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AIAs: A Look At the Future of AI-Related Contracts
The rise and notoriety of generative artificial intelligence technologies created a boom in artificial intelligence (AI) technologies of all kinds. Businesses raced to either roll out their own AI systems or find AI vendors to integrate the technology into their operations. While the law has struggled to keep pace, this boom has caught the attention of legislators and regulators. For example, substantive provisions of the European Union’s AI Act will come into force on Feb. 1, 2025, and the Colorado state legislature passed a landmark AI bill that comes into effect in February of 2026. Existing laws also implicate AI, such as in the privacy, intellectual property, and employment spaces.
As AI systems continue to proliferate all aspects of business, it’s time to think through the risks associated with the use of AI and who bears that risk in vendor agreements, joint ventures, and the like. In addition to increased regulatory attention, discoverable but unknown risks in using AI may expose a business to various avenues of liability, such as disruption in operations, data breaches, and decision-making outcomes that may lead to litigation. AI’s risk potential has been the discussion of endless debate, but one question remains: where do we go from here?
The Artificial Intelligence Addendum
Whether you’re on the buy or sell side of the next game-changing AI, critical tools to account for AI risk are proper risk allocation and controls imposed via contract. Are your vendors using AI, and are they using your data to train the AI system? Who is on the hook if your vendor’s AI discriminates against one of your customers? Is the vendor’s AI being implemented in a way that creates a single point of failure in your day-to-day operations? What termination options do you have in the event a new regulation makes your AI-vendor agreement obsolete? These are all questions that can be answered via contract, but to date no consensus structure for AI related provisions has emerged.
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