AI Contract: Types, Key Features, Red Flags, Lawyer Help
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What is an AI Contract?
An AI (artificial intelligence) contract outlines how parties are allowed to use AI for tasks and projects. The contract specifies important details, such as the parties’ rights, duties, and more.
Read the rest of this article to explore the different types of common AI contracts, key features in AI contracts, red flags to note, and how a lawyer can help you draft or review these essential agreements.
What are Common AI Contracts?
Some of the most common AI contracts include:
- AI licensing agreement. This agreement refers to how AI models and software can be used and licensed, such as their permitted and prohibited uses.
- Data licensing agreement. Access to datasets for training AI or other tasks is involved in these contracts, which should specify data ownership and privacy.
- Development agreement. This contract involves one party building or developing an AI model, with key terms including costs and milestones.
- Joint development agreement (JDA). If two or more parties are involved in developing AI, the agreement has to allocate intellectual property (IP) rights and duties.
What are Key Features of AI Contracts?
To be legal and clear for all parties concerned, AI contracts must include key terms such as the following:
- Intellectual property (IP). A big concern with AI contracts is who owns the IP, such as the model, data, and software improvements.
- Data usage. The contracts must specify what happens to the data, such as after the contract ends.
- Data protection. If personal or sensitive information is being processed or stored, the agreements need to specify what measures are in place to protect user privacy.
- Accuracy. Since AI systems are known for making errors, the contracts must specify how liability can be shared between parties and limited.
- Performance. There should be specific service levels the provider of the AI should meet, such as uptime guarantees.
- Termination. How parties can end the contract and what happens to the data/models when the contract comes to an end must be clearly defined.
- Human oversight. To ensure that AI is reviewed for accuracy, there should be provisions for human oversight.
- Transparency. Parties using the AI model or software will want to know how it works and how information is protected.
What are Red Flags in AI Contracts?
Across different types of AI contracts, there are specific things to keep an eye out for when reviewing them. Hiring a lawyer is also beneficial because they will be able to identify risks and liabilities that you might miss without a legal background.
Here are some typical red flags to spot:
- Broad rights. If the AI provider has full rights to inputs, outputs, software, or data, without any limits, this can put you at privacy or other risks.
- Lack of protection. Things can go wrong with AI systems. If the contract doesn’t put protection measures in place, this can leave you as the user or customer exposed.
- Unrestricted modifications. If the AI provider wants to make changes to the models or software, they should give the customer notice ahead of time.
- Vague wording. If the contract is vague or general, this can hide risks or create confusion between parties.
- Missing human oversight. There should be human review of the AI systems, especially if it’s allowed to make decisions.
- Unclear services. You want the services scope to be transparent, with commitments from the AI provider, such as uptime guarantees.
- Error remedies. Should the AI software or model fail, the provider should give you support to fix whatever went wrong to reduce the customer’s losses.
You can request a legal review of your AI contract by hiring a qualified lawyer on ContractsCounsel, one of the largest online legal marketplaces where clients can connect with vetted lawyers. Here’s how:
1. Go to the ContractsCounsel marketplace, where you can post your project for free.
2. You’ll receive multiple bids from lawyers directly on the platform who can assist you.
4. Once you receive the lawyer bids, you should review the lawyers' profiles. There’s lots of info on the platform to help you choose the best lawyer, such as their location, client ratings, years of experience, and field of expertise.
5. Connect with a lawyer you think is best suited to your requirements and hire them.
How Can a Lawyer Help You with AI Contracts?
AI contracts can be dense and technical, which can make them challenging to review. Besides reviewing or drafting your AI contract for you, a lawyer can help you in various ways, such as the following.
- They’ll identify any risks, such as one-sided clauses in the contract that give the provider broad rights.
- They’ll help you to negotiate with the other party for fair, balanced terms.
- They’ll protect your data and privacy rights, ensuring that sensitive information isn’t exposed or used in unauthorized ways.
- They’ll clarify all IP ownership. This prevents future disputes between parties.
- They’ll check all regulatory compliance. A lawyer is skilled at aligning the AI contract with all applicable regulations and laws.
- They’ll ensure you have favorable exit terms. They’ll help you keep your data and development ownership if the agreement comes to an end.
- They’ll consider what will happen if something goes wrong with the AI system or model. This enables you to add provisions for how to fix the issue, preventing hassles later.
Where to Find a Lawyer for an AI Contract
Finding a lawyer isn’t always easy, but you don’t have to cold-call traditional law firms, which can be time-consuming and expensive. The process of locating and hiring a lawyer is easier on online legal networks.
On ContractsCounsel, you can easily connect with vetted lawyers on the platform by finding an AI lawyer from the comfort of your home. All lawyers have the expertise and knowledge to guide you through all your AI concerns.
