Singapore: Due Diligence in AI Contracting (Thomson Reuters Practical Law 2026)

As businesses in Singapore increasingly adopt AI and generative AI tools, contracting decisions now require a deeper understanding of how these systems are built, used and governed. Issues around data, intellectual property, and regulatory compliance arise much earlier in the process, making due diligence a critical first step.

In the Thomson Reuters Practical Law 2026 Practice Note 'Due Diligence in AI Contracting (Singapore)', Jonathan Kok, Joyce Lee, Lee In Hae, Bernetta Foong and Haiying Deng examine how customers can approach pre-contractual diligence when evaluating the use or licensing of a supplier's AI technology in a business-to-business context. To read the full practice note, click here.

A framework built on guidance rather than statute

Singapore currently does not have a single overarching AI law. Instead, AI governance is shaped by a mix of non-binding governance frameworks, including the Model AI Governance Framework and related implementation guides and existing legal regimes, particularly in data protection, intellectual property and cybersecurity.

For the legal sector, the Ministry of Law's guidance on generative AI also provides useful context on how AI systems are defined and understood in practice.

Why due diligence matters  

Due diligence allows customers to assess both the supplier and the AI tool before entering into an agreement. It helps to identify legal, technical and operational risks, evaluate whether the tool is suitable for its intended purpose, and ensure alignment with internal governance policies.

The findings can materially influence contract negotiations. In some cases, they may lead to enhanced protections; in others, they may justify not proceeding with the engagement altogether.

Starting early and scoping appropriately  

The Practice Note emphasises that due diligence should begin early in the procurement process. Delays can reduce the customer’s ability to identify and mitigate risks or negotiate appropriate safeguards.

The scope of diligence will vary depending on factors such as the customer’s industry, the intended use of the AI tool, and the complexity of the solution. Information is typically gathered from internal stakeholders, supplier documentation, and discussions with or demonstrations by the supplier.

Key areas of focus

AI contracting introduces a number of considerations that go beyond traditional technology transactions. These include understanding the proposed use case, the type of AI tool involved, and how it is deployed and accessed.

Particular attention is given to training data and methodologies, which affect performance, bias and potential IP exposure. Customers should also consider what data they will input into the system, whether it includes personal or confidential information, and how that data may be used by the supplier.

Outputs present their own challenges, including questions of ownership, reliability and liability. As Singapore law on AI-generated content continues to develop, contractual terms play a central role in defining how outputs can be used and who bears the associated risks.

Assessing the supplier

Beyond the AI tool itself, customers should evaluate the supplier’s governance practices, including how it manages AI risk, ensures quality and mitigates bias. The supplier’s transparency, responsiveness and willingness to provide meaningful information can be indicative of its overall maturity.

General due diligence on the supplier remains important, particularly in areas such as intellectual property, data protection and cybersecurity.

From diligence to contract terms  

A key takeaway is that due diligence must translate into contractual protection. Customers may seek warranties, indemnities and audit rights, as well as clear provisions on data use, IP ownership and liability.

Where risks cannot be adequately managed, the prudent course may be to step away from the transaction.

How we can support you  

As AI adoption accelerates, businesses need to balance innovation with risk management. Our team supports clients through the full lifecycle of AI contracting, from due diligence and risk assessment to drafting and negotiation, helping to ensure that AI solutions are deployed with confidence and control.