As Artificial Intelligence (“AI”) tools become increasingly popular in legal and commercial settings, many businesses are turning to them for assistance with drafting and reviewing commercial leases.
However, the use of AI for this purpose can introduce significant risks that may lead to serious legal and financial consequences.
Commercial leases are often for long-term commitments, and even where shorter-term arrangements exist, the provisions agreed within a lease can govern the relationship between landlord and tenant for many years.
For that reason, it is essential that every clause is carefully considered, precisely drafted, commercially appropriate, and legally enforceable.
Relying on AI creates critical pitfalls that can undermine the integrity of the lease and expose parties to avoidable risks. Outlined below are the principal reasons why AI should not be used for drafting or reviewing commercial leases:
- A “one fits all” approach is inappropriate for commercial leases
While certain clauses may appear “standard,” their suitability depends entirely on the specific transaction, including the nature of the property, the parties’ intentions, and the allocation of risk.
AI-generated documents often rely on generic or generalised wording, which may be commercially unsuitable or even inappropriate in context. This can alter the intended meaning of the lease and lead to unintended consequences. - Risk of inaccurate or misleading language
Even minor variations in wording can significantly change the legal meaning of a clause. In addition, legal terminology varies between Scotland and England, as do the relevant statutory requirements.
AI may generate lease provisions that appear correct at first glance but fail to achieve the intended legal effect. This creates a risk of inaccuracies that can lead to disputes between the parties, potentially resulting in financial loss, reputational damage, and costly litigation. - Failure to reflect negotiated terms accurately
Commercial leases are highly negotiated documents. Key provisions — including rent, repairing obligations, service charges, and termination rights — are often carefully structured to achieve a delicate commercial balance.
An AI generated lease may fail to properly reflect these negotiated terms or the intentions behind them, increasing the likelihood of misunderstandings, disputes, and conflict.
In addition to legal risks, this can cause significant commercial harm. Where a lease does not accurately capture what was agreed, it can strain the landlord-tenant relationship and potentially deter future business dealings between the parties. - Inability to identify, assess, and manage risk
Commercial leases are drafted not only to record agreements but to actively manage and mitigate risk including liabilities, repair obligations, and termination provisions.
AI does not exercise professional legal judgment or commercial foresight. It cannot assess risk within the specific context of a transaction or adapt clauses accordingly. This may result in gaps, inconsistencies, or poorly allocated risk, leaving parties exposed to uncertainty and dispute.
The value of professional legal expertise
A well-drafted commercial lease can set the standard for future agreements. If the initial agreement contains errors, unclear drafting, or commercially unfavourable terms, these issues can easily be replicated in subsequent leases, compounding risk over time.
On the other hand, a carefully negotiated and professionally prepared lease creates a strong and reliable foundation—promoting consistency, streamlining future negotiations, and providing greater certainty for all parties.
For that reason, instructing a solicitor to draft and review your lease should be seen as a strategic investment, rather than a cost. It ensures the document is robust from the outset, helps avoid costly disputes, and protects your legal and commercial position throughout the life of the lease.
