Enterprise procurement teams are under increasing pressure to move quickly with generative AI. However, those who act too fast without thorough investigation will pay the price sooner or later. Before a contract lands on a lawyer’s desk, there are twelve questions every organization should ask regarding security, IP ownership, service levels, and audit rights.
Security and Data Processing Come First
The first thing a procurement team must determine is exactly where data goes once it enters a GenAI system. Many vendors route prompts and outputs through third-party infrastructure, sometimes spread across multiple jurisdictions. For Dutch companies covered by the GDPR, this is not a side note but a core issue.
Four essential security questions to ask every vendor:
- Where is data processed and stored? Ask for a full data flow diagram, not a summary paragraph.
- Is customer data used to train or fine-tune the model? This must be explicitly prohibited in the contract unless the company has given permission.
- What encryption standards apply during transit and at rest? Demand specifications, not marketing language.
- What happens to data when the contract is terminated? Deletion periods and confirmation procedures must be contractually established.
These are not optional questions. They are basic requirements for any organization working with sensitive information. Understanding the power dynamics around AI that enterprise leaders must know also helps procurement teams assess whether a vendor’s promises about infrastructure are realistic or primarily aspirational.
IP Ownership is More Complex Than It Seems
Intellectual property in GenAI contracts is truly complicated. Who owns the output? Who owns the fine-tuned model weights? And what happens if the vendor’s base model turns out to have been trained on copyrighted material?
Three IP questions that must be contractually fixed:
- Does the company own the generated output? Some vendor agreements claim a license on outputs by default.
- Who bears liability if outputs infringe on third-party IP rights? Indemnification clauses vary widely and require meticulous legal review.
- What rights does the vendor retain on custom model configurations? If the company has invested in fine-tuning, those assets should not remain with the vendor after termination.
IP provisions are often hidden in standard terms and conditions. Negotiating them out requires leverage and preparation. That is why walking through the questions you must ask before committing to an AI investment is a useful exercise, even before you enter vendor discussions.
SLAs Must Have Teeth, Not Just Targets
Service level agreements in GenAI contracts often look impressive on paper but offer limited recourse in practice. A 99.9% uptime guarantee sounds reassuring until you calculate that this still allows roughly nine hours of downtime per year—exactly when internal work processes depend on continuous availability.
Questions to ask about SLAs:
- What counts as downtime in this agreement? Degraded performance is often excluded from SLA calculations.
- What remedies apply in case of an SLA breach? Service credits are common but rarely reflect the actual cost of disruption.
- How are scheduled maintenance windows handled? These should be scheduled with prior notice and fall outside core business hours.
The production reality of AI-driven software development is often messier than vendor demos suggest. Contract language must account for realistic failure modes, not just benchmark scenarios.
Audit Rights Protect Long-Term Interests
Audit rights are often the most underestimated part of an enterprise AI contract. Without these rights, an organization has no independent way to verify a vendor’s claims about security measures, data processing, or model behavior.
Three audit-related questions you should insist on:
- Does the company have the right to conduct independent security audits? Some vendors offer third-party audit reports instead. Assess whether those are sufficient.
- Can the company access logs regarding how its data was processed? Log requirements should be defined, not discretionary.
- What reporting obligations apply if the vendor experiences a data breach? Deadlines must be specific and align with GDPR Article 33 requirements.
Payment Infrastructure and the Context of Digital Procurement
The procurement of enterprise software increasingly involves digital payment flows similar to those in other digital sectors. In the Netherlands, iDEAL remains the dominant payment method for online transactions, used in sectors ranging from e-commerce to subscription services.
Dutch consumers and businesses encounter iDEAL on various digital platforms, including online entertainment environments where reliable payments are crucial. An iDEAL casino is one context where Dutch payment infrastructure converges with digital service agreements, illustrating how the choice of payment methods reflects broader expectations regarding security and transaction trust. Those same expectations translate directly to enterprise procurement: payment terms, invoicing structures, and financial audit trails deserve the same critical scrutiny as any other contract provision.
Getting the Contract Right Before Signing
Rushing into a GenAI vendor contract creates problems that are difficult to reverse. Data residency issues, unclear IP ownership, and weak SLA remedies become significantly harder to address once a system is embedded in production processes.
The twelve questions outlined here provide procurement teams, legal advisors, and enterprise leaders with a practical framework to enter these negotiations well-prepared. Vendors willing to answer these questions clearly demonstrate exactly the transparency that long-term partnerships require.
