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The ever-increasing reliance of content producers on artificial intelligence apps to generate content for online use begs the question of what legal obligations and liability risks arise from the use of that content.

The statutory and regulatory requirements governing the use of AI to generate online content varies widely by jurisdiction. While there is no universal set of laws, certain general legal principles apply across the spectrum.

1. Copyright and Intellectual Property Rights

When an AI bot generates content, the first questions that arise are: “Where did it obtain this content? Is it original or was it derived from an existing source? If it is derivative, who holds the copyright to that material? Who should be credited as the author?”

Is the “author” the AI bot, the human who programmed or trained it, the human who provided the input data, or the human who edited or published the output? Different jurisdictions may have different criteria for determining authorship and ownership of AI-generated works, and some may not recognize AI as a legal entity or a “creator” at all.

It is important to determine whether the AI is creating “original work” or if the content is derivative of existing copyrighted material. Additionally, the use of AI to replicate copyrighted content without permission may infringe on the copyright holder’s rights.

AI-generated content may fall under the doctrine of fair use or transformative use, which allows the use of copyrighted material for purposes such as criticism, comment, news reporting, teaching, scholarship, or research. However, this is not a clear-cut rule and depends on factors such as the purpose and character of the use, the nature of the original work, the amount and substantive nature of the portion used, and the effect of that use on the potential market.

2. Liability and Accountability

AI-generated content may also entail legal risks and responsibilities for the parties involved in its creation and distribution. For example, who is liable if the AI-generated content infringes on someone’s rights, causes harm, or violates laws or regulations? How can the AI bot be held accountable for its actions and decisions? How can the human users or beneficiaries of the AI-generated content ensure its quality, accuracy, and reliability?

3. Privacy and Data Protection

AI-generated content may involve the use of personal data, such as names, images, or biographical information, to create realistic or personalized content. This could violate any number of privacy and data protection laws that regulate how personal data can be collected, processed, and shared online.

If the AI uses personal data to generate content, it must comply with data protection laws such as the General Data Protection Regulation (GDPR) in the European Union, the California Consumer Privacy Act (CCPA), the Personal Information Protection and Electronic Documents Act (PIPEDA) of Canada, and other similar regulations. These laws require obtaining consent from individuals before processing their personal data and ensuring the protection of that data.

4. Transparency and Disclosure

Depending on the jurisdiction, there may be requirements to disclose to your site visitors that content has been generated by AI, especially in cases where the content might be mistaken for human-generated content. This is particularly relevant in advertising, news articles, and other media where trust and authenticity are important.

AI-generated content may pose ethical challenges, such as opportunities to mislead or deceive the audience, harm the reputation or dignity of individuals, or undermine the credibility or diversity of information sources. From an ethical standpoint, it is important for content developers to disclose the use of AI to generate content and provide clear and accurate information about the source, purpose, and quality of the content. It’s also important to avoid creating content that is harmful, offensive, or discriminatory.

5. Consumer Protection Laws

AI-generated content must not mislead consumers. This falls under broader consumer protection laws that prohibit deceptive practices. Content that is designed to deceive or mislead users may result in legal action and penalties.

6. Liability for Harmful Content

If AI-generated content is defamatory, discriminatory, or otherwise harmful, there may be legal consequences. The entity responsible for the AI may be held liable for the content it produces, depending on the legal framework governing speech and publication in the relevant jurisdiction.

7. Accessibility

Laws such as the Americans with Disabilities Act (ADA) in the United States may require that online content, including AI-generated content, be accessible to individuals with disabilities. This includes ensuring that content is compatible with screen readers and other assistive technologies.

8. Platform-Specific Rules

Online platforms (such as X, Facebook, Instagram, etc.) have their own terms of service and/or community guidelines that govern the use of AI to generate content. These rules may go beyond legal requirements and can result in content being removed or accounts being banned for non-compliance.

9. Export Controls and Sanctions

In some cases, AI technologies are subject to export control laws and sanctions, guidelines and requirements for disclosing AI generated content.

TAKEAWAYS

Full Disclosure. Always disclose which content is AI-generated and clearly label it as such. This can be done through disclaimers or specific mentions within the content that it was generated or assisted by AI.

