Part of any due diligence project will involve an assessment of the target’s compliance with applicable legislation, and how liability and risk are apportioned when dealing with third parties. Whilst this guide does not deal with sector-specific legislation, this section will consider the various types of liability that might arise when investing in AI systems.
Tort Liability: When deploying AI, an organisation may be liable in tort where there is a duty of care. It is possible in the near future that the ‘designer’ of AI may become liable for the acts of its creation. As such, any investor should get into the detail of any claims made in this context and conduct a risk analysis in relation to the target’s offering, should the AI designer become liable in the future under a legislative regime.
Contractual liability: Contracts should define the way in which the target provides the AI tool to third parties. Investors should review any related terms to confirm the extent to which the target is liable for loss / damage under the contract.
Consumer law and Product liability: Products, services or digital content must comply with consumer law. As such, there are a number of implied terms (fitness for purpose, statutory quality etc.) that will need to be considered when taking any offering to market. Any underlying contracts cannot limit liability. In addition to this, any damage or loss suffered by a consumer could fall within strict liability laws (for example, in relation to the safety of the offering).
See the Liability section for further information.
Current at 20 November 2020
