Global Legal Framework and Strategic Governance Report for SARKIS AI

1. Executive Intelligence Brief: The AI Agency Legal Landscape

The emerging operational paradigm for Artificial Intelligence (AI) agencies represents a profound shift from traditional software development or professional services models. Entities like SARKIS AI do not merely license static code or provide human consultation; they orchestrate probabilistic systems, manage fleeting intellectual property (IP) rights across complex supply chains, and navigate a regulatory environment that is actively hostile to non-deterministic outputs. This report establishes the "Ultimate" Terms of Service (ToS) and Privacy Policy for SARKIS AI, derived from a rigorous forensic analysis of industry incumbents such as Markovate, Zapier, Jasper.ai, and Make.com.

The distinction between an "AI Agency" and a "SaaS Platform" is increasingly porous. Agencies like Markovate deploy custom machine learning solutions, while platforms like Make.com provide the infrastructure for automation. SARKIS AI, positioned as a global hybrid, faces a unique "double-exposure" risk profile. It must contractually insulate itself from the "hallucinations" of the underlying models it employs (e.g., OpenAI, Anthropic) while satisfying enterprise clients who demand deterministic guarantees regarding data privacy and IP ownership.  

Our analysis reveals that the "Ultimate" legal framework must transcend standard liability waivers. It must actively engineer legal defenses against specific AI failure modes: model drift, prompt injection attacks, and copyright infringement via generative output. Furthermore, as a global entity, SARKIS AI must navigate the "Brussels Effect," where the European Union's GDPR and AI Act set the de facto global standard, forcing compliance even for entities based in permissive jurisdictions.

1.1 The "Hallucination" Liability Vacuum

A defining characteristic of generative AI is its stochastic nature. Unlike deterministic software where Input A always equals Output B, Large Language Models (LLMs) operate on statistical likelihood, occasionally producing "hallucinations"—outputs that are syntactically confident but factually entirely fabricated. The term "hallucination," while anthropomorphic, describes the phenomenon where a model generates false information based on source-reference divergence or training data gaps.  

In the context of SARKIS AI, this presents a critical liability vector. If SARKIS AI automates a legal compliance workflow for a client, and the AI "hallucinates" a non-existent regulation (a scenario observed in legal tech ), the client may face fines. Traditional "fitness for purpose" warranties are insufficient here. Industry leaders like Jasper.ai have responded by explicitly shifting the burden of verification to the user, stating that customers must scrutinize the veracity of all output and use it at their own risk. Similarly, Kaptize.ai includes a specific "No Guarantee of Results" clause, disclaiming reliability entirely. SARKIS AI must adopt this aggressive disclaimer strategy, bifurcating its warranty: guaranteeing platform availability (uptime) while expressly disclaiming output accuracy.  

1.2 The Intellectual Property Paradox: Prompts, Weights, and Outputs

The ownership of AI-generated assets is a legal minefield. The value chain involves three distinct IP layers:

Input Data (Prompts): The instructions provided by the client.

The Engine (Model/Weights): The processing infrastructure, often owned by third parties or fine-tuned by the agency.

Output Data: The generated text, code, or images.

Agencies like LandingAI have pioneered a "separated rights" model, where the agency retains ownership of the "Background IP" (the tools, algorithms, and pre-trained models) but grants the customer a license to use "Fine-Tuned Models" developed during the engagement. Conversely, Ainna.ai explicitly prohibits clients from extracting the agency's "Methodology" or templates, treating the process of generation as a trade secret even if the output belongs to the client.  

For SARKIS AI, the "Ultimate" Terms must prevent "Prompt Leakage"—the scenario where a client takes the sophisticated prompt engineering developed by SARKIS AI and moves it to a cheaper competitor. The Terms must classify SARKIS AI's prompt chains and workflow architectures as "Background IP," ensuring client retention while granting ownership of the final deliverables.

