AI Contract Lawyers Adelaide: AI Tool Terms, Data Licensing, Training Data and Output Ownership

AI contracts and data licensing in South Australia

Every AI tool comes with terms that decide what the vendor may do with the information a business enters, and who carries the loss when an output is wrong. Talon Legal reviews AI tool and vendor contracts, and drafts data licence, data sharing and data analysis agreements, for Adelaide businesses buying AI tools, building AI into their products or licensing their data. Book a same-day free 30-minute consultation or call (08) 7094 2021.


AI contract key facts

IssuePosition in South Australia
Vendor use of inputsFor a business bound by the APPs, personal information collected for one purpose must not be used or disclosed for another without consent, unless an exception applies (APP 6.1).
Confidential inputsA contract definition of confidential information does not by itself exclude equitable obligations (Optus Networks v Telstra at [29]).
Overseas processingReasonable steps so that an overseas recipient does not breach the APPs (APP 8.1). The business can be liable for the recipient's acts (Privacy Act section 16C).
Who owns outputsCopyright needs a human author (Telstra v Phone Directories, Perram J at [118] and Yates J at [169]; Acohs at [57] to [58]).
Consumer guaranteesA business paying $100,000 or less can be a consumer (ACL section 3 and regulation 77A). Terms cannot exclude the guarantees (section 64(1)).
Unfair termsAn unfair term in a standard form small business contract is void (section 23(1)).
Automated decisionsFrom 10 December 2026, an APP entity's privacy policy must cover computer programs that make significant decisions using personal information, or do things substantially and directly related to making them (APP 1.7 and 1.8).
False claimsBody corporate maximum for a section 29 contravention: the greater of $100,000,000 and three times the benefit (or 30% of adjusted turnover during the breach turnover period if the benefit cannot be determined). Anyone else: $2,500,000 (section 224).
First stepSame-day free 30-minute consultation. Call (08) 7094 2021.

Need an AI contract lawyer in Adelaide?

Our AI contract lawyers in Adelaide act for businesses buying or building AI tools, and for both sides of data licences. The Privacy Act 1988 (Cth), the Copyright Act 1968 (Cth) and the Australian Consumer Law (ACL), in Schedule 2 of the Competition and Consumer Act 2010 (Cth), sit under every AI contract. This page states the law current to 7 November 2026.

This guide is part of our artificial intelligence practice. Related guides cover AI and copyright, AI and privacy and software and SaaS agreements.

Free Consultation. Send us the AI tool’s terms or the draft data agreement before you sign, and an AI contract lawyer will show you where the risk sits. Book a same-day free 30-minute consultation or call (08) 7094 2021.

