The Contract Clauses Every Business Should Consider When Using AI

As artificial intelligence becomes increasingly integrated into everyday business operations, contracts are evolving too.

Whether you're purchasing AI software, working with suppliers who use AI or deploying AI within your own organisation, your contracts should clearly address how the technology is used and who is responsible if something goes wrong.

Confidentiality and data protection

Many AI platforms process information entered by users. Businesses should understand:

• What data is being uploaded.

• Where it is stored.

• Whether it is used to train future AI models.

• Who has access to it.

  
  

Contracts should clearly define responsibilities for protecting confidential information and complying with UK data protection legislation.

Intellectual property

Who owns AI-generated content?

Depending on how AI is used, ownership of reports, marketing material, software code or other outputs may not always be straightforward.

Contracts should clearly establish ownership rights and permitted use.

Accuracy and responsibility

Where AI is used to generate business-critical outputs, agreements should specify:

• Expectations around accuracy.

• Human review requirements.

• Responsibility for verifying information.

• Procedures for correcting errors.

  
  

Clear wording helps avoid disputes later.

Liability

No technology is perfect.

Contracts should address:

• Limitations of liability.

• Indemnities where appropriate.

• Service levels.

• Responsibilities if AI-generated errors cause financial loss.

  
  

These provisions become increasingly important as businesses become more reliant on automated systems.

The bottom line

AI may be changing the way businesses operate, but the principles of good contracting remain the same. Clear responsibilities, appropriate protections and carefully drafted agreements continue to provide the strongest foundation for successful commercial relationships.