AI contract drafting tools are fast. They pull standard language, assemble it into coherent clauses, and produce a document in minutes instead of weeks. But 'fast' is not the same as 'complete.' In practice, AI drafts often produce contracts that look polished but miss the terms that matter most when something goes wrong: liability caps, confidentiality scope, termination rights, and dispute resolution. The result is a contract that reads well until you need to enforce it. The issue is structural. AI models are trained on thousands of template agreements, so they excel at reproducing common language. But they have no judgment about what belongs in your deal . They don't know whether you're selling software or staffing, what your gross margin is, what risk you can absorb, or what your customer typically demands. They fill in the gaps with defaults—and defaults are almost never in your favour. This checklist cuts through that. It covers seven specific liability, confidentiality, and commercial terms that AI drafts routinely ignore or underspecify. Each one can cost you tens of thousands of dollars if the contract ever gets tested. Walk through all seven before you sign. 1. Liability Cap: Is It Quantified and Mutual? AI drafts often include a liability cap that says something vague like 'liability is limited to direct damages' or 'neither party is liable for indirect damages.' That sounds protective until you read the rest of the contract and discover the cap itself is missing a number. What you need to check: Is there a dollar figure or formula? 'Limited to direct damages' is not a cap. A cap is: 'Neither party's liability shall exceed [X% of annual fees paid] or [$X per year], whichever is greater.' Without a number, 'limited' means nothing in court. Does it apply to both parties equally? Some AI drafts exempt the vendor from the cap while capping the customer. That's one-sided and usually unenforceable if challenged—but it will still go to litigation. Are there carve-outs? Liability caps typically do not apply to gross negligence, willful misconduct, or breach of confidentiality. Make sure those carve-outs are realistic. If the cap excludes 'any breach of this agreement,' the cap is useless. What is the baseline? Many contracts cap liability to 'fees paid in the 12 months prior.' If your deal is monthly, that's 12 months of value. If it's annual, that's one year. If it's a one-time license, it's that license fee. AI drafts sometimes omit the time period, which creates ambiguity when you need to calculate the cap. A liability cap that is not quantified is not a cap at all. Courts will interpret an unquantified 'limitation of liability' clause against the drafter—usually the vendor. Get a number. 2. Confidentiality: What Is and Isn't Confidential? AI confidentiality clauses are often so broad they become unworkable, or so narrow they protect nothing. The problem: AI has no context about what data you actually handle, what your customer considers sensitive, or what you need to disclose to run the business. What you need to check: Is confidential information defined? A good definition names specific categories: customer data, pricing, source code, business plans. AI drafts often say 'any information marked confidential' or 'all information,' which shifts the burden to labelling. If a customer forgets to mark something, it's not protected. Are there standard exceptions? Confidential information is typically not information that is: already public, independently developed, received from a third party, or required to be disclosed by law. Make sure these exceptions are in the contract. If they aren't, you'll be liable for breaking confidentiality if you're legally compelled to share data. What's the scope of permitted use? Can the other party disclose confidential information to its subcontractors? Auditors? Legal counsel? Many AI drafts say 'only to employees who need to know,' which prevents you from hiring an accountant to audit the deal or a lawyer to review a dispute. Spell out permitted recipients by category. How long does confidentiality last? Some clauses say 'during the term and for X years after termination.' Others say 'in perpetuity.' For most data, 3–5 years after termination is standard. In perpetuity creates operational debt for data retention. Is there a remedy for breach? Confidentiality clauses often do not specify whether breach entitles the other party to injunctive relief or just damages. If data is leaked, do you get a court order to stop further disclosure, or only money? That distinction matters. 3. Termination Rights: Who Can End This and When? Many AI drafts specify termination language that applies only to one party or create asymmetric termination rights. This can lock you into a contract you didn't intend. What you need to check: Can either party terminate for convenience? If only the customer can terminate without cause, and you're the vendor, you have no exit if the relationship sour