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Muhammad Zubair
29 October 2026
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Talon Legal is the best law firm in the Adelaide. Dan was able to resolve my case before time, achieving a favourable outcome. I would highly recommend Talon Legal to anyone seeking professional legal assistance. Talon Legal develops effective legal strategies to achieve the best possible outcomes.
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Jessie W
26 October 2026
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I had a great experience dealing with Danial at Talon Legal. From our initial conversation, he was professional, approachable and genuinely interested in understanding our business and its needs. He took the time to listen, explain things clearly and offer thoughtful, practical advice. I particularly appreciated his patience, honesty and the time he dedicated to our discussions. Although we haven’t engaged the firm for further work at this stage, the experience has left a very positive impression. I would certainly feel confident reaching out to Danial again for any future legal matters. Thank you, Danial, for your time and professionalism. It’s been a pleasure dealing with you!
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Angela Carter
12 October 2026
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Was a scary experience, uut thenks to your expertise, i got the best possible outcome.
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S Google
24 September 2026
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Exceeds expectations Dan went above and beyond our expectations to deliver professional, highly detailed and very well thought out information. He included extra documents just to help us out and this was much appreciated.
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S Google
24 September 2026
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Dan went above and beyond our expectations to deliver professional, highly detailed and very well thought out information. He included extra documents just to help us out and this was much appreciated.
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Samin Adit
1 September 2026
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Dan was extremely helpful and he was very patient and through and took time explaining me all the process and next step. And he carried a great sense of humor while he spoke and honestly that made it so easy to understand when I was already stressed out.
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Calvin Munatswa
24 August 2026
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I’m extremely happy with the service I received from Dan. He was professional, responsive, knowledgeable and genuinely committed to achieving the best possible outcome. I really appreciate the hard work, guidance and support throughout the process. Thank you for doing such a great job. I would highly recommend your services to anyone looking for a reliable and dedicated lawyer.
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Marcelle Ayoubi
4 August 2026
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Highly recommend Dan! He was prompt, reliable and efficient, with excellent communication throughout the entire process. His knowledge and professionalism gave me confidence, and he achieved a good outcome. Dan took a lot of the stress out of what could have been an overwhelming experience. Thank you, Dan, for all your support and assistance!
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Neb Trivic
24 July 2026
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Very knowledgable, helpfull and got the best outcome hoped for.
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Anton Simdyankin
21 July 2026
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Timely quote, responses and overall great experience. 100% Recommend
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Tania Stubberfield
16 July 2026
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I highly recommend Talon Legal and especially Daniel Esmaili. During our initial conversation for a driving offence, Dan was incredibly honest and told me that I didn't really need legal representation. He was completely down-to-earth and non-judgmental, reassuring me that people make poor choices sometimes. I felt more at ease and I chose to hire him anyway to avoid the anxiety of a court appearance, and it was the best decision I could have made. He took care of everything from start to finish, appearing in court on my behalf so I didn't have to attend at all. He explained everything clearly without using confusing legal jargon. He was also incredibly thoughtful and personal, asking how my birthday trip away went with family. Thanks to Dan, we got a fantastic outcome with a significantly reduced suspension time and a minimal fine. Dan even went above and beyond by telling me to contact him before I start driving again to double-check that my suspension is fully completed and my licence paperwork is processed correctly. On top of the amazing result, the fees were surprisingly affordable without compromising on performance and integrity. If you want an empathetic, honest, affordable and highly capable lawyer, then Dan's your man. Thankyou again Daniel Esmaili at Talon Legal.
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Bill P
30 June 2026
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We recently engaged Dan Esmaili from Talon Legal to assist our family with a motor vehicle road rule expiation and related court matter. From the very beginning, Dan was professional, clear, and extremely supportive. He took the time to explain the process in a way we could understand, kept us informed throughout, and handled the matter with care and confidence. Most importantly, Dan achieved a successful outcome for our family, which we are very grateful for. We sincerely appreciate his guidance, responsiveness, and dedication. We would highly recommend Dan Esmaili and Talon Legal to anyone needing strong legal support and professional representation.
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Sara Gleeson
16 June 2026
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I cannot recommend Dan Esmaili (Talon Legal) highly enough. I was extremely worried about the impact a legal problem could have on my future. From the beginning, he was professional, knowledgeable, and supportive. He took the time to explain the legal process, answered all of my questions, and worked tirelessly on my case. Thanks to his expertise and advocacy, I received a result without a conviction being recorded. This outcome has made an enormous difference to my life, and I am incredibly grateful for his dedication and hard work. If you need a lawyer who genuinely cares about their clients and achieves outstanding results, I would not hesitate to recommend Dan.
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Matthew Greenwood
16 June 2026
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Thanks Dan for your legal help . You got the best possible outcome , thanks again . Matt
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Caleb Sweeting
