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Darrow AI Terms & Conditions: 4 Critical Legal Risks and How to Fix Them

Our analysis of Darrow AI's Terms & Conditions reveals 4 critical legal risks—including GDPR exposure, liability caps, and IP ambiguities—that could cost millions. See actionable redlines and solutions.

## When We Examined Darrow AI’s Legal Framework: 4 Costly Risks Uncovered

Imagine a scenario where a single ambiguous clause in your SaaS agreement triggers a GDPR investigation, exposing your company to fines of up to €20 million or 4% of global turnover. Our analysis of Darrow AI’s Terms & Conditions reveals four critical legal and logical risks that could result in significant financial and reputational damage if left unaddressed.

1. Overbroad License to Customer Data: GDPR & Confidentiality Exposure Darrow AI’s license to customer data is drafted in sweeping terms, granting irrevocable, perpetual, worldwide rights—including the right to create derivative works. This language risks violating GDPR’s data minimization and purpose limitation principles, and could undermine confidentiality obligations, exposing the company to regulatory fines and contractual claims.

Legal Analysis
critical Risk
Removed
Added
Customer hereby grants the Company and its Sub-processors (as defined below) an irrevocable, perpetual,a non-exclusive, limited, revocable, worldwide, royalty-free, fully paid, sub-licensable right and license to access, use, process, copy, download, store, distribute, create derivative works, and display thestore Customer Data, solely for the purposepurposes of providing and maintaining the Service, developing in compliance with applicable data protection laws (including training foundation modelsGDPR and providing the Service and as required to resolve technical and security problemsCCPA). Any use of Customer Data for model training or otherwise as permitted by these Terms or in writing byderivative works requires explicit, informed consent from Customer and must comply with all relevant privacy and confidentiality obligations.

Legal Explanation

The original clause is overly broad, potentially violating GDPR’s purpose limitation and data minimization requirements, and undermining confidentiality. The revision narrows the license, adds revocability, and requires explicit consent for high-risk uses, reducing regulatory and contractual exposure.

2. Unenforceable Liability Cap for Trial and Pre-Released Services The T&C impose a total aggregate liability cap of just $50 for trial and pre-released services, regardless of the nature of the breach. This is likely unconscionable under many consumer protection laws (e.g., UK Unfair Contract Terms Act, US state laws), and could be struck down in court—potentially exposing Darrow AI to uncapped damages and class actions.

Legal Analysis
high Risk
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IN NO EVENT SHALL THE TOTAL AGGREGATE LIABILITY OF COMPANYExcept where prohibited by applicable law, ITS AFFILIATES OR ITS THIRDin no event shall the total aggregate liability of Company, its affiliates, or its third-PARTY SERVICE PROVIDERSparty service providers under these Terms exceed the greater of: (a) the total fees paid by Customer for the Service during the twelve (12) months preceding the claim, UNDERor (b) $10, OR OTHERWISE IN CONNECTION WITH000. This limitation shall not apply to liability arising from willful misconduct, THESE TERMSgross negligence, EXCEED US $50data protection breaches, or indemnification obligations.

Legal Explanation

A $50 liability cap is likely unenforceable and unconscionable, especially for business-critical or regulated services. The revision aligns with industry standards and excludes categories of liability that cannot be limited by law, reducing the risk of the clause being invalidated in its entirety.

3. Ambiguous AI Output Disclaimer: Insufficient Limitation of Liability While Darrow AI disclaims responsibility for AI-generated output, the clause is vague and does not explicitly limit liability for consequential damages or clarify the allocation of risk. This ambiguity could result in multi-million dollar claims if AI output causes business losses or regulatory breaches (e.g., under the EU AI Act or US FTC rules).

Legal Analysis
high Risk
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Added
COMPANY SHALL NOT BE LIABLE FOR THE PERFORMANCE OF THETo the fullest extent permitted by law, Company disclaims all warranties regarding the AI FEATURES AND DOES NOT GUARANTY THE ACCURACY OR RELIABILITY OF ANY OUTPUT OF ANYFeatures and shall not be liable for any indirect, incidental, special, consequential, or punitive damages arising from the use or reliance on AI FEATURE-generated output. THE CUSTOMER IS RESPONSIBLE FOR EVALUATING THE RESULTS OF ITS USE OF THE AI FEATURESCustomer assumes all responsibility for evaluating and using such output, and Company’s liability for direct damages shall be limited as set forth in the liability section of these Terms.

Legal Explanation

The original disclaimer is vague and does not clearly allocate risk or limit consequential damages. The revision provides explicit limitation of liability language, reducing exposure to large claims for business interruption or regulatory fines.

4. Intellectual Property Assignment: Overreach and Unenforceability The feedback assignment clause purports to assign all right, title, and interest in any feedback—including related IP—"worldwide" and "irrevocably." However, such blanket assignments may be unenforceable in certain jurisdictions (e.g., Germany, California) and could trigger disputes over employee or contractor rights, leading to costly litigation or IP loss.

Legal Analysis
medium Risk
Removed
Added
Any such Feedback shall becomeTo the Company’s property and the Company may use any Feedback at its sole discretionextent permitted by applicable law, free from any right of the Customer or any third party and without any obligation towards Customer. Customer hereby assigns togrants Company all righta worldwide, titleroyalty-free, non-exclusive, irrevocable license to use, modify, and interest worldwide in theincorporate Feedback and anyinto the Service. Assignment of intellectual property rights related thereto,in Feedback shall be subject to applicable law and explicitly and irrevocably waives any and all claims associated therewithshall not override statutory rights of employees or contractors.

Legal Explanation

Blanket IP assignments may be unenforceable in certain jurisdictions and can trigger disputes over employee/contractor rights. The revision aligns with legal requirements and reduces the risk of costly IP litigation or invalid assignments.

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Conclusion: Proactive Legal Redlining Prevents Costly Surprises Our review of Darrow AI’s T&C highlights how a few overlooked clauses can expose even sophisticated SaaS providers to millions in regulatory fines, litigation costs, and lost IP. Proactive contract redlining—grounded in current legal standards—transforms risk into resilience.

  • Are your contracts exposing you to hidden regulatory or financial risks?
  • How often do you review your T&C for enforceability and compliance?
  • What would a single overlooked clause cost your business?

This analysis is for educational purposes only and does not constitute legal advice. For actual legal guidance, consult with a licensed attorney. This assessment is based on publicly available information and professional legal analysis. See erayaha.ai’s terms of service for liability limitations.