Clause · Mergers & Acquisitions / Private Equity

AI systems and data warranties and indemnities for a share or asset sale agreement

Buyer-side warranty schedule and specific indemnity on the target’s AI systems, training data, privacy compliance, data breaches, automated decisions and EU AI Act exposure, with seller-side fallback positions.

Kind
Clause. Wording to drop into a longer document.
Where it applies
Australia, European Union, United Kingdom (England and Wales)
AI use
Yellow AI can help in set ways. A lawyer checks specific points before use.
Law stated as at
17 October 2026
Status
Maintained. Checked against the cited sources on 17 October 2026.
Version
1
Source
Written for this library

When to use it

Use in share or asset sale agreements where the target develops, uses or sells AI systems or relies heavily on data. Scale back for targets with only incidental use of standard AI tools. Check W&I insurance exclusions before relying on these warranties.

How AI may be used

AI may map warranties to due diligence findings and draft fallback positions. The disclosure against warranties and the indemnity package are settled by a lawyer.

AI may

  • Map each warranty to the due diligence findings and documents that bear on it
  • Draft seller-side fallback wording for each warranty
  • Check defined terms against the sale agreement

AI must not

  • Must not decide which issues should be covered by a specific indemnity
  • Must not assess whether the target’s AI systems are high-risk under the EU AI Act
  • Must not process the target’s source code or training data in an unapproved tool

The lawyer checks

  • Warranties align with the due diligence findings and the disclosure letter
  • Limitations (caps, time limits, de minimis) and W&I policy exclusions considered
  • EU AI Act analysis done by a person qualified to give it, if the target operates in the EU

Method: how the Green, Yellow and Red levels are decided. This is guidance for planning, not legal advice.

Authorities

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