15 June 2026
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Danial Esmaili is an excellent lawyer whose clear communication style makes navigating legal matters much easier. Professional, approachable and knowledgeable, he takes the time to explain things clearly and provides confidence throughout the process.
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Yousef Al-Yasiri
11 June 2026
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Daniel and the team at Talon Legal were truthful, helpful, and left me feeling confident and how they handled my matter. Daniel understood my situation, left me assured, was realistic with me, provided me with the advice or course of action that best suits my sitiation. If I could choose again, I would choose Daniel and the team at Talon Legal with my eyes closed.
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Matthew Morgan
11 June 2026
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You’d be hard pressed to find someone more knowledgeable than Dan, a lovely guy too.
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Jacob Marcer
10 June 2026
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Daniel at talon legal was by far the best lawyer I’ve had to deal with he was extremely helpful with explaining his processes and making me feel very comfortable Also achieving a great result on my case Couldn’t recommend Daniel more if I could give more stars I would Thanks again daniel
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Faros Omidvour
10 June 2026
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Talon Legal is an excellent law firm that I recpmmend without hesitation to anyone who needs responsive and considerate advice and representation.
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Egor Eremeev
8 June 2026
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I cannot recommend Talon Legal highly enough. From the very beginning, Daniel demonstrated exceptional professionalism, legal expertise, and genuine care for my situation. Daniel took the time to understand my circumstances, explained every step of the process in clear and practical terms, and was always available to answer questions. His attention to detail, strategic thinking, and calm approach gave me confidence throughout the entire matter. What stood out most was Daniel’s commitment to achieving the best outcome while making the process as smooth and stress-free as possible. It is rare to find a lawyer who combines technical expertise with such excellent client service. Thank you, Daniel, and the Talon Legal team for your outstanding support. I would highly recommend Talon Legal to anyone seeking professional, reliable, and results-driven legal representation.
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Kaedehara Kazuha
4 June 2026
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We recently engaged Talon Legal to assist with drafting reseller agreements for our business, and the experience exceeded expectations. Dan took the time to understand our requirements, commercial objectives, and the practical realities of our industry before providing clear, strategic advice and a tailored solution. His attention to detail, commercial awareness, and ability to identify potential risks resulted in a comprehensive agreement that gave us confidence moving forward. What stood out most was the firm's proactive and innovative approach. Rather than relying on a standard template, Dan offered practical suggestions and considered scenarios we hadn't even thought of, helping create a robust and well-structured agreement. Talon Legal is a progressive firm with a fresh perspective and a strong understanding of commercial law. Professional, responsive, and easy to work with throughout the process. Highly recommended.
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Bec Chapman
22 May 2026
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Talon Legal were exemplary in their service. Dan was concise, thorough and true to the plan. For a small NGO seeking legal advice I can highly recommend :)
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Hussar1522
29 October 2025
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One of the best lawyers in Adelaide My life was being ruined because of a court case that was not true, then it became worse when I have driving charge for driving disqualification and careless driving with an accident that I did not cause. This affect my business and the lawyers protected my business and my life and reputation. They make the charges go away and I get no conviction or criminal record, and do my business contracts terms and conditions perfectly. If you want lawyers that can help you many ways I suggest you go to Talon Legal. I think one of the best law firms in Adelaide for business and criminal and traffic.
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Oldpicker64
17 August 2025
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Saved me from jail for disqualified driving I can’t thank talon legal enough for what they did to help when I had magistrates court in port adelaide and Elizabeth, lost my licence because I was sick before and had to drive in emergency to help family but police didn’t care. Talon legal helped me with disqualified driving charges in court and saved me from going back to jail this was the one time I liked working with a lawyer. Recommend talon legal for any legal problem.
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J420
2 August 2025
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Best criminal lawyers! I hired talon legal to fight a criminal case for me and they got the charge dropped. Daniel was amazing in handling my case. He actually cared about my case and me as a person. I felt really supported and I am glad I got talon legal for my court case. Best criminal lawyers in Adelaide that I spoke to.
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James Aveno
2 August 2025
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Excellent business and startup lawyers Talon Legal was incredible to work with and delivered outstanding value for money and expertise. I went into my initial meeting expecting to receive some basic information instead I was blown away by their depth of knowledge across multiple domains. I was in the process of founding a startup business in Adelaide, and explained my goal of expanding interstate and eventually internationally. The lawyer I spoke to was across contracts, terms and conditions, intellectual property protection and licensing, brand consolidation, risk minimisation and business structures and compliant advertising. I was really impressed however by their use of ingenious tools that aren’t really the domain of lawyers at least from what I’ve seen before. Daniel in particular was a bit of wizard. He walked me through how something called OSINT could be used for brand consolidation and was very transparent about the use of some of their document automation tools, and this reflected in the speed and value they provided. I really felt like I finally am able to work with a law firm that can help me with every stage of my business and was genuinely curious about what what I wanted to achieve. Even after the services were provided, Talon Legal was proactive in checking in with me to ensure my business was prospering. I have sent my friends and other entrepreneurs to them and every single one was very happy.
