AI Contract: Types, Key Features, Red Flags, Lawyer Help

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.