Quality Assurance. Regardless of whether content is AI-generated or human-written, the focus should always be on producing high-quality, original content that provides value to the audience. 

Compliance with Laws and Regulations. The very nature of the worldwide web means that content on your website is accessible anywhere in the world. Be aware of any legal requirements or industry standards – both within your own jurisdiction and globally - that may apply to AI-generated content, and ensure that your content is compliant.

Image by Gerd Altmann from Pixabay

Image courtesy Pixabay.Com. Content partially researched using Microsoft Copilot AI.

If you're planning to incorporate a company in the United States, this checklist will help guide you through the process by outlining the information and documents you will need. Although each state has its own procedures, the basics of incorporating a company are much the same throughout the country.

Information Required Prior to Filing the Incorporation Application

• Reserve the proposed name of the corporation and any additional trade names under which the corporation will be doing business. This may entail additional documentation and filing fees to register those trade names.
• Determine who the directors and corporate officers (or if an LLC, the members and managers) will be.
• Discuss with your business partners (if any) and your legal counsel if any special provisions will be included in the articles or in the company bylaws / operating agreement.
• Ensure that any compliance, licensing or regulatory requirements for the corporation’s business are met.

Documents to be Prepared

• Articles of Incorporation or Organization (depending if a corporation or LLC)
• Certificate of Disclosure
• Bylaws or operating agreement (depending on the type of entity)
• Shareholders Agreement
• Minutes of Organizational Meeting
• Subscription for Shares of Stock
• Application for Employer Identification Number / Federal Tax ID
• Corporate Minute Book
• Stock Transfer Ledger
• Stock Certificates

Once the documents are prepared, you can file them with the Secretary of State. Most states have an online filing option.

Roles to be Filled Before Incorporation

• Accountants
• Legal counsel
• Registered agent
• Bank, trust company, other financial institution(s)
• Investment broker and financial advisors (if required or desired)
• Insurance company (life, office contents, commercial general liability, etc)
• Auditors (if required or desired)

Things to Do Following Incorporation

• Hold an organizational meeting to issue shares, appoint the directors and officers, set the company's fiscal year end, and adopt the bylaws.
• Apply for a federal EIN (employer identification number).

Other Matters to Consider

• Determine whether the corporation needs to obtain a sales tax license.
• Decide whether the corporation qualifies for Sub-chapter “S” status.
• Review the statutes governing corporations to determine what the regular reporting requirements are, and be sure the dates are properly diarized for preparing and filing the appropriate documents.
• Order corporate seal.
• Get information on the “piercing the corporate veil” rules.
• Get information on state, federal and municipal laws, rules and regulations that apply to the corporation’s business (environmental, tax, import/export, etc).
• Learn how to properly dissolve / liquidate a corporation.

Image by Pixabay.com

Have you reached a point with your business where it's no longer desirable or feasible to continue operations? So many businesses, large and small, have faced that decision during the COVID-19 pandemic. It's very difficult to consider walking away from something that you have built with your own equity, sweat, love and passion. But if you have reached that crossroads and there is no hope of selling it and no family members or employees willing to take it over, then your only other course of action may be to shut it down, liquidate the assets, and pay your creditors.

I just renewed my Canadian passport, and one of the questions on the renewal form was "Are you a naturalized Canadian?" Which started me wondering about what a "naturalized Canadian" is, and what the difference is between naturalization and Canadian citizenship.

Those of us who are lucky enough to have been born and raised in Canada get to enjoy all the rights, privileges and benefits of being citizens of this wonderful country. I believe that I live in the best country in the world. And apparently so do the quarter million new immigrants who arrive in Canada each year.

A naturalized Canadian is someone who has obtained citizenship by means other than being born in Canada or being born to or adopted by Canadian citizens. In other words, a naturalized Canadian is a person who became a permanent resident and then applied for and was granted full citizenship.

What rights does a permanent resident have (or not have)?