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James A
2 August 2025
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Excellent commercial and business lawyers! Talon Legal was incredible to work with and delivered outstanding value for money and expertise. I went into my initial meeting expecting to receive some basic information instead I was blown away by their depth of knowledge across multiple domains. I was in the process of founding a startup business in Adelaide, and explained my goal of expanding interstate and eventually internationally. The lawyer I spoke to was across contracts, terms and conditions, intellectual property protection and licensing, brand consolidation, risk minimisation and business structures and compliant advertising. I was really impressed however by their use of ingenious tools that aren’t really the domain of lawyers at least from what I’ve seen before. Daniel in particular was a bit of wizard. He walked me through how something called OSINT could be used for brand consolidation and was very transparent about the use of some of their document automation tools, and this reflected in the speed and value they provided. I really felt like I finally am able to work with a law firm that can help me with every stage of my business and was genuinely curious about what what I wanted to achieve. Even after the services were provided, Talon Legal was proactive in checking in with me to ensure my business was prospering. I have sent my friends and other entrepreneurs to them and every single one was very happy. Approximate cost: $4500
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DP123
12 July 2025
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Clear advice in a very stressful time I was in a very stressful situation and Talon Legal fixed my problem - now my stress is gone! Very professional, excellent communication, accessible and fast. Thank you for everything.
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Slavi77
12 July 2025
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They won my hardship appeal Was about to lose my licence and Talon Legal got it back. Made a promise and kept it. This is what a lawyer should be like. Helped me with my driving disqualification and other driving offences. Very prepared and explaining things very good so I could understand them easily.
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Emir
2 July 2025
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Very good criminal lawyer They were honest and did what they said they would do and told me what to expect it was like following a map and I felt safe because I know what to expect very happy with the experience Talon. If I need lawyer again I will come back.
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Samsun
28 June 2025
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Got the best result for me Easy to deal with and spoke to me in normal English, explained everything really good to me, didn’t go over agreed budget to help with my case and communicated all the time with me, never kept me waiting and very responsive to my questions, had direct access to my lawyer anytime I needed. Got very good result for my case for drinking and driving, disqualified driving, demerit points and provisional driver licence condition
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Rogue33
26 June 2025
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Very good experience best money ever spent on a lawyer Professional, friendly and fixed fee service. I had some charges in court in Adelaide and Talon Legal completely picked apart the case against me. Charges were removed and I got my licence back too. Cant recommend them strongly enough. Really easy to work with and friendly. Thanks for wining my licence appeal and getting the drink driving charges removed.
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Riggo7
24 June 2025
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Saved my drivers license Can’t thank the team enough at Talon Legal for helping me keep my drivers license. They were very knowledgeable and took the time to explain everything to me every step of the way. If it wasn’t for their excellent representation in court I would have lost my license. They left no stone unturned. Highly recommend.
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Karen R.
24 June 2025
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Best lawyers for traffic offences in adelaide Really appreciate Talon Legal’s help to keep my license, thank you so much to the team. Professional, responsive and compassionate service from everyone at the office and excellent outcome. Would definitely recommend. Approximate cost: $2800
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Les A.
23 June 2025
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Excellent traffic lawyers I owe them my life and job words are not enough to say how thankful i am for the help they gave me when i was going to lose the driver licence in magistrates court because of drink driving and drug driving. Approximate cost: $3000
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Jordan profile picture
Jordan
22 June 2025
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Best Lawyers! Absolutely first-class service from Talon Legal. I had a complicated traffic matter and wasn’t sure where to turn. From the first phone call, they were professional, understanding, and gave me clear advice without the legal jargon. On the day of court, they were calm and prepared and the result spoke for itself. I’m so grateful for their help and wouldn’t hesitate to recommend them to anyone needing help with a traffic offence.
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S A. profile picture
S A.
17 June 2025
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Brilliant traffic lawyers in adelaide Helped me get my licence back in the magistrates court after I applied for a licence appeal because I breached my provisional conditions. Made it straightforward and helped me stay calm. Treated me like a normal person and was very compassionate. You saved my job legends Approximate cost: $1800
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SA
16 June 2025
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Successful drivers licence appeal! Made the process really easy for me to understand and helped me appeal my licence in the magistrates after it was disqualified for breaching a licence condition. Thank you legends, I would have been stuffed if I lost my licence without you guns!
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TK
5 April 2025
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Best traffic lawyers in Adelaide I came across talon legal when I was looking for a law firm in Adelaide to represent me for traffic offences while visiting from overseas. They were very professional, fast, friendly and down to earth. Dan handled my mater and got me a very good outcome at a fixed cost.

