AI Model Development Agreement

AI MODEL DEVELOPMENT AGREEMENT

AGREEMENT DATE: [DATE]

PROJECT NUMBER: [PROJECT-NUMBER]

PARTIES

CLIENT:
- Legal Name: [CLIENT LEGAL NAME]
- Address: [FULL ADDRESS]
- Contact: [NAME, EMAIL, PHONE]

DEVELOPER:
- Legal Name: [DEVELOPER LEGAL NAME]
- Address: [FULL ADDRESS]
- Contact: [NAME, EMAIL, PHONE]

ARTICLE 1: PROJECT OVERVIEW

1.1 Project Description

Developer shall develop the following AI/ML model(s) for Client:

Project Name: [NAME]

Model Purpose: [DESCRIBE THE BUSINESS PROBLEM AND INTENDED USE]

Model Type:
☐ Classification model
☐ Regression/prediction model
☐ Natural language processing model
☐ Computer vision model
☐ Recommendation system
☐ Generative AI model
☐ Other: [SPECIFY]

1.2 Technical Specifications

Detailed specifications in Schedule A, including:
- Model architecture requirements
- Performance metrics and thresholds
- Input/output specifications
- Integration requirements
- Scalability requirements

1.3 Deliverables

ARTICLE 2: DEVELOPMENT PROCESS

2.1 Project Phases

Phase 1: Discovery and Planning
- Requirements gathering
- Data assessment
- Feasibility analysis
- Project plan development

Phase 2: Data Preparation
- Data collection/acquisition
- Data cleaning and preprocessing
- Feature engineering
- Data validation

Phase 3: Model Development
- Model architecture design
- Training and validation
- Hyperparameter tuning
- Performance optimization

Phase 4: Testing and Validation
- Performance testing
- Bias and fairness testing
- Integration testing
- User acceptance testing

Phase 5: Deployment and Handover
- Deployment preparation
- Documentation
- Training
- Support transition

2.2 Milestones

2.3 Change Management

Changes to scope require:
☐ Written change request
☐ Impact assessment
☐ Mutual agreement on revised scope, timeline, and fees
☐ Signed change order

ARTICLE 3: DATA PROVISIONS

3.1 Client Data

Client shall provide:
☐ Training data as specified in Schedule B
☐ Validation data
☐ Test data
☐ Data documentation

Data Delivery Timeline:
| Dataset | Format | Volume | Due Date |
|---------|--------|--------|----------|
| [DATASET 1] | [FORMAT] | [SIZE] | [DATE] |
| [DATASET 2] | [FORMAT] | [SIZE] | [DATE] |

3.2 Data Quality Requirements

Client warrants data meets:
☐ Quality standards in Schedule B
☐ Completeness requirements
☐ Accuracy requirements
☐ Format specifications

3.3 Data Rights

Client represents:
☐ Client has rights to provide data for model development
☐ Data use complies with applicable privacy laws
☐ Necessary consents obtained
☐ No third-party rights infringed

3.4 Developer Data Use

Developer may use Client data only for:
☐ Developing the Model under this Agreement
☐ Not for training other models
☐ Not retained after project completion
☐ Subject to confidentiality obligations

ARTICLE 4: PERFORMANCE REQUIREMENTS

4.1 Performance Metrics

The Model shall meet the following performance thresholds:

4.2 Fairness Requirements

The Model shall meet fairness requirements:

4.3 Acceptance Criteria

Model acceptance requires:
☐ Performance metrics met on test dataset
☐ Fairness requirements satisfied
☐ Documentation complete
☐ Integration testing passed
☐ Client user acceptance testing passed

ARTICLE 5: INTELLECTUAL PROPERTY

5.1 Client Materials

Client retains ownership of:
- Client data
- Client-provided specifications and requirements
- Client business processes and know-how

5.2 Model Ownership

SELECT ONE:

☐ Option A: Client Owns Model
Client owns all right, title, and interest in:
- Trained Model (including weights)
- Model architecture (to extent custom-developed)
- Training code and scripts
- Documentation

Developer retains rights to pre-existing tools and general know-how.

☐ Option B: Developer Owns Model, Client License
Developer owns the Model. Client receives:
- [Exclusive/Non-exclusive] license
- [Perpetual/Term] license
- Scope: [SCOPE]

☐ Option C: Joint Ownership
Parties jointly own the Model. [SPECIFY EXPLOITATION RIGHTS]

5.3 Pre-Existing Materials

Developer's pre-existing materials remain Developer's property. Developer grants Client a non-exclusive, perpetual license to use pre-existing materials incorporated in Deliverables.

5.4 Open Source

Developer shall:
☐ Identify all open-source components used
☐ Ensure compliance with open-source licenses
☐ Not introduce "copyleft" open-source without approval

ARTICLE 6: DOCUMENTATION

6.1 Required Documentation

Developer shall provide:

☐ Model Card including:
- Model description and intended use
- Training data summary
- Performance metrics
- Limitations and risks
- Ethical considerations

☐ Technical Documentation including:
- Architecture documentation
- API specifications
- Integration guide
- Deployment instructions

☐ User Documentation including:
- User manual
- Administrator guide
- Troubleshooting guide

☐ Source Code Documentation including:
- Code comments
- README files
- Build instructions

ARTICLE 7: TESTING AND ACCEPTANCE

7.1 Developer Testing

Developer shall conduct:
☐ Unit testing
☐ Integration testing
☐ Performance testing
☐ Bias/fairness testing
☐ Security testing

7.2 Acceptance Testing

Client shall have [NUMBER] days to conduct acceptance testing.

