THE IMPACT OF ARTIFICIAL INTELLIGENCE IN DEVELOPING LEGAL CONTRACTS: CHALLENGES AND OPPORTUNITIES FROM A LEGAL AND ETHICAL PERSPECTIVE

Abstract

The use of artificial intelligence (AI) in legal contract development is increasing and has the potential to change traditional legal practices. This dissertation examines the impact of AI on the drafting and use of legal contracts in the United Kingdom, focusing on the legal and ethical challenges and opportunities that arise from AI-assisted and smart contracts. The study adopts a doctrinal research methodology and analyses relevant UK contract law principles, legislation, case law, and regulatory guidance. The research finds that English contract law is generally flexible enough to recognise AI-assisted and smart contracts, provided that the traditional requirements of contract formation, such as offer, acceptance, intention to create legal relations, and capacity, are satisfied. However, the study identifies ongoing legal uncertainty regarding liability, particularly where autonomous AI systems are involved. Ethical concerns, including data protection, lack of transparency, and algorithmic bias, also limit trust in the use of AI in contract development. Despite these challenges, the dissertation highlights that AI can improve efficiency, reduce costs, and increase access to legal services. The study concludes that clearer regulatory guidance, stronger ethical safeguards, and increased human oversight are necessary to support the responsible use of AI in contract law. Addressing these issues would improve confidence in AI-assisted contracts while ensuring compliance with fundamental legal principles in the UK.