1.3 Regulatory Convergence: The "Global" Compliance Stack

Operating globally requires SARKIS AI to synthesize conflicting data regimes. The European Union's GDPR imposes strict constraints on data processors, specifically regarding international transfers and "Automated Decision Making" (ADM). Canada's PIPEDA adds layers regarding "comparable protection" for cross-border flows. Simultaneously, the US market is fragmented with state-level acts like the CCPA/CPRA, which demand specific "Do Not Sell/Share" opt-outs.  

A critical finding from the research is the necessity of Standard Contractual Clauses (SCCs) and Transfer Impact Assessments (TIAs). Following the Schrems II ruling, transferring EU citizen data to the US or other jurisdictions requires a documented assessment of the destination country's surveillance laws. SARKIS AI cannot merely rely on "Safe Harbor" frameworks (which are often invalidated) but must embed these SCCs directly into its Data Processing Agreements (DPAs) to ensure commercial viability with EU enterprise clients.  

2. Strategic Clause Architecture for SARKIS AI

Before presenting the full text, we analyze the strategic necessity of specific clauses based on the research snippets. This section justifies why the Terms of Service are drafted as they are.

2.1 The "Human-in-the-Loop" (HITL) Defense

Legal liability for AI errors often hinges on whether the system was "fully autonomous" or "human-assisted." Zapier's Acceptable Use Policy and Creatio's glossary highlight the trend of mandating HITL for high-stakes workflows. If SARKIS AI allows users to automate financial transfers or medical triage without human review, it invites negligence claims.  

Strategic Decision: The Terms of Service will include a mandatory HITL clause for "High-Risk Activities." This shifts liability. If a client automates a firing decision using SARKIS AI and fails to review it, the breach of contract lies with the client for failing to implement the required human oversight, insulating SARKIS AI.

2.2 The "Proof of Concept" (PoC) Refund Shield

AI development is experimental. Agencies often engage in "Discovery" or "PoC" phases. A common dispute arises when a PoC fails not because of the agency's lack of effort, but because the underlying AI model (e.g., GPT-4) simply cannot perform the reasoning task required.  

Strategic Decision: The Payment terms will explicitly classify PoC fees as non-refundable "Research & Development" costs. We will incorporate a "No Guarantee of Feasibility" clause, protecting SARKIS AI from refund demands when the technology itself hits a ceiling.  

2.3 The "Anti-Surveillance" Acceptable Use Policy

Aligning with the forthcoming EU AI Act, SARKIS AI must proactively prohibit "unacceptable risk" AI practices. Competitors like Decart.ai and Zapier explicitly ban "biometric identification," "social scoring," and "deepfakes."  

Strategic Decision: The AUP will be a standalone, enforceable document referenced in the ToS. It will strictly prohibit non-consensual synthetic media (deepfakes) and mass surveillance. This is not just ethical signaling; it is a defensive maneuver to prevent SARKIS AI's infrastructure from being blacklisted by upstream providers (like OpenAI) or regulated out of existence by EU authorities.

3. The Ultimate Terms of Service for SARKIS AI

Document Version: 1.0 Effective Date: December 5, 2025

IMPORTANT NOTICE: BINDING ARBITRATION AND CLASS ACTION WAIVER

PLEASE READ THESE TERMS CAREFULLY. SECTION 14 CONTAINS A BINDING ARBITRATION AGREEMENT AND A CLASS ACTION WAIVER THAT AFFECT YOUR LEGAL RIGHTS. BY ACCEPTING THESE TERMS, YOU AGREE TO RESOLVE DISPUTES THROUGH INDIVIDUAL ARBITRATION RATHER THAN IN COURT.

1. Preamble and Acceptance

These Terms of Service ("Terms") constitute a binding legal agreement between SARKIS AI Global Ltd. ("SARKIS AI," "Company," "we," or "us"), a corporation organized under the laws of, and the individual or entity accessing or using our services ("Customer," "Client," or "you").