• Permanent residents are eligible for health care and most other social benefits, they can live and work anywhere in Canada, and they are protected by Canadian laws and the Canadian Charter of Rights and Freedoms just as any Canadian citizen would be.
• As a Canadian citizen, I have the right to vote. Permanent residents cannot vote, and they can't run for public office.
• I would not lose my citizenship if (heaven forbid) I was convicted of a criminal offence, but if I was a permanent resident, I might be deported for criminal activity. Which is not a bad thing. Too bad we can't deport a few of our more notorious Canadian criminals!
• Permanent residents also cannot hold Canadian passports. They must have a passport from their country of origin in order to travel, but they must attach official documentation showing that they have permanent resident status in order to get back into Canada.

How does an immigrant become a naturalized Canadian?

1. First of all, you must have acquired permanent resident status and you must be at least 18 years of age.
2. You must have lived in Canada for at least 3 years.
3. You must be able to speak and understand English or French.
4. You must have an understanding of Canadian government, history, geography and what the rights and responsibilities of Canadian citizenship are.
5. You must pass the citizenship test. The federal government will supply you with a guide that you can study in preparation for the test.
6. Once you've passed the test, you then are ready to take the oath of citizenship.

Who does not qualify for Canadian citizenship?

• Anyone who has been convicted of a criminal offence or an offence under the Citizenship Act in the 3 years prior to their citizenship application.
• Anyone who is in prison, on parole or probation, or who has been in prison, on parole or probation for a period of more than 1 year at any time in the past four years.
• Anyone who has a deportation order against them.
• Anyone who has been charged with or convicted of a war crime or a crime against humanity.
• Anyone who has had their citizenship revoked within the past 5 years.

Image by jacqueline macou from Pixabay

Q. What is a partnership?

A. A partnership is an unincorporated business that is owned and operated jointly by two or more parties. It is typically an ongoing long-term business operation, the end goal of which is to create profit for the partners.

Q. What's the difference between a partnership and an incorporated entity, such as a corporation or limited liability company?

A. The biggest difference is that a corporation has a legal existence separate from its owners, with the same legal rights and obligations as a natural person. A corporation can hold property and assets in its own name, it can sue and be sued, and it must file income tax returns. A partnership does not have this type of separate and distinct existence.

Unlike a corporation, a partnership is not required by law to hold meetings, elect officers, or maintain a corporate minute book. Usually the partners will all participate in the management of the partnership and will share pro rata (according to their individual contributions) in the profits and losses, and assume equal responsibility for the partnership's liabilities.

Shareholders of corporations and LLCs are not personally liable for the obligations of the corporation / company. By contrast, partners in a general partnership are all personally liable for its obligations and can be sued by the partnership's creditors.

Q. What are the legal requirements for creating a partnership?

A. If you go into business with someone else, you have automatically formed a partnership and are not required to file anything to "create" the partnership in the eyes of the law. That having been said, depending on where the business is located and what type of partnership you are forming (such as a limited partnership), there may be some forms that are required by local government authorities for business and/or tax purposes.

Do your research to find out if you're required to submit any documentation to satisfy those requirements in your state, province or territory. It is beneficial for all parties that the details of how the partnership will be run are clearly set out in a written partnership agreement. If you don't have a written agreement, the partnership laws of your state, province or territory will govern the partnership. A written partnership agreement will remove any ambiguity as to the parties' rights and their responsibilities to each other and to the partnership, and can eliminate many sources of conflict before they arise.

Q. How can a partner leave the partnership?

A. This is another reason to have a formal agreement in place. All partners can then agree what will happen to the partnership if somebody wants to leave the partnership for any reason - whether by choice (retirement, change of circumstances, etc) or by necessity (illness, incapacity, bankruptcy, death). Every Partnership Agreement should contain buy-sell provisions to deal with these situations, in order to avoid loss of income, litigation, tax implications, and other negative consequences.

Q. How is partnership income taxed?

A. As discussed above, a partnership is not considered a separate entity in the way that a corporation is, so the partnership does not pay income taxes on its own behalf. Partnership profits and losses pass through to the partners, who must claim them on their own income tax returns. The partners then pay taxes on their share of profits or deduct their share of partnership losses, as appropriate. Nevertheless, partnerships are required to file certain forms with the taxing authority - this is true in both the United States and Canada.

