even to professional deal reviewers, it is frequently not apparent in which to seem to uncover information about facts selection and use. Typically, numerous diverse sections tackle the a variety of kinds of collected details alongside with the various uses and use. ChatGPT can cull and synthesize data from different sections, significantly speedier than manual evaluation.


GPT-4 is not trusted for agreement review nevertheless. It is like a terrible or newbie deal reviewer who in some cases misses items, receives matters mistaken, or just flat out will make points up.

But, when it obtained factors right, it was in a position to collect facts buried in many locations speedier than a human reviewer, normally within one particular minute.

Portion of the problems in using ChatGPT for contract assessment currently is that it is unclear what varieties of thoughts ChatGPT is great or poor at answering. I didn’t come across any patterns to the types of issues that ChatGPT reliably answered effectively or improperly. ChatGPT is unpredictable.

You could surprise if improved prompt engineering would generate improved solutions. This is possible. When I examined versions in term option and phrasing of my thoughts, the results did not adjust meaningfully.

Two tactics, even though neither foolproof, enhanced GPT-4’s accuracy.

Very first, you can prompt ChatGPT to double test its answers by inquiring, “Are you positive?” By accomplishing so, ChatGPT generally corrected its issues. This tactic labored a couple moments, though not each time.

2nd, you can use an AI software that is specifically built to analyze contracts. My early experimentation making use of a method like this showed greater success than ChatGPT, but it still experienced hallucinations and lack of precision.

This short article does not always reflect the feeling of Bloomberg Sector Group, Inc., the publisher of Bloomberg Legislation and Bloomberg Tax, or its house owners.

Creator Information and facts

Tammy Zhu is a tech lawyer who assists firms build and use AI items and scale industrial capabilities. She is the VP of Authorized at Sourcegraph, Inc.

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