With AI, You Need Signed Agreements More Than Ever

If there is only one thing you’ve learned from me, I hope it is knowing that signed agreements with your clients and your contractors are essential to protecting your IP and expertise.

Signed agreements are the only way that you can override the default rules of ownership (your contractors own the deliverables you commissioned and paid for if there is no signed agreement to the contrary) and licenses (your client will have an undefined license to use your materials 😬).

Let’s add a new potion to the foul brew of oral and unsigned agreements (which include email).

Without a signed agreement, you do not get any assurances that contractor deliverables are original and don’t infringe a third party’s rights.

A standard written contractor agreement will require the contractor to provide representations and warranties that are something like this:

Representation and Warranties: Except with respect to material provided to Contractor by Client, Contractor represents and warrants that Contractor’s work will be original, unpublished, and solely Contractor’s own work product; will be rendered in accordance with all generally accepted professional industry standards and practices applicable to Contractor’s and Client’s respective industries, and that the goods and services shall be free from material errors and defects; and that Contractor’s preparation of such work product for use by Client does not violate any applicable laws or any of Contractor’s other contractual obligations, or third party rights.

These representations and warranties, along with the indemnification, provide the best form of protection for you, as the client, when receiving deliverables from a contractor in a world where AI is increasingly used during some (or all) of the process.

Yes, there are implied warranties, but you do not want to rely upon implied warranties when you are responsible for making affirmative originality and legality reps and warranties to your end client. The same applies if you are using the deliverables to invest in scalable assets for your business.

If you don’t want the contractor to use any AI, sign an agreement that says so. If you are okay with some AI so long as it is disclosed to you, sign an agreement that requires that. See the pattern.

Most importantly, always be mindful of how the deliverables from a contractor will be used, and make sure that you have mitigated the legal risks for you to use them.

❌ You don’t want to be on the receiving end of a cease and desist letter from the owner of materials you don’t have the right to use. At best, you’ve wasted money and momentum. At worst, you’ll incur legal fees and permanently damage your reputation.

Contact me if you have questions about how AI impacts your service agreements with clients and contractors.

Cheers.💡

Erin