The vendor’s contract decides who holds the bag. By default, that’s you.
You’re not buying software. You’re feeding a system your client files, employee records, and strategy — then publishing and deciding things based on what comes out. Most AI is bought on the vendor’s paper: clickwrap terms written by their lawyers, for their protection. This guide teaches you to read that paper.
- The 12 red flags that matter, ordered by damage — the vendor training on your data, liability capped at a month’s fees, one-way indemnity, ‘as is’ outputs, and buried arbitration clauses
- 11 model protective clauses to demand — no-training-on-your-data, deletion with certification, vendor IP indemnification, liability-cap carve-outs, 72-hour breach notice — each with model language and negotiation notes
- A 5-step negotiation script for small businesses with no leverage to spare, including the three-asks email to send before the redlines
- 6 walk-away lines — the bright lines where you don’t sign, period
- The clickwrap playbook: 4 levers you still have when the terms are truly non-negotiable
- The 2026 regulatory backdrop translated into contract terms — Colorado’s rewritten AI law, Texas’s new prohibitions, Florida’s FIPA third-party-agent rule, the EU AI Act, and the training-data land grab
- When to bring in your lawyer — and exactly what to hand them
The posture is simple: this guide makes you a dangerous customer, not your own lawyer. The model clauses are starting points for discussion with licensed counsel — print them and take them in.
Companion to the AI Liability Coverage Checklist (insurance) and When AI Gets You Sued in Florida (enforcement). You get both PDF and Word versions.
Part of the AI for the Little Guy resource family.
General information for business owners — not legal advice. The model clauses are illustrative starting points, not ready-to-sign documents; have licensed counsel adapt them to your facts before you rely on them.
