Artificial intelligence is now embedded in many technologies and managed services, which means AI risk is now a contract issue, not just a technical one. When engaging any vendor that uses AI, contracts must clearly define how your data, rights, and liabilities are protected.
Define Data & Ownership
Contracts should precisely define “customer data” to include all information you provide, plus any derivatives or outputs created from it. Limit the vendor’s use of that data strictly to delivering agreed services, explicitly prohibiting reuse for AI model training or other products unless you grant written permission.
Protect Confidentiality & Security
Include robust confidentiality language that applies to all AI processing activities, not just traditional systems. Require specific security controls, such as encryption, role-based access controls, monitoring, and regular security audits, to reduce the risk of misuse or exposure.
Address AI‑specific Issues
Spell out whether, and under what conditions, your data can be used as AI training data, and require aggregation and anonymization if any use is allowed. Clarify who owns AI-generated outputs derived from your data, to avoid ambiguity around reuse, licensing, or downstream IP rights.
Allocate Compliance & Liability
Vendors should commit to complying with all applicable AI, privacy, and data protection laws in the regions where you operate. Include indemnification that covers third‑party claims arising from the vendor’s AI use, such as IP infringement or unlawful data processing.
Control Data Handling & Oversight
Your contract should include a detailed data processing agreement for any personal data, aligned with your regulatory obligations. Specify how and when data will be returned or securely deleted at contract end, and ensure you have audit rights over AI systems and data handling practices.
Well-constructed AI clauses turn your contract into a living control framework that evolves with technology and regulation. Review and update these terms regularly so protections keep pace with new AI capabilities and legal requirements.
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