The Japanese Ministry of Economy, Trade and Industry (METI) has released a Contract Checklist for the Use and Development of AI, aimed at helping businesses navigate the legal and operational complexities of artificial intelligence (AI) adoption. The checklist, compiled in response to the rapid expansion of generative AI technologies, provides practical guidance for companies engaging in AI-related contracts, ensuring fair risk allocation and responsible AI utilization.
The document is designed to support Japanese businesses—particularly those unfamiliar with AI or legal frameworks—by offering clear checkpoints for reviewing AI-related agreements. METI emphasizes that as AI becomes increasingly integrated into corporate operations, understanding the legal implications of AI contracts is crucial to protecting business interests and data security.
With the rise of AI-powered platforms and automation tools since 2022, companies across various sectors have begun incorporating AI into their operations. However, METI notes that many businesses lack the legal expertise to fully assess AI-related risks, leading to potential pitfalls such as unintended data usage, insufficient service guarantees, and vague accountability measures.
The checklist addresses these concerns by outlining essential contract considerations, including:
- Scope of AI usage, ensuring businesses understand how AI-generated outputs will be used and who holds ownership rights.
- Data security and privacy, preventing proprietary or sensitive business data from being misused or shared with third parties.
- Liability and accountability, clarifying responsibilities in cases where AI-driven decisions result in financial or reputational damage.
- Service level agreements, defining performance expectations, AI model updates, and dispute resolution mechanisms.
METI’s initiative seeks to promote AI adoption while ensuring legal safeguards are in place to prevent unintended risks.
The AI contract checklist is intended for a broad audience, ranging from corporate legal teams to business managers conducting preliminary contract reviews. It serves as a reference tool for negotiating AI service agreements, developing AI-powered products, and ensuring regulatory compliance.
METI hopes that by providing businesses with a structured approach to AI contracts, Japan can foster responsible AI development while remaining competitive in the global AI landscape.
Need Help?
If you’re concerned or have questions about how to navigate the Japanese or global AI regulatory landscape, don’t hesitate to reach out to BABL AI. Their Audit Experts can offer valuable insight and ensure you’re informed and compliant.
