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In an article for Practising Law Institute (PLI), Managing Attorney Jana Gouchev explores how corporate legal teams are responding to the rapid integration of artificial intelligence into commercial contracts. She explains when AI addenda are necessary, which provisions matter most, and how legal teams can draft AI-specific terms that address data, regulatory, and governance risk.
Summary
Artificial intelligence now appears in many vendor, technology, and service agreements. Yet many contracts still fail to address AI-specific risk. When agreements involve AI-driven systems, model training on company data, or AI outputs that affect regulated or high-impact decisions, standard contract language falls short. A tailored AI addendum allows legal teams to address data use, model training, bias, errors, regulatory compliance, and governance directly.
Effective AI addenda require early involvement and careful tailoring to the specific technology and business use case. Legal teams should align AI terms with internal risk tolerance and involve key stakeholders across the organization. They should also push back on generic vendor language that avoids accountability. Clear provisions on data boundaries, audit rights, liability, transparency, and change management help companies manage risk while supporting responsible innovation as AI and regulation continue to evolve.
Originally published by Practising Law Institute (PLI Plus), 2025.
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