You ask an LLM to draft an NDA. It spits out something that reads right—clean formatting, proper sections, professional tone. You send it to your counterparty. Three weeks later, your lawyer flags a payment term that doesn't exist in your jurisdiction, an indemnity clause that contradicts your liability cap, and a governing law provision that creates a forum conflict nobody intended. This happens constantly. Large language models are statistically sophisticated enough to sound authoritative about contract law, but they hallucinate specifics, invent precedent, miss local nuance, and contradict themselves within a single draft. The cost of catching these after signature can be six figures. The cost of catching them before is a checklist. Why LLMs fail at contracts Contracts aren't prose. They're logic gates dressed in words. An LLM trained on contracts learns statistical patterns—how sections typically relate, what clauses usually say—but it does not learn the legal reasoning why they say it. More dangerously, it does not learn what your jurisdiction actually requires. An LLM trained on 10,000 NDAs will produce something that looks like an NDA. But if 8,000 of those were US contracts and your agreement needs to work under Singapore law, the model will still pattern-match to the US majority. It will invent terms that sound legal but don't exist in your contract law. It will miss statutory requirements it has never seen enforced. The result: a contract that reads well until a court or regulator actually tries to interpret it. Clause 1: Payment terms (LLMs invent specifics) Almost every LLM-drafted contract includes a payment term like: "Payment shall be due within thirty (30) days of invoice issuance, or such other period as the parties may mutually agree. Late payments shall accrue interest at the rate of 1.5% per month or the maximum rate permitted by law, whichever is lower." This sounds reasonable. It's also vague enough to create disputes. What LLMs get wrong: The "maximum rate permitted by law" part is jurisdiction-specific. In Singapore, late payment interest is governed by the Late Payment of Commercial Debts (Interest) Act, which caps it at 5% per annum plus the Bank of England base rate (a UK figure, inapplicable here). In Malaysia, it's governed by different statutes depending on contract type. An LLM trained primarily on US case law will often cite US usury rates or invent a rate that sounds legal but has no statutory basis. Human review checkpoint: Does the interest rate reference an actual statute in your jurisdiction? Can you name the law? If the LLM's answer is vague or cites foreign law, rewrite it to reference the specific act. Example: "Late payments shall accrue interest at the rate prescribed under the Late Payment of Commercial Debts (Interest) Act 1998 of Malaysia." Clause 2: Indemnity (LLMs flatten liability hierarchy) Indemnity and liability cap clauses are where LLMs most often create internal contradiction. A typical LLM draft: "Each party shall indemnify the other against all claims, damages, losses, and liabilities arising from its breach of this agreement. Notwithstanding any other provision, neither party shall be liable for indirect, incidental, or consequential damages. Total liability under this agreement shall not exceed the fees paid in the preceding twelve months." The problem: the first sentence says indemnity is unlimited. The third sentence caps it. Which wins? An LLM does not actually resolve this—it pattern-matches both clauses from real contracts without understanding that they contradict . When a claim lands, you will spend weeks arguing whether indemnity carve-outs apply to the cap. What LLMs get wrong: They do not weight clauses hierarchically. They do not test whether an indemnity clause actually survives the liability cap you just defined. They treat each clause as independent boilerplate instead of an interconnected logic system. Human review checkpoint: For every indemnity clause, ask: does this survive the liability cap? Write it down. If your agreement says "neither party liable for indirect damages" but the indemnity clause says "indemnify for all damages," you have a trap. Rewrite the indemnity to carve itself to the same limits: "...indemnify against all claims for direct damages, provided that in no event shall such indemnity exceed the liability cap set forth in Section [X]." Clause 3: Governing law and jurisdiction (LLMs miss local rules) An LLM will typically draft: "This agreement shall be governed by and construed in accordance with the laws of Singapore, without regard to its conflict of laws principles. Each party irrevocably submits to the exclusive jurisdiction of the courts of Singapore." This looks standard. It is also legally inert in many situations. In Singapore, consumer protection statutes cannot be contracted out of; if your contract includes consumer sales, this clause is void as to those protections. Similarly, if one party is an Indones