Q. What is the difference between a general partnership and a limited partnership?

A. A general partnership is a partnership in which all the partners participate in managing the business. In a limited partnership, one or more general partners are responsible for running the business while the limited partners (of whom there may be many) are responsible for capitalizing the business. The limited partners have very little control over the day-to-day operations, but in return for giving up that control their liability for partnership debts and obligations is limited to the extent of their investment. Securities laws may apply to the sale or transfer of limited partnership interests. If you're considering setting up a limited partnership to attract investment capital, you should consult a lawyer.

Q. What is the liability of the partners in a general partnership?

A. Because a partnership has no legal status as a separate entity, the partners are personally liable for all of the partnership debts and obligations. Partners in a general partnership have the same degree of liability as the owner of a sole proprietorship. If one of the partners creates an obligation for the partnership, all of the partners are bound by it. Limiting the liability exposure of the partners can be encompassed in a written agreement, by stipulating that all or a majority of the partners must consent to enter into certain types of obligations or to incur debts over a certain limit on behalf of the partnership.

Limited partnerships reduce the liability of the limited partners to the extent of their original investment. The general partner manages the partnership and accepts full liability for the partnership obligations, and the limited partners give up any management authority in return for the protection from liability.

Q. What provisions should a Partnership Agreement include?

A. A written Partnership Agreement should contain the following:

• The identity of each partner.
• The name of the partnership and the type of business it will operate.
• The amount / extent of each partner's investment.
• A procedure for allocating profits and losses.
• The duties of each partner with respect to the partnership business.
• The partners' privileges for drawing on the partnership accounts (if applicable).
• Restrictions on an individual partner's ability to act on behalf of the partnership (and therefore the other partners).
• What types of events will dissolve the partnership (death or incapacity of a partner, for example).
• Procedure for terminating the partnership (for example, either partner may terminate the agreement and dissolve the partnership upon _____ days written notice to the other partner).
• Procedure for removing a partner.
• Procedure for dealing with the partnership interest of a deceased or departing partner.
• Mechanism for dispute resolution.

Image by Gerd Altmann from Pixabay

If your business hires outside consultants, it's worth your while to learn how a consulting contract is structured. And if you're a consultant yourself, you'll want to know how to prepare your own agreements with clients to cut down on your legal fees.

While people often assume you need to have an attorney draw up your contracts, if you acquaint yourself with the various provisions that are included as standard elements in a consulting agreement, you should be able to confidently draft your own contracts.

The terms of the contract should be discussed and agreed to verbally first, before putting it in writing. It might be a good idea to prepare a Letter of Intent first, to make sure that both parties are on the same page before you enter into a formal written agreement.

The Elements of a Consulting Agreement

1. The Preamble. On the first page you will set out the full legal names and a brief description of each party, and a summary of the parties' intents and the purpose of the contract.

2. Services to be Provided or Excluded. Fully describe the scope of the services that the consultant will provide, either in the main body of the contract or in an attached schedule. If certain services are specifically not included, these exceptions should be clearly set out. All deliverables, completion dates and deadlines should be listed.

3. Employees and Contractors. If more than one person will be providing consulting services, identify them and how they are related, i.e. which ones are employees and which ones are independent contractors retained by the consultant to assist with the project. It may be helpful to include an organizational chart with each person's name, position and job description, and the reporting hierarchy. Each of these persons should agree in writing to be bound by the terms of the Consulting Contract.

4. Qualifications. The consultant's qualifications should be described, or if the parties prefer, the consultant can make representations to the effect that he/she is fully qualified to provide the services.

5. Term and Renewal. Is the contract ongoing and open-ended? Will it renew automatically or will the parties negotiate a new contract before the old one expires? Is it a project-specific contract that will end when the project is completed? Is it a one-year arrangement? Define what the term of the agreement will be. If it is project-specific, clarify the circumstances that define completion of the project.

6. Contract Price. The contract price should be clearly set out. You also need to be very clear about:

• the amounts of periodic payments and the dates on which they are due. If payments are tied to the completion of certain milestones, those milestones need to be clearly defined;
• the method of billing by the consultant (weekly, monthly, etc. or whether invoicing will be done periodically as milestones are accomplished);
• the method of payment by the customer. State if payment is net 30 after the date of the invoice or within a specified number of days after a deliverable is delivered or a milestone is reached.

