SaaS & AI Agreements

Evana D
1 day ago
4 min read

What Every Australian AI Platform Founder Needs to Know

Why This Matters

You've built an AI platform. Now customers want to use it. Before they do, you need agreements that:

Protect your business from liability
Set clear expectations about what your platform does (and doesn't do)
Comply with Australian law—including rules you can't contract around

This guide covers the essentials in plain English.

Part 1: Your Customer Agreement Essentials

What You're Providing

You're offering access to your AI platform—not selling software. Customers pay a subscription to use it. This is a SaaS (Software as a Service) model.

Your agreement needs to cover:

Topic	What to Address
What they get	Features, usage limits, user numbers
What they pay	Pricing, billing cycle, what happens if they don't pay
What they can't do	Misuse, illegal activity, reverse engineering
What happens when it ends	Cancellation, refunds, data return

Service Levels—Be Careful What You Promise

Customers will ask about uptime and reliability. Be realistic.

Do This	Avoid This
"We target 99.5% uptime"	"We guarantee 99.99% uptime"
Offer service credits for outages	Promise refunds or compensation for any downtime
Exclude scheduled maintenance	Promise 24/7 availability with no exceptions

Why it matters: If you over-promise and under-deliver, customers can claim you breached the contract—or made misleading claims under Australian Consumer Law.

Data—Who Owns What?

This is where AI platforms get complicated. Be crystal clear:

Question	Your Agreement Should Answer
Who owns the data customers upload?	They do. Always.
Who owns the outputs your AI generates?	Usually the customer—but you may want a licence to use anonymised outputs
Will you use their data to train your AI?	Be upfront. If yes, say so. If no, commit to it.
Where is data stored?	Australian customers increasingly want Australian hosting

Plain English clause example:

"You own your data. We won't use it to train our AI unless you agree. We store data in Australia."

If you're using customer data to improve your models, disclose this clearly. Hidden training clauses damage trust—and may breach privacy laws.

AI-Specific Risks You Must Address

AI is unpredictable. Your agreement needs to manage that.

1. Accuracy Disclaimers

Your AI will sometimes get things wrong. Protect yourself:

"Our AI provides suggestions only. Outputs may contain errors. You're responsible for reviewing outputs before relying on them."

Don't hide this in fine print—make it visible.

2. No Liability for AI "Hallucinations"

AI can generate confident-sounding nonsense. Make clear:

You don't guarantee accuracy
Customers shouldn't use outputs for critical decisions without human review
You're not liable for decisions made based on AI outputs

3. Intellectual Property Risks

AI outputs might accidentally resemble copyrighted content. Address this:

You don't guarantee outputs are free from third-party IP claims
Consider whether you'll offer any IP indemnity (larger enterprise customers may demand this)

Limiting Your Liability

You need to cap what you could owe if something goes wrong.

Standard approach:

"Our total liability is limited to the fees you paid us in the last 12 months."

Also consider excluding:

Indirect or consequential losses (e.g., lost profits, reputational damage)
Losses caused by customer misuse
Third-party claims arising from how customers use outputs

But note: You cannot exclude everything. See Part 2 on Australian Consumer Law.

Part 2: Australian Consumer Law (ACL)—What You Can't Contract Around

The Basics

The ACL provides consumer guarantees that apply automatically. If your customers qualify as "consumers," you cannot exclude these guarantees—even if your contract says otherwise.

Who Is a "Consumer"?

Your customer is a consumer if:

They pay less than $100,000, OR
The services are of a kind ordinarily acquired for personal or domestic use

Many small business customers will qualify. Don't assume ACL doesn't apply to B2B.

Guarantees You Can't Exclude

Guarantee	What It Means
Due care and skill	Your platform must work properly and be provided competently
Fit for purpose	If a customer tells you what they need it for, it must be suitable
Provided within reasonable time	You must deliver as promised
Match description	Your platform must do what your website/sales materials say

If you breach these: Customers may be entitled to refunds, compensation, or to terminate the agreement.

What This Means for Your Agreement

You must include a statement like this:

"Our services come with guarantees that cannot be excluded under the Australian Consumer Law. For major failures with the service, you are entitled: • to cancel your service contract with us; and • to a refund for the unused portion, or to compensation for its reduced value. You are also entitled to be compensated for any other reasonably foreseeable loss or damage."

You cannot say:

"No refunds under any circumstances"
"We are not liable for any loss whatsoever"
"Use at your own risk—we make no promises"

These clauses are void against consumers and could get you in trouble with the ACCC.

Don't Make Misleading Claims

Under the ACL, you must not make false or misleading representations about your platform.

Risky Claim	Safer Alternative
"99.9% accurate"	"Designed to assist with [task]—always review outputs"
"Enterprise-grade security"	"We use [specific measures] to protect your data"
"AI-powered insights you can trust"	"AI-generated suggestions to support your decisions"

The ACCC is watching AI. Overpromising what AI can do is a fast way to attract regulatory attention.

Quick Checklist for Your Agreement

SaaS Fundamentals

Clear description of what customers get
Pricing and payment terms
Acceptable use policy
Realistic service levels (not over-promised)
Termination and refund terms
Data ownership clearly stated

AI-Specific

Accuracy disclaimer—outputs may contain errors
No guarantee of IP clearance for outputs
Disclosure of any model training on customer data
Human review recommendation for important decisions

ACL Compliance

Consumer guarantee statement included
No blanket exclusion of all liability
No misleading claims about product capabilities
Refund policy that doesn't contradict ACL rights

Data & Privacy

Where data is stored
Who can access it
How long you keep it
What happens to data on termination

Three Things to Do Today

Review your marketing. Does it match what your platform actually delivers?
Check your refund policy. Does it comply with ACL?
Get your terms reviewed. A lawyer can spot gaps that cost you later.

Need help turning this into a proper customer agreement? Let's chat.