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.
Read the full text
The full text is for signed-in accounts. It is free. When you sign in you can:
- read the whole precedent, with its drafting notes beside it;
- copy it, or download it as a Word file or Markdown;
- add it to your firm’s knowledge base, so colleagues can find it;
- let the AI tools you connect read it from that knowledge base.
The summary, the law it rests on and the AI-use guidance above stay public. Privacy.
More in Mergers & Acquisitions / Private Equity
- Legal due diligence request list (share or asset acquisition)
- Protocol for AI-assisted due diligence review, with client notice (tools, data-room terms, sampling, sign-off)
- Vendor disclosure letter against sale agreement warranties
- Scheme of arrangement and takeover bid timetable and deal-protection checklist
- FIRB application information checklist and cover letter
All precedents for Mergers & Acquisitions / Private Equity · Tasks and AI use in this area