Use the Bonterms Standard AI Addendum (AI Addendum) to establish terms for generative AI features in a cloud service or SaaS agreement. The AI Addendum layers onto an existing agreement between the parties (the Main Agreement) and addresses training restrictions, data handling, output ownership, indemnification, warranties, use restrictions and model provider obligations.
The AI Addendum can be implemented using a Bonterms Cover Page, as a standalone signable agreement, or as an attachment to an existing agreement.
Option 1: Cover Page Version
Use this version if you wish to enter into the AI Addendum using a separate Cover Page.
Steps:
- Review the AI Addendum (Cover Page Version) with your legal counsel
- Prepare your Cover Page (see example):
- Identify the parties: Customer and Provider
- Complete the Key Terms: Main Agreement and AI Addendum Effective Date
- Propose any Additional Terms (additions to or modifications of the AI Addendum). See the Playbook of Additional Terms for examples.
- Send the Cover Page to your counterparty
- Negotiate and execute to create your AI Addendum
Option 2: Signable Version
Use this version if you wish to enter into the AI Addendum by signing it directly.
Steps:
- Review the AI Addendum (Signable Version) with your legal counsel
- Complete the document fields:
- Identify the parties: Customer and Provider
- Complete the Key Terms: Main Agreement and AI Addendum Effective Date
- Propose any Additional Terms (additions to or modifications of the AI Addendum). See the Playbook of Additional Terms for examples.
- Negotiate and execute to complete your AI Addendum
Option 3: Attachment Version
Use this version if you wish to attach the AI Addendum to an existing agreement or include it when signing a new agreement.
Steps:
- Review the AI Addendum (Attachment Version) with your legal counsel
- Prepare implementing language to add to the Main Agreement (if new) or an amendment (for existing Main Agreements) that specifies:
- Parties: Customer and Provider
- Main Agreement: the agreement into which the AI Addendum is incorporated
- AI Addendum Effective Date
- Any Additional Terms (additions to or modifications of the AI Addendum). See the Playbook of Additional Terms for examples.
- Example: "The parties agree that the Bonterms Standard AI Addendum Version 2.0 (Attachment Version) attached as Exhibit [X] is incorporated into and forms part of the Main Agreement. For purposes of the AI Addendum, [Party Name] is the 'Customer' and [Party Name] is the 'Provider.' The AI Addendum Effective Date is [date]. [Include any Additional Terms if needed.]"
- Negotiate and execute to complete your AI Addendum
FAQs
What is the Bonterms Standard AI Addendum?
The AI Addendum is a Bonterms Standard Agreement that governs generative AI features in a cloud service or SaaS product. It is designed to be incorporated into a broader agreement between the parties (the Main Agreement) and covers training restrictions, operational monitoring, data handling, output ownership, copyright indemnification, AI warranties, use restrictions and model provider obligations.
What is the Main Agreement?
The Main Agreement is the separate agreement under which the Provider provides the Cloud Service to the Customer. The AI Addendum is incorporated into the Main Agreement as described in Section 9.2.
Why is this Version 2.0?
The AI Addendum v2.0 is the latest version of Bonterms AI contracting terms. It builds on and updates the work done in the Bonterms AI Standard Clauses (Version 1.0), which provided modular clause options for AI-related topics. The AI Addendum v2.0 is a complete Standard Agreement with defined defaults and can be modified through Additional Terms. The Playbook of Additional Terms provides ready-to-use language for common modifications.
Why are there three versions of the AI Addendum?
Bonterms offers three versions to support different contracting workflows. All three versions share the exact same operative terms (Sections 2-9) and differ only in how they are implemented. Choose the version that best fits your process.
What is the Playbook of Additional Terms?
The Playbook provides example Additional Terms — ready-to-use language for common modifications to the AI Addendum. Examples include training exceptions, alternative output ownership approaches, indemnification alternatives and model provider notice requirements. The Playbook is a companion to the AI Addendum and is available on the Bonterms website.
Can I use the AI Addendum with any Main Agreement?
Yes. The AI Addendum is designed to work with any SaaS, cloud services or similar technology agreement, whether or not the Main Agreement is a Bonterms Standard Agreement. The definitions in Section 1 are written to accommodate different terminology — for example, if the Main Agreement uses "Client Data" instead of "Customer Data," the Main Agreement definition controls.
Output Claims: Why does the AI Addendum include an Output indemnity?
Many SaaS agreements have not historically addressed the concept of output, particularly in the context of indemnity. For that reason, the AI Addendum creates a structure for Output to be covered under the Main Agreement's existing indemnification framework, but limited to copyright and with some built-in qualifications. The parties can adjust to meet their needs through Additional Terms.
Output Claims: Why is there a liability cap?
Bonterms Standard Agreements are designed to work as a starting point for both customers and providers. The liability cap represents a default compromise that the Committee believes is appropriate absent the specific context of any particular deal. Parties can adjust this to their needs through Additional Terms, and the Playbook offers alternatives including removing the cap, applying an enhanced cap or carving out legal fees.
Output Claims: Why are consequential damages allowed?
This mirrors the approach taken in the Bonterms Cloud Terms (standard SaaS MSA), where indemnification claims are not subject to the consequential damages waiver. The Committee determined that damages classification in intellectual property infringement cases is inherently uncertain, and applying the waiver could render the indemnity without practical effect. The parties can adjust to meet their needs through Additional Terms.
What happened to the AI Standard Clauses?
The AI Standard Clauses v1.0 provided a menu of clause options that parties could select and incorporate into their agreements. The AI Addendum v2.0 takes a different approach — it provides a complete set of default terms that work out of the box, with modifications available through Additional Terms and the Playbook. The AI Standard Clauses v1.0 remain available under Release Notes on the Bonterms website. Parties currently using the AI Standard Clauses may wish to consider whether the updated AI Addendum v2.0 is more appropriate for their needs.
Updated