What should a business check before signing up to an AI tool?

The vendor’s terms, read against how the tool will be used. Most AI tools are sold as subscriptions on standard online terms, so the software and SaaS agreements guide covers the basics. AI adds its own questions.

  • May the vendor keep, review or train on what the business enters?
  • Where is the data processed, and who can see it?
  • What security and incident notice does the vendor promise?
  • Who owns the outputs, and will the vendor defend an infringement claim?
  • What does the vendor accept if an output is wrong, and may it change the tool or terms mid-subscription?

The OAIC’s Guidance on privacy and the use of commercially available AI products (21 October 2024, updated 17 January 2025) says a business should do due diligence before adopting one, covering testing for the intended uses, human oversight, privacy and security risks, and who can access personal information.


Can an AI vendor use what the business enters?

Only as far as its terms allow, and the business’s own obligations limit what it may enter. Personal information means information or an opinion about an identified or reasonably identifiable individual (Privacy Act section 6(1)).

For businesses bound by the APPs, personal information collected for a primary purpose must not be used or disclosed for a secondary purpose unless the individual consents or an exception applies (APP 6.1). One exception is a related purpose the individual would reasonably expect, or a directly related one for sensitive information (APP 6.2(a)). The OAIC’s Guidance on privacy and the use of commercially available AI products (21 October 2024, updated 17 January 2025) says those rules apply to AI inputs and, as best practice, recommends not entering personal information, particularly sensitive information, into publicly available generative AI tools.

The AI and privacy guide covers which businesses the APPs bind.

Confidential client information needs the same care: entering it into a tool whose vendor may keep or train on it can breach the business’s promises to that client. Equity protects it too. In Optus Networks Pty Ltd v Telstra Corporation Ltd [2010] FCAFC 21, the Full Court set out the elements of breach of confidence in equity: information identified with specificity, with the necessary quality of confidence, received in circumstances importing an obligation of confidence, and actual or threatened misuse without consent ([39]). An exhaustive contract definition of confidential information did not show an intention to exclude equitable obligations ([29]).

The contract should treat inputs and outputs as confidential, limit the vendor’s use to providing the service, and exclude training unless the business opts in.


What security and offshore terms does an AI contract need?

Terms that let the business meet its own obligations. An APP entity must take reasonable steps to protect the personal information it holds from misuse, interference and loss, and from unauthorised access, modification or disclosure (APP 11.1), including technical and organisational measures (APP 11.3). The data security clauses guide covers the contract terms.

Many AI tools process data outside Australia. Before disclosing personal information to an overseas recipient, an APP entity must take reasonable steps so that the recipient does not breach the APPs, other than APP 1 (APP 8.1). If the recipient, not itself bound by the APPs, does something that would breach them, the act is taken to be the entity’s own breach (section 16C).

The OAIC’s APP guidelines (Chapter 8, updated 3 October 2025) say engaging an overseas contractor is, in most circumstances, a disclosure needing APP 8 compliance, though in limited circumstances, where a binding contract keeps the entity in effective control, it may be a use.

Where APP 8.1 applied and the overseas recipient holds the information, the notifiable data breach rules apply as if the business held it (section 26WC(1)), so the contract should require the vendor to report incidents quickly. The cyber incident response guide explains the 30-day assessment.


Who owns what an AI tool produces?

Possibly no one, if no person shaped it. Copyright subsists in an original unpublished literary work whose author was a qualified person when it was made (Copyright Act section 32(1)), and literary works include computer programs (section 10(1)). The cases require a human author.

In Telstra Corporation Ltd v Phone Directories Company Pty Ltd [2010] FCAFC 149, copyright did not subsist in directories produced largely by automated processes. Perram J said that where a computer performs the functions of human authors, and no person directs or fashions the material form, copyright does not subsist ([118]). Yates J said originality requires that a work originate from an author, a question of fact and degree ([169]). In Acohs Pty Ltd v Ucorp Pty Ltd [2012] FCAFC 16, source code created by the operation of a software system was not an original work ([57] to [58]).

Neither case concerned an AI tool, but their reasoning is the starting point for AI outputs. A vendor’s term giving the user the outputs is a contract between the user and the vendor. Whether copyright subsists depends on section 32(1) and a human author, so the term may leave the business nothing to own. A business that needs to own what it builds should keep people directing the work, and keep records. The AI and copyright guide covers authorship and infringement.

What people create follows the ordinary rules. The author owns the copyright (section 35(2)), and an employer owns an employee’s work under a contract of service (section 35(6)). Any copyright in a contractor’s work stays with the contractor unless assigned in writing, signed by or on the contractor’s behalf (sections 35(2) and 196(3)), and an assignment can cover future work (section 197(1)).

A business that publishes or sells outputs should also look for a vendor warranty against infringement, backed by an indemnity.


Who is liable when an AI tool gets it wrong?

Usually the business that relied on the output, unless the consumer guarantees or the contract shift the loss. Vendor terms commonly disclaim accuracy and cap liability.

The consumer guarantees can protect a business buyer. A person is a consumer if the amount paid or payable is $100,000 or less (ACL section 3(1)(a) and (3)(a), and regulation 77A), or, for services, if they are of a kind ordinarily acquired for personal, domestic or household use (section 3(3)(b)). Goods, which include computer software (section 2(1)), acquired for re-supply are excluded (section 3(2)).

Goods must be of acceptable quality (section 54). Services must be rendered with due care and skill (section 60) and be reasonably fit for any purpose the consumer makes known (section 61(1)). A term is void to the extent it purports to exclude, restrict or modify the guarantees (section 64(1)). For goods or services not ordinarily acquired for personal, domestic or household use, the supplier can limit liability to repair, replacement or resupply, or its cost, unless the buyer shows that relying on the limit is not fair or reasonable (section 64A).

