The clause that is not the liability clause

The one system Erimtan had actually bought

Fenniston supplies the extraction tool that reads Erimtan's incoming purchase orders and tech-pack cover sheets, and writes their fields into the order record. Four seats, USD 8,940.00 a year. This is the system lesson 1 found ranked eighth of eleven on exposure and first of eleven on governance effort. It is the one this course now uses to show what an agreement has to say.

Four questions. Erimtan's agreement answered two of them well, one of them worthlessly, and one of them against Erimtan without anybody noticing.

One: what may the supplier do with what we put in?

Fenniston's paid terms say submitted content is not used to improve the service. That is the answer you want, you can check it, and it belongs in the permission of lesson 2 quoted rather than summarised.

The uncomfortable half is the four months before the purchase, when Okuyan was using a free tier whose terms said the opposite. You cannot price a disclosure that has already happened. There is no remedy to claim, no measurement to take and no undo. What you can do is stop, and tell the buyer. Erimtan did: one awkward call to Halbertsma, which cost nothing except the call. Not telling was the option that would have cost the programme. The disclosure log of lesson 2 was going to be asked for eventually, and an honest log with a stopped practice in it reads very differently from a log somebody assembled after a question.

Two: who owns the output?

Erimtan's first draft asked that all intellectual property in the output belong to the customer. Fenniston agreed the same afternoon, with no negotiation at all.

That speed is the finding. Granting a right that may not exist costs nothing. Whether a machine-produced output attracts a right at all, and if so whose it is, is unsettled and differs between countries. This page is not going to pretend to know. A title clause is a promise about a question nobody has answered: comfortable to sign, and it may come to nothing.

Three sentences do the work instead, and none of them depends on the answer:

1. The supplier will not make any claim against the customer's use of the output.
2. The supplier will not grant anyone else rights in it, and will not reuse it for another customer.
3. The customer's inputs remain the customer's, and nothing in this agreement gives the supplier any right in material belonging to the customer's own customers.

The third is the one people miss, and it is where a factory's real exposure lives. An intake sheet produced from Halbertsma's tech pack is derived from Halbertsma's property. The international copyright framework protects an adaptation of a work without prejudice to the copyright in the original work. The derived thing existing takes nothing away from the thing it came from. So no clause between Erimtan and Fenniston can touch Halbertsma's rights, because you cannot grant, in a contract, a right belonging to somebody who is not in the room. Anyone who offers to is offering you something they do not have.

Three: what happens when it is wrong?

In September the tool read a measurement tolerance from a Trewithen cover sheet as plus or minus 1.0 cm. The sheet said plus 1.0 cm and minus 0.5 cm. It is a plausible reading of an unusual notation, and it went onto the specification the cutting room worked to.

Nothing was recovered, and the cap had nothing to do with it. Under a heading called Customer responsibilities, several pages away from anything about liability, the agreement said the customer is responsible for checking outputs before relying on them. Erimtan had not. The claim never travelled far enough to reach the cap it had spent an afternoon reviewing.

The clause that decided who paid was not in the liability section, and it did not use liability words. It read as an operating instruction, and a sensible one, which is why nobody flagged it. Course 14.2 owns the general rule that a clause with no number in it is the one to price. This is that rule's harder case: a clause with no number, no liability language, and a heading that describes what you do rather than what you are owed.

Now the useful part, because you are not going to negotiate that sentence away. No supplier of a system that produces likely values will accept responsibility for a customer relying on one. A supplier who offered to should worry you more than one who refuses. So read it for what it actually is: a scope statement. It tells you which decisions may be routed through the tool. Only those whose worst case you are willing to carry yourself.

Erimtan's rule after the incident is one sentence. No extracted value reaches a document that binds the factory to a buyer unless a named person has compared it to the source. That rule has a cost, measured in minutes a document, and lesson 5 makes it a purchase criterion rather than an afterthought.

Four: what happens when it changes, and when it stops?

In month seven a routine spot check re-ran 40 documents that had been processed in month two. 6 came out different. Nothing had been announced. There was no release note, and no clause requiring one.

Nothing had gone wrong, exactly. The outputs were not worse. They were different, on the same inputs. Everything Erimtan had accepted on the strength of the earlier behaviour was now standing on something it had not been tested against. Re-checking the affected work took 22 styles at 1.4 hours: 30.8 hours, or USD 757.68.

The clause that covers it is short and costs the supplier an email. It is: notice of a material change to the system, and the right to re-run the acceptance test within a stated window after the notice. Fenniston agreed to it at renewal for no extra fee. It had never been asked.

Exit is the same shape. The extracted data exports per document in a form a machine can read, which is fine. The field mapping is the problem. That is the list of which of a buyer's 22 labels goes to which Erimtan field, built up over a year of corrections. It lives in the supplier's settings and exports as a printable page. Rebuilding it elsewhere was costed at 61 hours, or USD 1,500.60. Asking for it in machine-readable form at signature would have cost nothing at all.

Act as a commercial reviewer who knows the clause that decides liability is usually not in the liability section. I will paste a supplier's agreement or terms for a system that reads, drafts or classifies something. Do not summarise. Answer four questions, quoting the sentence that answers each and naming the heading it sits under. One: what may the supplier do with what we put in? Is submitted content used to improve the service, where is it held, how long is it kept, and is any of that different between a free tier and a paid one? Two: who owns the output? And separately, does the agreement contain the three things that work whichever way that unsettled question is answered: no claim made against my use, no rights granted to anyone else, and my inputs remaining mine, including material belonging to my own customers? Three: what happens when it is wrong? Find the liability cap. Then find every sentence anywhere in the document that makes me responsible for checking or reviewing an output before relying on it, because that sentence, and not the cap, will decide who pays. Tell me which of my decisions may therefore be routed through this system. Four: what happens when it changes or stops? Is there notice of a material change, is there a right to re-test after such a notice, and on exit do I get my settings and mapping back in the same machine-readable form as the data? For each of the four, give me the exact wording to ask for where it is missing, and mark which requests cost the supplier nothing to grant.

What to take away

1. Four questions: what may they do with our inputs, who owns the outputs, what happens when it is wrong, and what happens when it changes or stops.
2. A disclosure that has already happened cannot be priced or undone. Stop it, tell the buyer, and keep the honest log.
3. An ownership clause granted instantly is usually free to grant. Ask for no claim, no other rights and your own inputs instead, and remember you cannot grant a right belonging to somebody who is not a party.
4. Erimtan's wrong tolerance cost USD 24,783.20 against a cap of USD 8,940.00, and recovered USD 0.00, because a clause under "Customer responsibilities" had already decided it.
5. Read that clause as a scope statement. It defines which decisions may be routed through the tool.
6. Ask for notice of a material change and the right to re-test. It costs the supplier an email, and it is the clause that makes an acceptance threshold last.
7. Ask for the settings to export in the same form as the data. Erimtan's mapping was 61 hours to rebuild.