By accessing the SARKIS AI website, utilizing our automation platforms, integrating our APIs, or engaging us for agency services (collectively, the "Services"), you signify your irrevocable acceptance of these Terms. If you are entering into these Terms on behalf of a company or other legal entity, you represent that you have the authority to bind such entity to these Terms.

2. Definitions and Interpretation

To ensure precise allocation of intellectual property rights and liability, the following definitions apply:

2.1 "AI Agents" means the autonomous or semi-autonomous software workflows, bots, or scripts designed, deployed, or managed by SARKIS AI that utilize machine learning algorithms to execute defined tasks. 2.2 "Background IP" means all Intellectual Property owned or licensed by SARKIS AI prior to the Effective Date, including but not limited to our proprietary prompt engineering techniques, "Methodology" , workflow architectures, automation libraries, code snippets, and standard operating procedures. 2.3 "Customer Input" means any data, text, files, images, or other materials provided by the Customer to SARKIS AI for processing, including specific prompts, constraints, or context data entered into the Services. 2.4 "Generated Output" means the final text, code, images, data, or other materials resulting from the processing of Customer Input by the Services. 2.5 "Fine-Tuned Model" means a machine learning model that has undergone a fine-tuning process using Customer Input to adapt its weights, parameters, or behaviors for specific tasks. 2.6 "Third-Party Models" means foundational Artificial Intelligence models (including but not limited to GPT-4, Claude, Llama, Stable Diffusion) provided by external vendors (e.g., OpenAI, Anthropic, Google) which SARKIS AI integrates into the Services.  

3. Scope of Services and Agency Engagement

3.1 Service Models. SARKIS AI provides Services under two primary models:

(a) Platform Subscription: Access to our self-service automation tools and pre-built AI Agents ("SaaS Services").

(b) Agency Services: Custom development, consulting, and implementation of bespoke AI solutions as described in a Statement of Work ("SOW").

3.2 Third-Party Dependencies. You acknowledge that the Services rely heavily on Third-Party Models and integrations (e.g., Zapier, Make, OpenAI). SARKIS AI does not control these third parties. We are not liable for service interruptions, model deprecations, API rate limits, or changes in the terms of service of these third-party providers. If a Third-Party Model provider (e.g., OpenAI) degrades their model performance ("Model Drift"), SARKIS AI will use commercially reasonable efforts to mitigate the impact but does not guarantee restoration of previous performance levels.  

3.3 Human-in-the-Loop (HITL) Requirement. For "High-Risk Use Cases," you agree to implement a mandatory Human-in-the-Loop review process. High-Risk Use Cases include, but are not limited to: (i) automated financial transactions >$100; (ii) medical or health-related advice; (iii) employment or hiring decisions; and (iv) automated legal filings. SARKIS AI disclaims all liability for damages arising from High-Risk Use Cases executed without human review.  

4. Intellectual Property Rights

4.1 Ownership of Customer Input. You retain all right, title, and interest in and to your Customer Input. You hereby grant SARKIS AI a worldwide, non-exclusive, royalty-free, fully paid-up license to access, use, process, copy, and display Customer Input solely to: (i) provide the Services; (ii) debug and troubleshoot the Services; and (iii) comply with applicable law.

4.2 Ownership of Generated Output. Subject to your full payment of all applicable Fees, SARKIS AI hereby assigns to you all its right, title, and interest in and to the Generated Output. You acknowledge that:

(a) Generated Output is probabilistic and may not be unique to you (other users may receive similar outputs from similar prompts).  

(b) Copyright protection for AI-generated works is a developing area of law. SARKIS AI makes no representation regarding the copyrightability of Generated Output in your jurisdiction.  

