Generative AI in commercial contracts: clauses, warranties and liability caps
A closer read of the terms of Google's AI services (and competitors) to identify liability exclusions that fall on the business.
The terms of the major AI platforms converge on one point: responsibility for the output is transferred to the user. No warranty of conformity, exclusion of indirect damages, caps set at a few months of subscription fees, unilateral suspension rights: the imbalance is structural.
Businesses embedding these services into offerings for
Businesses embedding these services into offerings for their own clients must address this asymmetry in their contract chain. Passing exclusions through is not always possible, particularly with large accounts or consumers. The delta stays with them.
Businesses embedding these services into offerings for their own clients must address this asymmetry in their contract chain.
Three clauses deserve harder negotiation
Three clauses deserve harder negotiation: portability of data and configurations, service continuity when the model evolves, and the regime applicable to hallucinations that produce identifiable damage. Gaps between providers are starting to widen on these points.
Key takeaways
- 01No warranty of conformity, exclusion of indirect damages, caps set at a few months of subscription fees, unilateral suspension rights: the imbalance is structural.
- 02The delta stays with them.
- 03Gaps between providers are starting to widen on these points.
Published on
27 May 2026
Section
Contracts
Rackham Limited
Take this further
A confidential conversation with the Rackham team to translate these questions into your organisation.
Start the conversation →Related articles
Continue reading →
Law & AI
Google's agentic AI and legal liability: who bears the risk when the agent gets it wrong?
Google's new AI agents (I/O 2026) act without direct human supervision. What liability chain applies to the business that deploys them?
Compliance
AI Overviews in Europe: compliance, IP and the risk of misinformation
As Google's AI summaries roll out in France, what obligations apply to businesses embedding these tools in their processes?
Data & AI
Gemini Omni and sensitive data governance: when multimodal AI crosses boundaries
Gemini's ability to process text, image, audio and video in a single flow raises questions of data classification and protection.