The platform provides comprehensive research on the lawyers’ profiles, enabling you to search for lawyers based on data such as their level of expertise, years of experience, client ratings, location, and previously completed projects.
ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.
Meet some of our AI Contract Lawyers
Alton H.
I am a U.S.-licensed attorney with more than a decade of experience in complex litigation and intellectual property matters. I have practiced at leading Am Law firms including Pillsbury Winthrop Shaw Pittman, Arent Fox, and Sughrue Mion, and I currently operate my own law practice. I have extensive experience handling high-stakes patent litigation, drafting pleadings and briefs, managing large-scale discovery, preparing and defending depositions, and appearing before federal courts and administrative bodies such as the PTAB and ITC. I hold a J.D., cum laude, from The George Washington University Law School and advanced technical degrees in chemistry and chemical engineering, which allow me to efficiently handle technically complex matters. I am admitted in multiple jurisdictions, including New York, Virginia, New Jersey, and the District of Columbia, and I regularly provide high-quality remote legal support to clients nationwide.
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Don M.
AI and crypto-savvy Attorney with 20+ years’ experience advising companies in I.T., software, telecommunications, FinTech and Artificial Intelligence (AI) with 9+ yrs spent in GC roles. Barred in 3 states (Calif. New York & Wash. D.C.) plus the U.S. Supreme Court. Registered Patent Attorney (USPTO). Extremely versatile, with subject matter expertise in a variety of legal topics highly useful for tech and startup companies, including IP, privacy, financial / banking laws (Regulation E, UDAAP, ID Theft Red Flags Rule, etc.), AML, KYC, export controls, litigation/ADR, cryptocurrency regulations and the rules governing the use of A.I. Deep understanding of computer technology via Master’s in Comp. Info. Systems (MSCIS). Also pre-law business experience. Certifications: Certified Anti-Money Laundering Specialist (CAMS); Certified Information Privacy Professional (CIPP-US); Certified HIPAA Professional. Education: Law degree (JD): UCLA, 2003. MSCIS: Boston Univ., 2011.
Tim B.
Attorney Tim Baldwin is the founder of Property Management Law Solutions, PLLC, a Florida law firm that specializes in representing landlords, property owners, apartments, and property management companies in a variety of property related legal matters, like evictions, security deposit disputes, fair housing matters, civil defense, damages actions, risk mitigation, partition, code violation, lease enforcement, and other real property litigation. Starting as a prosecutor from 2004 to 2006, Tim Baldwin gained invaluable experience as a courtroom litigator and to date has tried nearly 60 jury trials. When he opened his law practice in 2006, Tim focused his law practice on helping landlords in the Florida Panhandle. Since then, Tim Baldwin has expanded his law practice across Florida and become known as one of the premier Florida attorneys in landlord and property law. Tim regularly speaks at events for real estate groups, such as apartment and property management associations and real estate investment groups. Tim also hosts his own podcast, Property Management Law Solutions Podcast, where he discusses a wide range of landlord and property management related topics, and is frequently asked to be a guest on other podcasts nationwide.
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Kevin F.
Hi, I’m Kevin Flaherty, an Illinois-licensed attorney with extensive experience negotiating and drafting complex commercial agreements for engineering firms, technology companies, public agencies, and small-to-mid-sized businesses. Over the course of my career, I’ve: Led negotiations on domestic and international contracts, including engineering services agreements, EPC arrangements, SaaS licensing, MSAs, purchase/supply agreements, NDAs, and other mission-critical commercial documents. Developed risk-allocation strategies around indemnities, liability limits, flow-downs, multi-party contracting structures, and high-stakes project frameworks. Built contract playbooks, drafting standards, review matrices, and workflows designed to help clients understand their risks clearly and move deals forward with confidence. Provided training and guidance to internal teams and leadership on contract strategy, compliance considerations, and best practices. I bring not only legal expertise, but also a practical, problem-solving mindset—translating dense legal terms into actionable business decisions and helping clients protect their interests without losing momentum.
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Robert F.
I’m a commercial contracts attorney who helps growing companies get out of contract chaos and into something sustainable. I focus on the agreements that sit at the core of how companies operate—customer contracts, vendor deals, SaaS agreements, and supply and distribution relationships. Before going independent, I worked in private practice and embedded legal roles supporting technology, consumer goods, and manufacturing businesses. That experience shaped a practical, business-first approach to contracts: clear drafting, efficient negotiation, and advice grounded in how companies actually operate. I hold the CIPP/US credential and have completed AI governance training, which informs my work on data, privacy, and AI-adjacent risk terms commonly found in modern commercial agreements. If you want contracts that are clear, balanced, and usable by the people who sign and manage them, that’s where I’m most effective.
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