What Makes AI Vendor Deals Different — And Why Your Standard SaaS Playbook Won’t Cut It | Ward and Smith, P.A.

AI vendor transactions present distinct risks compared to traditional SaaS deals due to their unique characteristics and potential impacts on business processes.
These risks include data use and model training issues, unpredictable AI outputs, rapid model iteration cycles, opacity of model behavior, intellectual property concerns, data privacy challenges, and increasing regulatory scrutiny.
Counsel must understand the specific category of AI tool being used, as this significantly affects contracting considerations such as data exposure, training restrictions, output ownership, and model control.
Different deployment models influence risk profiles, compliance requirements, and liability allocations.
Each AI category affects five key contracting dimensions: data exposure, model control, auditability, explainability, and the allocation of responsibility for the outputs.

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