She Used AI to Draft a LOI for a $2 Million Deal. Here's What Was Missing.

A client came to me with a letter of intent for a $2 million business acquisition.

It looked fine. It read fine.

And when I got to a certain point, I stopped and asked her one question.

"Who drafted this?"

She told me the LOI was quickly drafted through Chat GPT.

I want to be clear about something before I go any further. I use AI. I think it is a genuinely useful tool, and I am not here to tell you to stop using it. This is not that kind of post. This is a post about what AI cannot do and why that gap matters more than most people realize.

So what was missing?

The letter of intent had no no-shop clause.

If that term is new to you, here is what it means. A no-shop clause tells the seller that while this deal is being negotiated, they cannot go out and shop the business to other buyers. It is a protection for the buyer. It says: we are serious, we are spending time and real money on this process, and you need to take this off the market while we work through it together.

My client was the buyer. She had no idea this clause existed. And because she did not know to ask for it, she could not prompt AI to include it. The document came back looking polished. The protection simply was not there.

That is not an AI failure. That is a knowledge gap.

Your output is only as good as your input. And you cannot input what you do not know is missing.

There were other gaps too. There was no governing law language. The binding obligations language was non-standard and unprotective of buyer, and the deal was structured as an asset acquisition when it was actually a stock deal. These are not small technical details. They are the kind of things that can create real problems.

And she did not know any about of these gaps. Why would she?

Same problem. Different document.

A few weeks later I was working through a coaching agreement for someone I care about. That person had been given the agreement they’d been using in their business for years by someone else. And as we started reviewing proposed changes to the document, they admitted they had never actually read it before.

Sound familiar?

As I went through it, there were provisions that were missing and provisions that were in places they did not belong. The kind of gaps a lawyer catches immediately and a business owner would have no reason to look for.

This friend is not someone who takes shortcuts. They are intentional and serious about how they run their business. They just trusted a document they had never read because it existed, and because someone they trusted had given it to them.

That trust had a cost my friend did not know about yet.

Here is the pattern I keep seeing.

These two situations are not unusual. They show up in my practice constantly, in different forms.

Someone downloaded a Services Agreement contract template from Etsy in 2023 and has been sending it to their 1:1 coaching clients ever since. Someone's family member handed them an agreement and said "you can use this." Someone used AI to draft something quickly because they needed to get a client onboarded, and did not have time to think about it.

None of these people are being reckless. They are doing what most business owners do — moving fast, making it work, and trusting that because something looks right, it probably is.

But here is the truth I have seen over 20 years of practice.

Having a contract and being protected by a contract are not the same thing.

The gap between those two things is where disputes happen. Where money gets left on the table. Where a client pushes back on scope and the agreement does not back you up. Where you try to get out of something and realize there is no language to help you do it.

Is this you?

I am not asking to make you panic. I am asking because I genuinely want you to think about it for a second.

Is there a contract sitting in your Google Drive right now that someone handed you and you never read? An agreement you downloaded somewhere and have been using for two years? Something AI drafted that you sent out because it looked professional and you were busy?

If your honest answer is yes, you are not alone. And you are not behind. You are just building, like everyone else.

But now you know. And knowing is the bravest first step.

What is the contract you have been using that you have honestly never read all the way through? Tell me about it in the comments.

I have got you,

Mel

Making you unstoppable despite uncertainty