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.
4 Situations Where a Securities Attorney Supports Business and Commercial Law
For many California companies, securities issues and contract disputes feel like separate problems. In reality, they often show up in the same deal. When you’re raising capital, signing commercial agreements, or restructuring ownership, working with a securities attorney will help you see risks that are easy to miss. Reviewing documents with a trusted securities attorney before you sign is often less expensive than trying to fix mistakes later.
1. When Business Deals Start to Look Like Securities Offerings
Shareholder buyouts, convertible notes, revenue-sharing arrangements, and “friends and family” investments can all trigger securities obligations, even if they look like ordinary contracts at first. If investors are relying on your statements about the business, regulators may treat those arrangements as securities offerings. The SEC’s overview of the laws that govern the securities industry explains how disclosure and anti-fraud rules apply whenever capital is raised from investors. A securities attorney helps you translate those high-level rules into practical steps for your specific transaction.
2. When Contract Language Affects Investor Expectations
Contract provisions about performance, projections, and risk allocation often sit at the intersection of business and commercial law and securities regulation. A clause that seems harmless in a commercial contract may be read very differently if investors later claim they relied on it when deciding to put money into the company. Reviewing key agreements with counsel who handles business and commercial law and securities matters can help you:
Clarify what you’re promising to counterparties and investors
Align those promises with your disclosures and offering documents
Reduce the chance that ordinary contract language becomes evidence in a securities dispute
3. When You’re Negotiating With Sophisticated Counterparties
Institutional investors, strategic partners, and experienced counterparties usually come to the table with their own legal teams. They expect careful drafting, clear risk descriptions, and alignment between what is said in meetings, in emails, and in the final agreements. Among the benefits of having a securities attorney on your team are things such as::
Flag provisions that might be hard to reconcile with your offering materials
Suggest language that balances commercial objectives with regulatory expectations
Help you understand which points are worth pushing for—and which carry more compliance risk than they’re worth
4. When You Need to Respond to Investor or Regulator Questions
Questions from investors, auditors, or regulators often come with tight deadlines. If your commercial contracts and securities documents tell slightly different stories, it can be stressful to decide what to disclose, how to explain past decisions, and what needs to be updated. Your securities attorney will assist with tasks like:
Compare contracts, term sheets, and disclosures side by side
Prepare clear explanations for investors or regulators
Plan any needed amendments or supplemental communications
Bringing It All Together
Not every business contract requires securities counsel, but deals that involve investors, complex financing, or ownership changes often do. In those situations, working with a securities attorney who understands how documents play out under business and commercial law can help you reduce risk before problems surface.
Disclaimer: This article is for educational purposes only and does not constitute legal advice.