4.3 SARKIS AI Background IP. SARKIS AI retains all ownership of the SARKIS Background IP. This Agreement does not grant you any right to source code, model weights, or proprietary prompt chains used to generate the output, except as strictly necessary to use the Generated Output. You may not reverse engineer, decompile, or extract the SARKIS Methodology (e.g., "prompt injection" to reveal system instructions) for the purpose of building a competing service.  

4.4 Fine-Tuned Models.

(a) Client-Owned Adapters: Unless otherwise stated in an SOW, if SARKIS AI creates a Fine-Tuned Model specifically for you using only your Customer Input, you shall own the specific "adapter" or "weights" resulting from that fine-tuning, subject to the license terms of the base Third-Party Model.

(b) Agency Retention: SARKIS AI retains ownership of the base model and any general improvements to its fine-tuning methodologies derived from the engagement, provided such improvements do not incorporate your Confidential Information.

4.5 No Training on Data. SARKIS AI will not use Customer Input to train its foundational models for the benefit of other customers without your explicit written consent. We utilize strict data segregation protocols (e.g., single-tenant environments or logical isolation) to ensure your data remains isolated.  

5. Acceptable Use Policy (AUP)

You agree not to use the Services for any purpose prohibited by this Section 5. A violation of this AUP constitutes a material breach allowing for immediate termination.

5.1 Prohibited AI Use Cases. You may not use the Services to:

(a) Deepfakes & Impersonation: Generate audio, video, or images that deceptively impersonate a real person (living or deceased) without their verifiable written consent, or create synthetic media intended to mislead the public regarding political events or public safety.  

(b) Unlawful Surveillance: Conduct real-time biometric identification, facial recognition, or "social scoring" of individuals in public or private spaces.  

(c) Discriminatory Automation: Build workflows that discriminate against individuals based on race, gender, religion, disability, or sexual orientation, particularly in housing, employment, or credit decisions.

(d) Malware Generation: Generate executable code intended to disrupt, damage, or gain unauthorized access to computer systems.

5.2 Content Moderation. SARKIS AI reserves the right (but has no obligation) to monitor Customer Input and Generated Output for violations of this AUP using automated classifiers. We may block prompts or suspend accounts that trigger our safety filters.  

6. Fees, Payment, and Refunds

6.1 Fees. Fees are specified in the applicable Order Form or Checkout Page. All payment obligations are non-cancelable, and fees paid are non-refundable, except as expressly provided in this Agreement.

6.2 Pilot Programs and Proof of Concept (PoC).

(a) Nature of PoC: You acknowledge that PoC engagements are experimental. The feasibility of an AI solution may not be known until the project is underway.

(b) Non-Refundable: Fees for PoC and "Discovery" phases are strictly non-refundable once the project kickoff has occurred, regardless of whether the final AI solution achieves the desired performance metrics. This reflects the "Best Efforts" nature of researching novel AI applications.  

6.3 Late Payments. Late payments shall accrue interest at the rate of 1.5% per month or the maximum rate permitted by law, whichever is lower.

7. Warranties and Disclaimers

7.1 Limited Platform Warranty. SARKIS AI warrants that the SaaS Services will perform materially in accordance with the Documentation. Your sole remedy for breach of this warranty is the re-performance of the deficient Services or a pro-rata refund of fees for the downtime period.

7.2 NO WARRANTY OF ACCURACY ("AI HALLUCINATIONS"). YOU ACKNOWLEDGE THAT ARTIFICIAL INTELLIGENCE SYSTEMS ARE STOCHASTIC AND PROBABILISTIC. THEY MAY GENERATE OUTPUT THAT IS INACCURATE, FACTUALLY INCORRECT, OFFENSIVE, HARMFUL, OR BIASED ("AI ERRORS"). SARKIS AI DOES NOT WARRANT THAT THE GENERATED OUTPUT WILL BE ACCURATE, COMPLETE, RELIABLE, OR FIT FOR ANY PARTICULAR PURPOSE (INCLUDING LEGAL, MEDICAL, OR FINANCIAL ADVICE). YOU AGREE TO INDEPENDENTLY VERIFY AND FACT-CHECK ALL GENERATED OUTPUT BEFORE RELYING ON IT, ACTING UPON IT, OR PUBLISHING IT. YOU ASSUME ALL RISKS ASSOCIATED WITH YOUR USE OF THE GENERATED OUTPUT.  

