Artificial Intelligence (AI) is now permeating in all walks of life. There are very few sectors which are not affected by the evolving new technologies in AI. The recent release of a new AI tool – Deepseek by Chinese company has raised a global debate over the impact the AI can have over humanity. AI has successfully conducted many tasks efficiently and with a fraction of cost. However, new legal challenges are cropping up with regards to Data Privacy, Intellectual Property Rights (IPR) , Ethical Issues, possible mass unemployment. This will give rise to many legal disputes in future. This paper tries to explore the ethical and legal challenges arising out of usage of AI and possible solutions to these disputes.