7. Invoices. If an invoice is required to initiate the payment cycle, it's advisable to include a description of the invoice format or attach a sample invoice as a schedule.

8. Approval Process. Describe the procedure for approval and acceptance of each phase or deliverable, as well as the procedure for revisions if any are required.

9. Contract Extras. Describe how changes or additional services can be requested by the customer, the additional amount that must be paid for those extras, and when and how it must be paid.

10. Currency. Be clear on what currency is the basis for the amounts quoted by including a paragraph like this one: "All amounts required to be paid under or in connection with this Agreement shall be paid in lawful money of ___________ (name of country)."

11. Expenses. Detail which expenses will be paid by the customer, what proof is required for reimbursement by the customer (e.g., receipts), any maximum limit on expenses, and which expenses or amounts require the customer's prior approval. Clarify whether expenses will be included as line items on the regular invoices or if they will be billed separately.

12. Reporting. What kind of reports will the consultant be required to deliver, how often and in what form? This should all be clearly established in the contract.

13. Ownership. Be very clear about who will own the work product, including any intellectual property rights included in that work product. If the contract is made on a work-for-hire basis, the customer should be the owner of the work product and IP rights.

14. Insurance. Will the consultant be required to carry E&O / professional liability insurance during the term of the agreement? Make sure the insurance provision establishes the amount and type of coverage to be maintained.

15. Termination. This section should set out:

• the grounds on which the contract can be terminated by either party,
• the procedure for termination, including:
  • the length of notice period required,
  • the form of notice (typically in writing) and how it can be given (by fax, personal delivery, registered mail, etc), and
  • what information must be included in the termination notice (reason for termination, date on which the agreement terminates, and what the non-terminating party can do to remedy the situation, such as paying any outstanding amount that may have triggered the termination),
• what happens to work that is already underway,
• payment of unbilled or unpaid amounts, and
• which provisions of the agreement will survive the termination. This could include such things as confidentiality restrictions, intellectual property rights, and licensing arrangements.

16. Dispute Resolution. Include a provision to deal with how disputes arising out of the agreement will be handled, such as having the parties agree to submitting disputes to binding arbitration or a third party mediator. It should also include the legal remedies available to each party.

17. Governing Law. Clarify the jurisdiction which governs the agreement (eg. "This Agreement shall be governed in all respects by the laws of _________________.").

18. Notices. Provide an address for each party for service of notices and other communications. If copies are to be provided to attorneys, accountants or other advisors, include an address for each of these persons as well.

19. Confidentiality. Include confidentiality provisions in the consulting contract or, alternatively, have the consultant sign a separate Confidentiality Agreement, make reference to it in the contract and attach a copy as a schedule. The confidentiality provisions should survive the expiration or termination of the contract. Clarify what the legal consequences will be for disclosing any confidential information without consent.

20. Non-Competition. Consider whether to include a non-competition clause (also called a "non-compete"), which restricts or limits the consultant's ability to perform similar services for a client's competitors (or its customers) during the term of the contract.

21. Entire Agreement. Make sure that all items agreed to verbally are set out in writing in the agreement. And include a standard clause that says the agreement supersedes any other verbal or written agreements between the parties and that no modifications or amendments are binding unless they are in writing and signed by both parties.

22. Limitation of Liability. Limit your liability to the extent legally possible. You cannot completely eliminate or avoid liability, but you may be able to limit the amount an unsatisfied client can claim to a reasonable amount, such as the amount that the client has paid under the contract plus attorneys' fees. The contract should specifically prevent recovery for consequential damages. Include your employees and subcontractors under the limitation of liability clause to reduce their exposure as well.

Important Things to Remember!

I. Read and understand what you're signing.

Both parties should review the contract with a legal advisor and ask for explanations of any clauses that are not completely clear. Whether you're the client or the consultant, you should not sign anything unless you fully understand what you're signing.

II. Spread out the payments.

If the contract is for a lengthy project, don't agree to wait until the end of the contract term to get paid. Split the payments up over the duration of the contract.