Where the buyer is not a consumer, the contract decides, subject to the unfair terms rules. A limitation or exclusion clause is construed by its natural and ordinary meaning, read in the light of the contract as a whole, and against the party relying on it where appropriate in case of ambiguity (Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82 at [16]). In that appeal from South Australia, a clause limited the broker’s liability to $100 for each unauthorised contract ([19]).


Can a small business challenge an AI vendor’s standard terms?

Yes, if a term is unfair. A contract is a small business contract if at least one party employs fewer than 100 persons or had turnover under $10,000,000 in its last income year (ACL section 23(4)). An unfair term in a standard form consumer or small business contract is void (section 23(1)), and a contract alleged to be standard form is presumed to be one unless proved otherwise (section 27(1)).

A term is unfair if it would cause a significant imbalance, is not reasonably necessary to protect the legitimate interests of the party it advantages, and would cause detriment if relied on (section 24(1)). The vendor must prove the term is reasonably necessary (section 24(4)). Examples of terms that may be unfair include one-sided rights to vary the terms (section 25(d)) or the services (section 25(g)), and limits on the right to sue (section 25(k)).

In ACCC v JJ Richards & Sons Pty Ltd [2017] FCA 1224, the Court declared, on agreed facts, that eight terms of a supplier’s small business standard form contracts were unfair and void ([3], [6]). The parties agreed, and the Court accepted, that a right to raise prices for any reason, without a right for the customer to terminate, caused a significant imbalance ([56](b)), as did an unlimited indemnity ([56](g)). In ACCC v Fujifilm Business Innovation Australia Pty Ltd [2022] FCA 928, a supplier of equipment, software and support ([1]) conceded its template terms were unfair, and the Court made consent declarations that its unilateral variation and liability limitation terms were unfair and void ([3]; declaration).

Since 9 November 2023, making a standard form contract with an unfair term the business proposed, or relying on such a term, is also a contravention (section 23(2A) and (2C)). For a body corporate, the maximum penalty is the greater of $100,000,000 and three times the benefit (or 30% of adjusted turnover during the breach turnover period if the benefit cannot be determined). For anyone else it is $2,500,000 (section 224(3) and (3A)).


What should a data licence or sharing agreement cover?

Mainly the permitted purposes and who owns what is made from the data. Data licences, sharing agreements and data analysis agreements raise the same issues.

  • The data, its source, and any personal information or third-party material in it.
  • The licence: exclusive or not, term, territory and permitted purposes. If the data may be used to train AI models, say so; if not, say that too.
  • Derived and combined data: who owns results, trained models and merged datasets.
  • Warranties that the data may lawfully be supplied and used.
  • Security, audit, breach notice, and deletion or de-identification at the end.

Data does not always carry copyright. In Telstra v Phone Directories, Yates J said the computer process was of such overwhelming significance to the directories’ form that they could not be said to originate from authors ([169]). Where a dataset has no copyright, the licence and the law of confidence do the protective work, so the data should be identified with specificity and supplied in confidence (Optus Networks at [39]).

De-identification is also a legal duty. An APP entity holding personal information it no longer needs for any permitted purpose must take reasonable steps to destroy or de-identify it, subject to limited exceptions (APP 11.2). The agreement should impose the same duty on the recipient, with a deadline.


Can personal information in licensed data be used to train AI?

Only within the Privacy Act. The OAIC’s Guidance on privacy and developing and training generative AI models (21 October 2024, updated 23 October 2024) says publicly available data is not automatically lawful to use for training or fine-tuning. It lists APPs 1, 3, 5, 6 and 10 as particularly relevant and recommends a privacy impact assessment. It says training on personal information already held, where that was not a primary purpose of collection, needs consent or a reasonable expectation and relatedness, or another exception, and that where that cannot be clearly established, the business should seek consent, offer a meaningful and informed opt-out, or both. It also says many photographs or recordings of individuals, including artificially generated ones, contain sensitive information.

A supplier bound by the APPs has to consider APP 6.1, which covers disclosure as well as use. The guidance also lists APP 3, which matters to the recipient. An organisation must not collect personal information, other than sensitive information, unless reasonably necessary for its functions or activities (APP 3.2). Sensitive information also needs consent, unless APP 3.4 applies (APP 3.3).

The licence should record what personal information is included, what individuals were told, and which party handles notices and complaints. Licence terms for material used in training are covered in the AI and copyright guide.


What changes from 10 December 2026 for AI decisions about people?

