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L3 · Contracting for AI: buying and selling9 min read

Selling AI: customer terms, disclaimers and liability

When your company puts AI into products or customer service, legal's job flips: you now draft the terms customers sign, and the company carries the risk of what its AI says and does.

What customer terms should cover

  • Clear description: what the AI feature does, what it doesn't, and its known limits.
  • Customer responsibilities: reviewing output before relying on it, lawful use, the right to upload what they upload.
  • Acceptable use: prohibited uses (for example, unlawful, high-risk or deceptive uses), with the right to suspend.
  • Data use: whether customer data trains your models. Customers increasingly expect "no" by default, mirroring what you ask of your own vendors.
  • Output ownership and IP: who owns outputs; whether you offer an IP indemnity, and on what conditions.
  • Liability: caps, exclusions and carve-outs for AI-specific risks.
  • Regulatory allocation: which party does what under AI laws (for example, provider vs deployer duties).

Disclaimers have limits

A disclaimer that "AI may make mistakes" sets expectations, but it doesn't make the company immune. Consumer protection law, misrepresentation and sector rules still apply to what your AI tells people. Pair disclaimers with quality controls: testing, monitoring, escalation to humans and a fast correction process.

Claims about your AI

What sales and marketing say about the AI is a legal risk too. Regulators have acted against overstated AI claims, including the FTC's action against a "robot lawyer" service in 2024 and the SEC's 2024 "AI washing" cases against investment advisers.

What this means for the General Counsel

What this means for a General Counsel

Create an AI product schedule that every AI feature uses: description, limits, customer duties, data use, acceptable use and liability. Agree standard preferred, fallback and walk-away positions on liability with the CFO and the business before the big deals arrive.

And remember the lesson of Air Canada: you can't contract your way out of what your AI tells a consumer. Make legal part of launch reviews for customer-facing AI, not only of the terms.

Real example

In Moffatt v. Air Canada, 2024 BCCRT 149 (February 2024), British Columbia's Civil Resolution Tribunal held Air Canada liable for negligent misrepresentation after its website chatbot told a customer he could apply for a bereavement fare retroactively, which contradicted the airline's policy. The tribunal rejected the argument that the chatbot was responsible for its own actions and ordered Air Canada to pay the fare difference and related costs. Source: McCarthy Tétrault — Moffatt v. Air Canada: a misrepresentation by an AI chatbot (2024 BCCRT 149) ↗

Use it

Quick check · 3 questions

  1. 1.What did Moffatt v. Air Canada show about chatbots?

  2. 2.Which is the best partner to a disclaimer in customer-facing AI?

  3. 3.Why should legal review AI marketing claims?

0 of 3 answered

Sources

Last reviewed 2026-10-01.