III. Avoid overly restrictive non-compete provisions.

If a non-competition provision is included, you must ensure that it does not unfairly restrict the consultant's ability to earn a living in his/her field of expertise. This can result in the provisions being struck down in the courts. For instance, in California courts non-competition provisions are very likely to be deemed invalid. And in most other jurisdictions the more restrictive the provision is, the more likely a court will strike it.

IV. Be careful of the wording of the ownership clauses.

The ownership provision should be worded so that it does not give the client title to ALL work performed by the consultant during the term of the contract. This could be interpreted by a court as giving the client title to work performed for other clients. You should get legal advice on this subject to ensure that (i) your rights are protected and (ii) other parties' rights are not infringed upon.

V. Renegotiate any prohibition about assigning the contract.

You should be wary of provisions that unreasonably restrict the consultant from assigning their interest in the contract or from subcontracting any of the work. Renegotiate this with the customer before finalizing to allow for assignment with consent, which should not be unreasonably withheld.

Conclusion

Almost any contract - even a "standard" form contract - is negotiable. If you're signing someone else's standard contract and any condition or provision of that contract makes you nervous or uncomfortable, it's your responsibility to bring it up. Don't sign anything until you're satisfied with it. Review it with your lawyer, who can then assist you in negotiating a more favorable arrangement.

_{Image by Aymane Jdidi from Pixabay}

A parental consent letter, stating that the adult in charge has the parent's or guardian's permission to travel with the child and authorizing him/her to make decisions on behalf of that child, is now essential - especially if traveling out of the child's country of residence. It should be signed by every person who has custodial rights over the child.

Samuel Goldwyn once said, "An oral contract isn't worth the paper it's written on." Sam had a point - it's often very hard to establish with 100% accuracy whether a contract actually exists, let alone what the terms of the contract are, with no written point of reference. And if you can't prove you have a contract, how can you enforce it?

How do you prove an oral contract exists?

If both parties admit, firstly, that there is a contractual relationship between them and secondly, what the terms are that were agreed upon, then an oral (or verbal) contract can be established and enforced to the extent that those terms can be verified. This of course presupposes that the parties are giving accurate and truthful representations about the agreed-upon terms.

If there were any other persons who were present at the time the contract was struck (such as employees or family members), those persons can act as witnesses to verify the existence of the relationship. Even if there is no signed contract between the parties, there is very often other documentation to support the existence of the contract, such as correspondence (letters or emails), notes, supplementary agreements or even draft contracts which were never signed.

The course of conduct between the parties can also help to establish that there is a contractual agreement. If the parties have acted in a certain manner which supports the assertion of a contract (for example, services were provided by one party to the other in exchange for payment), that is also evidence that a contract exists.

If I can prove the oral contract exists, is it now fully enforceable?

To be legally enforceable any agreement (whether oral or written) must meet certain requirements. It must contain essential contractual terms; those terms must be sufficiently certain to allow for enforcement; and no essential terms may be left on the table for future agreement.

Different countries approach the subject differently. For instance, in Canada a verbal contract is enforceable if you can prove the existence of a contract and its terms. Under US law, an oral contract is enforceable unless its subject matter falls within the statute of frauds, which requires certain contracts to be in writing. The Uniform Commercial Code governs the enforceability of oral contracts in any purchase and sale agreement involving a commercial merchant. British law allows for binding and legally enforceable oral contracts, except in certain circumstances. In all 3 countries, a written agreement is required in transactions involving the purchase, sale and mortgaging of real estate, personal guarantees, and transfers of securities (although there are some exceptions to this rule).

Whether or not the law requires it, it is always prudent to put your agreement in writing. A written contract provides clarity, confirms that the parties have the same understanding of the relationship, establishes the rights and obligations of the parties, and provides protection and security in the event of a default or dispute. It can even reduce the potential for legal claims, because it provides a clear reference point as to how the parties have agreed to act and cooperate throughout the performance of the contract and reduces the potential for misunderstanding and miscommunication.

Image by Andreas Volz from Pixabay

We are often contacted by customers who want to know how they can file a lien on someone's house or vehicle. Many people have the idea that if someone owes them money for any reason, they have the right to place a lien on the debtor's property. Often the answer is no. First you need to understand what a lien is, how lien rights are created, and whether or not you have the right to file that lien.