Negotiating Key Terms in AI Vendor Contracts and Conducting Due Diligence to Assess AI Providers, Mitigate Risks

AI solutions are becoming increasingly prevalent, and the technology is evolving at such a rapid pace that it is difficult to keep up let alone identify and evaluate the risks associated with AI deployments. Thus, it is critical for counsel and business leaders to understand AI to evaluate AI partnerships and effectively contract with AI providers.

Some key issues when negotiating and drafting AI vendor agreements include intellectual property ownership and infringement, data privacy, indemnification, liability caps, jurisdiction, and rights of the parties upon termination of the contract. Counsel must conduct extensive due diligence regarding these issues to ensure the successful adoption of the contract and to mitigate risks.

As AI continues to evolve so do the laws and regulations governing its use. Data privacy and security laws have a big impact on how AI can be used, and these laws are constantly changing. Under this ever-changing legal and regulatory landscape, it is imperative that counsel regularly review AI vendor agreements to ensure they are compliant with current data privacy laws.

Because many AI providers are startup companies with very little business history, business leaders and counsel must ensure an AI vendor can adequately meet the business needs of the client while also maintaining proper compliance with applicable rules and regulations. Before entering into an agreement, an assessment should be made as to whether the vendor is NIST compliant and has proper data security, cybersecurity insurance, and data privacy policies in place.

Listen as our authoritative panel of experts discusses how to conduct due diligence to assess AI providers and identify, evaluate, and mitigate risks with an AI deployment. The panel will also provide tips on negotiating and drafting key contractual terms in an AI vendor agreement.