Consider How a Business and Commercial Law Attorney Approaches AI Contract Risks

Artificial intelligence is no longer a niche tool. California businesses now rely on AI for hiring, marketing, analytics, and even drafting disclosures. That creates new questions about who owns the data, how models are trained, and what happens if an algorithm makes a mistake that affects customers or investors. A commercial business attorney can help turn AI into a managed part of your operations by clarifying how contracts allocate responsibility and risk.

Why AI Vendor Agreements Aren’t “Standard” Contracts Anymore

Many AI vendor agreements were written as ordinary software or SaaS deals. Today they sit at the center of regulatory and litigation exposure. Provisions on data sources, training practices, and automated decision-making can influence privacy, discrimination, and compliance obligations if they are not drafted carefully. For California companies, these agreements also intersect with expectations around reporting and investor communications.

Where Business and Commercial Law Overlaps With Securities Concerns

AI tools support areas that matter to investors: financial modeling, risk scoring, and internal reporting that may shape disclosures. When those tools influence information that ends up in pitch decks, offering materials, or investor updates, securities issues can overlap with business and commercial law. A counsel who handles commercial contracts and works alongside a firm’s securities attorney can help you:

• Identify which AI-driven outputs might affect investor-facing statements
• Align representations and warranties with how the technology actually works
• Clarify who is responsible if an AI system produces incorrect or biased results

Without that alignment, businesses risk a gap between what contracts say, what disclosures imply, and how the AI behaves in practice.

Key Clauses a Business and Commercial Law Attorney Reviews

When a company adopts AI tools, several contract provisions deserve extra attention:

• Data sources and ownership: How training data is obtained, who owns inputs and outputs, and whether data can be reused across clients.
• Disclosure and audit rights: Whether you can review how the system makes decisions, especially if regulators or investors ask.
• Liability and indemnity: How responsibility is shared if AI-driven actions lead to investigations or investor claims.
• Change-of-law language: How the contract adapts if AI or privacy rules change mid-term.

Frameworks such as the NIST AI Risk Management Framework highlight how organizations can build structured approaches to identifying, assessing, and managing AI-related risks across systems and contracts.

Articles such as this discussion of the intersection of securities regulation and commercial transactions show how contract terms can affect operations and investor expectations in complex deals that involve technology.

AI tools are becoming embedded in how companies operate, but they also introduce new contractual and compliance questions. Working with a business and commercial law attorney who understands AI vendor agreements, risk allocation, and disclosures can help your business adopt new technology while managing disputes and compliance risk.

Disclaimer: This article is for educational purposes only and does not constitute legal advice.