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ARTICLE · 09 NOVEMBER 2026

AI Cannot Replace Proper Advice, A Cautionary Tale

A vendor's reliance on AI-generated legal documents for a business sale on vendor finance terms led to defective security registrations and significant financial losses during liquidation. This case demonstrates how AI tools, while useful for many tasks, cannot replace qualified professional advice when structuring complex commercial transactions and security arrangements.

AustraliaCorporate/Commercial Law

By now, I am sure many of you have started effectively implementing AI into your daily working lives.

Automating workflows, creating agents, setting up notebooks, and all that other good stuff you have heard at every single meeting you have attended in the last few years.

AI is great. Don’t get me wrong. I may or may not even be using it to help me write this article. But with its rampant use, we are starting to see dangerous long-term ramifications, particularly when someone relies on AI instead of seeking proper advice and assistance from a qualified professional. 

The most recent case involved a sale of business on vendor finance terms. The vendor traded a small business on Victoria’s surf coast. He was struggling with his personal finances, and at the same time was facing a significant long-term relationship breakdown. In his circumstances, running the business was no longer an option. The idea of shutting shop was a difficult reality. The vendor had poured his heart and soul

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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