Source: Mondaq - Contracts To Manage AI Risk (Bermuda)

The article by Duncan Card from Appleby law firm discusses how contracts are pivotal tools to manage the risks associated with artificial intelligence development and deployment, especially in Bermuda’s financial services sector. It highlights the Bermuda Monetary Authority’s (BMA) 2025 Business Plan, which signals forthcoming policies integrating AI risk management into existing regulatory frameworks such as the Insurance Code of Conduct and Cybersecurity Code of Conduct. The article reviews model AI contracts from the UK’s Society for Computers and Law and Australia’s Digital Transformation Agency, emphasizing pragmatic contractual provisions that address commercial and legal risks like performance reliability, due diligence challenges, interoperability, and warranty obligations.

Key contractual terms recommended include precise operational specifications, acceptance testing, warranty clauses for defect remediation, and compliance with privacy and export control laws. The article also stresses the importance of addressing intellectual property risks, particularly the misappropriation of third-party data and copyright infringement, recommending broad indemnities and non-infringement covenants. The piece concludes that as AI technology evolves, Bermuda’s legal sector is adapting through innovative contract models to mitigate AI-related risks effectively.