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Buying AI capability: the five contract terms most worth negotiating
Calling a third-party model API doesn't make risk disappear because 'you didn't train it'. The contract is where that risk gets allocated.
More products call third-party models via API. That doesn't outsource the risk — users see your product, and responsibility lands on you first. The contract is the tool to allocate risk in advance.
First, data use: whether the vendor retrains on your input, whether it retains data, and for how long — directly affecting whether you can keep your own compliance promises.
Second, IP and indemnity: for ownership of outputs and infringement indemnity, read the scope and caps carefully.
Third through fifth: availability and change (notice duties on model deprecation/upgrades), compliance cooperation (duty to provide audit materials), and exit with data deletion. Settle these before you can talk about stable operations.