Artificial Intelligence is changing the way many documents are drafted. You’ve probably seen accounts of legal briefs written with AI. If AI can draft court documents, can AI draft your next construction contract?
No doubt, legal research tools have changed the practice of law. I use CaseText and like it. Digital tools make the full body of law available to anyone with a web connection and a few dollars a month. That’s good. In seconds, anyone can find relevant law or precedent. But is AI a substitute for experience and judgment?
To find out, I ran a test, maybe the most challenging test possible, a California Home improvement contract. Like 36 other states, California requires very specific notices and disclosures in home improvement contracts. Without these notices and disclosures, the contract isn’t legal and risks discipline by the state license board.
My AI tool was Microsoft Copilot. I gave Copilot:
- A job description,
- The construction site,
- Names of the parties,
- Scope of the work,
- Contract price.
I got a written contract back in seconds. For that, I give Copilot an A grade. It’s fast. Another plus: Copilot filled in many contract terms I had not specified:
- A payment schedule,
- Time of completion,
- Changes to the work,
- Permits and inspections,
- Warranties,
- Insurance,
- Termination,
- Governing law.
But Copilot left out nearly all the notices and disclosures required by California law. Worse, some parts of the Copilot contract were simply illegal. Here’s where Copilot blew it:
- The document title has to be "Home Improvement Contract" in boldface type.
- A statement in 12-point bold type: "You are entitled to a completely filled in copy. . .”
- The date when work will begin.
- The down payment can’t exceed $1,000 or 10%, whichever is less.
- California’s mechanics’ lien warning.
- A statement on release of lien in exchange for payment.
- A general statement about commercial general liability insurance.
- Confirmation that the contractor carries (or doesn’t carry) insurance.
- Information about the Contractor's State License Board.
- A statement on performance and payment bonds.
- California’s checklist for homeowners.
- A sample change order form including specs for any change order.
- Receipt acknowledging delivery of the California’s 3-day right to cancel.
- California’s 3-day Notice of Cancellation.
- The statement: "Any Notice of Cancellation can be sent to this address."
- The Federal right of rescission (Reg Z) notice.
For those omissions, I can’t give Copilot a passing grade -- at least for drafting residential contracts. To the discredit of Copilot, all the notices and disclosures Copilot missed are black letter law -- statutes readily available to anyone who cares to look. For example, the initial payment can’t be more than 10% for California home improvement projects. Copilot’s contract specified a 20% down payment. That’s dead wrong. Another mistake: Omitting the 3-day right to rescind required in all 50 states when working on an owner’s home.
Clearly Copilot needs one more disclaimer: “This contract may not comply with law in your state.” There’s a better choice. Construction Contract Writer drafts letter-perfect contracts for any state or type of work. The trial version is free.
