ARTICLE

Human review clauses divide responsibility for AI output between the vendor that builds the tool and the customer that uses it. When vendors draft these clauses, they often make them one-sided. The drafts require the customer to review every output before use. Any failure by the customer to review is a material breach. The icing on the cake? The vendor bears no liability for outputs the customer approves.

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None of us know how to draft every type of contract language. If we’re lucky, we have colleagues and mentors who explain things to us. But even then, they have duties beyond just training us. So we are left having to figure out a lot of drafting things on our own.

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This guide from Spellbook, our sponsor, compares AI tools and human lawyers on efficiency and cost, accuracy, client interaction, and ethical decision-making. It reviews recent survey data on AI use in legal practice. It explains why AI output calls for lawyer oversight and how lawyers and AI tools can work together. It also covers the ethical and regulatory framework for using AI in legal work. The guide is available as a download.

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CONTRACT TIP

This contract tip is about using multiple definitions for similar terms.

I've seen this approach used by some vendors to avoid responsibility for third-party elements incorporated into their own products.

Most commercial contracts make the vendor liable for any infringement or misappropriation involving third-party IP incorporated into the vendor's product.

But some vendors use a subtle drafting technique to avoid that responsibility.

These vendors create a separate definition of their product that excludes any third-party IP.

Let's take the example of a vendor licensing a software program that incorporates open-source software.

The vendor might create one definition of the software program that includes both its own code and the open-source software. This defined term might be something like "Product." The vendor would then use another definition that includes only its own proprietary code, labeling it as "Software."

Then the vendor would use the term "Software" (the term that includes only its own code) when identifying what software is covered by the IP indemnification and other provisions.

Whenever you see two definitions covering similar concepts, make sure to take note of the differences and watch for how they are used.

Have you seen this in the contracts you receive?

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