Acceptance Process:
1. Developer delivers Model with test results
2. Client conducts acceptance testing
3. Client provides acceptance or rejection with deficiencies
4. Developer remediates deficiencies
5. Client re-tests
6. Repeat until acceptance or termination

7.3 Acceptance

☐ Express written acceptance
☐ Deemed accepted if no rejection within [DAYS]
☐ Partial acceptance for individual components

7.4 Rejection

If Model fails acceptance testing:
☐ Developer shall remedy at no additional cost
☐ After [NUMBER] failed attempts, Client may terminate
☐ Refund provisions per Section 8.5

ARTICLE 8: FEES AND PAYMENT

8.1 Project Fees

☐ Fixed Price: $[AMOUNT]
☐ Time and Materials: Not to exceed $[AMOUNT]
☐ Milestone-based (see Section 2.2)

8.2 Rate Schedule (if T&M)

8.3 Expenses

☐ Included in fees
☐ Billed separately: [CATEGORIES]
☐ Pre-approval required above $[AMOUNT]

8.4 Payment Terms

• Invoices due within [NUMBER] days
• Late payment interest: [%] per month

8.5 Refund

If Client terminates for Developer's material breach:
☐ Refund of fees for undelivered milestones
☐ Pro-rata refund based on work completed

ARTICLE 9: WARRANTIES

9.1 Developer Warranties

Developer warrants:

☐ Performance: Model will meet performance specifications for [PERIOD] after acceptance

☐ Conformance: Model will conform to specifications and documentation

☐ Non-Infringement: Model does not infringe third-party IP (to Developer's knowledge)

☐ Professional Standards: Work performed with professional skill and care

☐ No Malicious Code: Deliverables free from viruses, malware, or harmful code

9.2 Warranty Remedies

During warranty period, Developer shall:
☐ Correct defects at no additional cost
☐ Provide reasonable support for issues

9.3 Disclaimer

EXCEPT AS EXPRESSLY STATED, DEVELOPER DISCLAIMS ALL WARRANTIES INCLUDING MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. DEVELOPER DOES NOT WARRANT THAT MODEL WILL ACHIEVE CLIENT'S BUSINESS OBJECTIVES.

ARTICLE 10: SUPPORT AND MAINTENANCE

10.1 Initial Support Period

Developer shall provide [DAYS/MONTHS] of support following acceptance, including:
☐ Bug fixes
☐ Technical support
☐ Minor adjustments

10.2 Ongoing Maintenance (Optional)

☐ Not included
☐ Included for [PERIOD] at [TERMS]
☐ Available under separate maintenance agreement

10.3 Training

Developer shall provide:
☐ [HOURS] of training for Client personnel
☐ Training materials
☐ Additional training available at $[RATE]

ARTICLE 11: CONFIDENTIALITY

11.1 Confidential Information

Each party shall maintain confidentiality of the other's confidential information.

11.2 Client Data

Client data is Client's confidential information. Developer shall not disclose or use except as authorized.

11.3 Duration

Confidentiality obligations survive for [NUMBER] years after termination.

ARTICLE 12: LIABILITY

12.1 Limitation of Liability

EACH PARTY'S LIABILITY LIMITED TO:
☐ Total fees paid under this Agreement
☐ $[AMOUNT]

12.2 Exclusions

NEITHER PARTY LIABLE FOR INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES.

12.3 Exceptions

Limitations do not apply to:
- Confidentiality breaches
- IP infringement
- Willful misconduct

ARTICLE 13: TERM AND TERMINATION

13.1 Term

This Agreement commences on [DATE] and continues until project completion or termination.

Estimated Completion: [DATE]

13.2 Termination for Cause

Either party may terminate for material breach not cured within [DAYS].

13.3 Termination for Convenience

☐ Client may terminate for convenience upon [DAYS] notice
☐ Payment for work completed through termination

13.4 Effects of Termination

Upon termination:
- Developer delivers work product completed to date
- Client pays for work completed
- Confidentiality and IP provisions survive

ARTICLE 14: GENERAL PROVISIONS

Governing Law: [JURISDICTION]

Dispute Resolution: [MEDIATION/ARBITRATION/LITIGATION]

Independent Contractor: Developer is independent contractor.

Assignment: No assignment without consent.

Entire Agreement: This Agreement and Schedules constitute entire agreement.

Amendments: Written amendments signed by both parties.

SIGNATURES

CLIENT:

Signature: _________________________________ Date: _____________

Name: [NAME] Title: [TITLE]

DEVELOPER:

Signature: _________________________________ Date: _____________

Name: [NAME] Title: [TITLE]

SCHEDULE A: TECHNICAL SPECIFICATIONS

[DETAILED TECHNICAL REQUIREMENTS]

SCHEDULE B: DATA SPECIFICATIONS

[DETAILED DATA REQUIREMENTS]

SCHEDULE C: PROJECT PLAN AND TIMELINE

[DETAILED PROJECT PLAN]

This AI Model Development Agreement template is provided for informational purposes. Legal counsel review is recommended.