23/09/2026
AI tools are everywhere now, and it’s easy to get swept up in the hype. Before signing a contract, consider whether the tool meets these essential requirements.
Start with the problem, not the tool
- Get clear on the specific problem you’re trying to solve before you acquire the tool
- Avoid buying a tool because it’s trendy, “we should have AI” isn’t a strategy
- Map the use case to measurable outcomes (time saved, cost reduced, quality improved)
- Ensure the selected product actually solves the problem
Privacy and data handling under Australian law
- Check whether the AI provider complies with the Privacy Act 1988 and the Australian Privacy Principles (APPs)
- Find out where your data is actually stored with many AI vendors hosting data overseas, raising cross-border disclosure obligations under Australian Privacy Principle 8
- Ask whether your data is used to train the vendor’s models, and whether you can opt out of this
Accuracy and reliability
- Ask for evidence of performance or a trial period
- Test with your own data cases, not just the vendor’s demo
- Consider how much human oversight the output realistically needs
Regulatory landscape (know this is moving)
- Check if the tool meets Australia’s AI Voluntary Safety Standards for organisation’s deploying AI (Voluntary AI Safety Standard | Department of Industry Science and Resources)
- Consider if you are in a regulated sectors and if there are extra requirements that must be met (for example, the financial services sector should check ASIC and APRA guidance on AI use)
- Are there AI bias issues with the tool?
- Have you considered the human rights implications of the tool?
Cost and pricing structure
- Understand the full pricing model and what discounts are available if you have more users now or in the future
- Be on the look out for hidden costs such as implementation, training and support
Due diligence
- As with any product, understand the seller and their legal status
- Are they an Australian entity? If so, this helps with disputes and consumer protections
- Check whether support is delivered in Australian time zones, or if you are relying on US business hours
- Ensure there is a service level agreement in place so you get the support when you need it
- Understand you leave – given how quickly AI is developing signing long term contracts is not recommended
Consumer protections
- If you’re buying as a consumer or small business, the Australian Consumer Law’s guarantees around acceptable quality and fitness for purpose still apply
- Be wary of AI products making inflated or unsubstantiated claims keeping in mind the ACCC has flagged AI hype and “AI-washing” as an enforcement focus area
- Read the fine print on refund and cancellation terms, especially for overseas vendors who may not default to Australian consumer norms
Change management
- Plan for training so staff actually adopt the tool rather than working around it
- Identify an internal owner responsible for monitoring performance over time
- Set a review point and a review process to assess whether the tool is delivering value
Legal review
- A legal review of business contracts is always recommended to identify overly onerous obligations and hidden catches
- Sometimes negotiating is not always possible, but a legal review can help you fully understand the contract, key trigger points and risks you want to appropriately manage throughout the term of the contract
AI has so much potential, potential for growth and the increase in productivity many organisations are looking for, but there is also significant potential for things to go very wrong. Reach out to the expert team at Griffin Legal for assistance with all things AI related including:
Privacy policies and data breach plans
Contract review and negotiation before you sign up
Human rights impact assessment
Development of AI use policies and review of existing policies and procedures
Change management plans