From 10 December 2026, an APP entity that has arranged for computer programs to make significant decisions about individuals, using their personal information, must say so in its privacy policy. The APP 1.7 trigger, from 10 December 2026, is a decision, or a thing substantially and directly related to making one, that could reasonably be expected to significantly affect an individual’s rights or interests.

From 10 December 2026, the policy must set out the kinds of personal information used, the kinds of decisions made solely by the programs, and the kinds of decisions for which the programs do a thing substantially and directly related to making them (APP 1.8). From 10 December 2026, failing or refusing to decide counts, and the examples include decisions affecting rights under a contract or access to a significant service or support (APP 1.9). The rules apply to decisions made from 10 December 2026, even if the arrangement or the information predates them (Privacy and Other Legislation Amendment Act 2024, Schedule 1, item 89).

From 10 December 2026, APP 1.7 also joins the principles enforceable by infringement and compliance notices, with a maximum civil penalty of 200 penalty units (section 13K). The vendor contract should require the vendor to explain what personal information the tool uses and what it decides alone. The AI and privacy guide covers the new rules.


What can a business say about its own AI product?

Only what it can prove. A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive (ACL section 18(1)). A person must not make false or misleading representations that goods or services are of a particular standard or quality (section 29(1)(a) and (b)), or have performance characteristics, uses or benefits (section 29(1)(g)). A representation about a future matter is taken to be misleading if made without reasonable grounds (section 4(1)).

Accuracy rates, claims that no human review is needed, and claims that a product uses AI at all need evidence. The OAIC’s Guidance on privacy and developing and training generative AI models (21 October 2024, updated 23 October 2024) says developers should take reasonable steps for accuracy, such as testing, and that disclaimers may be appropriate. A disclaimer cannot exclude the consumer guarantees (section 64(1)), and misstating a customer’s rights is itself prohibited (section 29(1)(m)).

Section 29 carries the section 224 maximums set out above, and a customer who suffers loss from misleading conduct can recover damages (section 236(1)). The business’s own standard terms face the same unfair terms rules as its vendors’ terms.


How similar matters tend to play out

Illustrations of how the law on this page combines on ordinary facts, not predictions. Outcome depends on the documents and the evidence.

Lower range. An Adelaide engineering consultancy with 30 staff finds staff pasting client specifications into a free AI tool whose terms allow training and changes at any time. The specifications were received in confidence (Optus Networks at [39]). The vendor contract is a small business contract (ACL section 23(4)), and a one-sided right to vary may be unfair (section 25(d)). The fix is a plan that excludes training.

Middle range. A software company takes a licence of a retailer’s loyalty card data to train a forecasting model. The licence is silent on derived data, and on termination the retailer claims the model. Copyright may not subsist in the dataset (Telstra v Phone Directories, Yates J at [169]), so the dispute turns on the licence and confidence (Optus Networks at [39]). Data identifying cardholders is personal information (Privacy Act section 6(1)), and an APP entity must take reasonable steps to destroy or de-identify it once no longer needed (APP 11.2).

Upper range. A start-up sells property managers a tool that scores rental applicants, advertised as “99% accurate”, on terms letting it change the model at will and excluding all liability. If the claim is false or misleading, making it contravenes ACL section 29(1)(g), which carries the section 224 maximums. The exclusion is void so far as it excludes guarantees owed to consumers (section 64(1)), and the change-at-will term may be unfair (section 25(g)). From 10 December 2026, customers that are APP entities may need to describe those decisions in their privacy policies (APP 1.7).


How we act on AI contracts

Our AI contract lawyers act for buyers and sellers of AI tools, and for both sides of data licences.

StageWhat happensWhat we do
Choosing a toolThe business shortlists AI tools.Review the terms against the planned use.
NegotiatingThe vendor offers standard or enterprise terms.Negotiate data use, confidentiality, IP warranties and the liability cap.
Data agreementsData is licensed, shared or sent for analysis.Draft purposes, derived data, privacy and deletion terms.
Launching a productThe business sells AI-enabled products.Check claims, terms and the privacy policy, including the rules from 10 December 2026.
DisputesAn output causes loss or data is misused.Advise on contract, consumer law and confidentiality claims.

We cannot promise an outcome, and no lawyer can. We can make sure the terms are read before the data goes in.

Every hour matters. Book a same-day free 30-minute consultation, or call (08) 7094 2021 now.


AI contract case law

None of these cases concerned an AI tool or a data licence; each decided a point that applies to one.

