Chicago Business Attorney Blog
Most contracts were not built for AI. That is the problem.
Right now, companies are layering AI into their business:
•drafting contracts with ChatGPT
•integrating AI vendors into workflows
•using AI-generated content in operations and marketing
But they are doing it on top of contracts that were written for a different reality.
Pre-AI contracts.
And those contracts are not equipped to handle:
•AI-generated outputs
•data exposure
•unclear ownership
•shifting liability
This is where legal risk is quietly building.
Direct answer: Do your contracts need to change because of AI?
Yes.
If your business is:
•using AI tools
•working with vendors that use AI
•or producing AI-generated content
Your contracts should be updated.
Without that, you are operating with undefined risk.
Where AI breaks your existing contracts
Most contracts assume:
•humans create the work
•data stays controlled
•responsibility is clear
AI disrupts all three.
1. Ownership of AI-generated content is unclear
The issue
Who owns:
•AI-generated copy
•designs
•strategies
•code
Your contract likely does not say.
Why it matters
If ownership is not clearly defined:
•you may not fully own what you paid for
•vendors may reuse or repurpose outputs
•IP disputes become more likely
What to fix
Your contracts should explicitly define:
•ownership of AI-generated outputs
•rights to modify and use
•restrictions on reuse
2. Data usage is a hidden liability
The issue
When employees or vendors use AI, they may be inputting:
•proprietary data
•customer information
•internal strategy
Most contracts do not address how that data is handled.
Why it matters
Depending on the tool:
•data may be stored
•accessed
•or used to improve systems
This creates exposure in:
•confidentiality
•compliance
•privacy obligations
What to fix
Add clear language around:
•what data can be used with AI tools
•how that data is protected
•who is responsible for misuse
3. Liability is no longer straightforward
The issue
If AI produces:
•incorrect information
•infringing content
•misleading claims
Who is responsible?
Your contract probably does not answer that.
Why it matters
Without clear allocation:
•liability defaults become messy
•disputes become expensive
•responsibility becomes contested
What to fix
Define:
•who is responsible for AI-generated errors
•indemnification obligations
•limits of liability tied to AI use
4. Vendor risk has changed
The issue
Many vendors now:
•use AI internally
•integrate AI into their services
•rely on third-party AI platforms
Often without disclosing it clearly.
Why it matters
You may be exposed to:
•unknown data practices
•subcontracted AI systems
•third-party risk you did not approve
What to fix
Require:
•disclosure of AI use
•approval rights for AI tools
•accountability for third-party systems
5. “Boilerplate” is no longer enough
The issue
Standard contract language was not designed for:
•AI-generated outputs
•evolving regulatory expectations
•dynamic data usage
Why it matters
What used to protect you no longer fully does.
What to fix
Contracts need to be:
•updated
•intentional
•specific to AI risk
Not copied from templates.
The real risk is not AI. It is undefined responsibility.
AI does not create risk on its own.
Unclear ownership, unclear data use, and unclear liability do.
And right now, most contracts leave all three undefined.
What this means for your business
If you are:
•using AI internally
•working with vendors that use AI
•publishing AI-generated content
And your contracts have not been updated…
You are relying on assumptions that may not hold up.
A better way to think about it
Contracts are supposed to do one thing:
Define responsibility before there is a problem.
If your contract does not account for AI, it is not doing that.
If your contracts do not address AI, they are already outdated
Most companies will not realize this until:
•a dispute
•a claim
•or a breakdown in responsibility
At that point, you are negotiating from a position of exposure.
George Bellas works with companies to:
•identify where contracts are vulnerable
•update agreements to reflect AI risk
•protect ownership, data, and liability before issues arise
If you cannot clearly answer:
•who owns your AI-generated work
•how your data is being used
•who is responsible when something goes wrong
you have a gap.
Contact George Bellas today to review your contracts and close that gap before it becomes a legal problem.