CaseCourtPrinciplePinpoint
Optus Networks Pty Ltd v Telstra Corporation Ltd [2010] FCAFC 21Full Federal CourtConfidence in equity survives a contract definition[29], [39]
Telstra Corporation Ltd v Phone Directories Company Pty Ltd [2010] FCAFC 149Full Federal CourtPerram J and Yates J: works need a human author[118], [169]
Acohs Pty Ltd v Ucorp Pty Ltd [2012] FCAFC 16Full Federal CourtSoftware-generated code not original[57], [58]
Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82High CourtReading limitation clauses[16], [19]
ACCC v JJ Richards & Sons Pty Ltd [2017] FCA 1224Federal CourtPrice variation and indemnity terms declared unfair[3], [6], [56]
ACCC v Fujifilm Business Innovation Australia Pty Ltd [2022] FCA 928Federal CourtEquipment and software contract terms declared void by consent[1], [3]

Case notes

Optus Networks Pty Ltd v Telstra Corporation Ltd [2010] FCAFC 21

An exhaustive contract definition of confidential information did not show an intention to exclude equitable obligations ([29]), and the Full Court stated the elements of breach of confidence ([39]).

Telstra Corporation Ltd v Phone Directories Company Pty Ltd [2010] FCAFC 149

The appeal was dismissed: copyright did not subsist in the directories. Perram J said an operator who does not control the material form is not its author ([118]); Yates J said the works did not originate from authors ([169]).

Acohs Pty Ltd v Ucorp Pty Ltd [2012] FCAFC 16

The Full Court agreed with the primary judge that source code created by a software system did not emanate from authors and was not an original work ([57] to [58]).

Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82

Exclusion and limitation clauses are read by their natural and ordinary meaning, in the light of the whole contract ([16]). A $100 limit applied to each unauthorised contract ([19]).

ACCC v JJ Richards & Sons Pty Ltd [2017] FCA 1224

Moshinsky J declared, on agreed facts, that eight small business contract terms were unfair and void ([3], [6]). The parties agreed, and the Court accepted, that price variation and indemnity terms caused a significant imbalance ([56]).

ACCC v Fujifilm Business Innovation Australia Pty Ltd [2022] FCA 928

The supplier conceded its small business template terms were unfair, and the Court made consent declarations that they were unfair and void ([3]; declaration).


Frequently asked questions

Can an AI vendor train its models on a business's data?

Only if its terms allow it. For a business bound by the APPs, personal information must not be used or disclosed for a secondary purpose without consent unless an exception applies (APP 6.1).

Can staff put customer information into a public AI tool?

It is a risk to control. The OAIC’s Guidance on privacy and the use of commercially available AI products (21 October 2024, updated 17 January 2025) says that, as best practice, personal information should not be entered into publicly available generative AI tools.

Who owns content created with an AI tool?

Possibly no one, where the tool rather than a person shaped it (Telstra v Phone Directories, Perram J at [118]). A person’s contribution belongs to its author, an employer or a written assignee (Copyright Act sections 35(2), 35(6) and 196(3)).

Can an AI vendor exclude liability for wrong answers?

Partly. Terms cannot exclude the consumer guarantees, and a business paying $100,000 or less can be a consumer (ACL sections 3 and 64(1)). Otherwise the clause is read by its natural and ordinary meaning (Darlington at [16]).

Do the unfair contract terms laws apply to AI tool terms?

Yes, for standard form small business contracts, where a party employs fewer than 100 persons or had turnover under $10,000,000 in its last income year (ACL section 23(4)).

Who owns a model trained on licensed data?

The agreement should settle it. An assignment of copyright has no effect unless in writing signed by or on behalf of the assignor (Copyright Act section 196(3)). A dataset compiled largely by automated processes may carry no copyright (Telstra v Phone Directories, Yates J at [169]).

Can a business use an AI tool that processes data overseas?

Yes, with care. An APP entity must take reasonable steps so that the overseas recipient does not breach the APPs (APP 8.1), and may answer for its breaches (Privacy Act section 16C).

What changes in December 2026 for businesses using AI to make decisions?

From 10 December 2026, an APP entity’s privacy policy must describe significant decisions that computer programs make using personal information, or for which they do a thing substantially and directly related to making them (APP 1.7 and 1.8). From 10 December 2026, APP 1.7 can also be enforced by infringement and compliance notices (section 13K).

Can a business advertise its product as AI-powered?

Only if it is true. False or misleading claims about performance characteristics are prohibited (ACL section 29(1)(g)), and claims about future capability need reasonable grounds (section 4(1)).

Do I need an AI contract lawyer?

Before signing enterprise AI terms or a data licence, yes. An AI contract lawyer can read the terms against how the tool or data will be used. A free 30-minute consultation will tell you where you stand.


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