7.3 "As Is" Disclaimer. EXCEPT AS EXPRESSLY PROVIDED HEREIN, THE SERVICES ARE PROVIDED "AS IS" AND "AS AVAILABLE." SARKIS AI DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING MERCHANTABILITY, TITLE, NON-INFRINGEMENT, AND FITNESS FOR A PARTICULAR PURPOSE.  

8. Indemnification

8.1 By SARKIS AI. We will indemnify, defend, and hold you harmless against claims, actions, or proceedings brought by a third party alleging that the SARKIS AI proprietary platform code (excluding Third-Party Models, Customer Input, and Generated Output) infringes a third party’s valid U.S. or EU copyright.

Limitation: We have no obligation to indemnify you if the infringement arises from (i) your Customer Input; (ii) the underlying Third-Party Model (e.g., a claim that GPT-4 itself infringes copyright); or (iii) your use of the Services in violation of the AUP.

8.2 By Customer. You will indemnify, defend, and hold SARKIS AI, its officers, directors, and affiliates harmless against any claims, damages, liabilities, and expenses (including reasonable attorneys' fees) arising from:

(a) Your violation of the AUP (e.g., creating deepfakes or spam);

(b) Your Customer Input infringing the rights of a third party;

(c) Your use of Generated Output without the required Human-in-the-Loop verification ;  

(d) Any professional advice (legal, medical, financial) you provide to third parties based on the Generated Output.

9. Limitation of Liability

9.1 Exclusion of Consequential Damages. TO THE MAXIMUM EXTENT PERMITTED BY LAW, IN NO EVENT SHALL SARKIS AI BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES, INCLUDING LOSS OF REVENUE, PROFITS, DATA, OR BUSINESS INTERRUPTION, OR DAMAGES RESULTING FROM "MODEL DRIFT" OR AI HALLUCINATIONS, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.  

9.2 Liability Cap. SARKIS AI’S TOTAL AGGREGATE LIABILITY ARISING OUT OF OR RELATED TO THIS AGREEMENT, WHETHER IN CONTRACT, TORT, OR OTHERWISE, SHALL NOT EXCEED THE TOTAL AMOUNT PAID BY YOU TO SARKIS AI IN THE TWELVE (12) MONTHS PRECEDING THE EVENT GIVING RISE TO THE CLAIM.

10. Confidentiality

10.1 Definition. "Confidential Information" means non-public information disclosed by one party to the other that is designated as confidential or should reasonably be understood to be confidential. This includes Customer Input (where not public), SARKIS Methodology, and pricing terms.

10.2 Obligations. Each party agrees to protect the other’s Confidential Information with the same degree of care it uses to protect its own, but no less than reasonable care. 10.3 AI Exception. SARKIS AI shall ensure that Customer Confidential Information is not accessed by Third-Party Model providers for the purpose of training their general foundation models, provided that Customer utilizes the "Enterprise" or "Private" endpoints where such assurances are technically supported by the vendor.  

11. Term and Termination

11.1 Term. The term of this Agreement commences on the Effective Date and continues until all Order Forms have expired or been terminated.

11.2 Termination for Cause. Either party may terminate if the other party materially breaches these Terms and fails to cure such breach within thirty (30) days of written notice.

11.3 Effect of Termination. Upon termination, your right to use the Services ceases immediately. SARKIS AI will make your Customer Data available for export for a period of thirty (30) days, after which it will be deleted, subject to statutory retention requirements.

12. Dispute Resolution and Arbitration

12.1 Governing Law. These Terms shall be governed by the laws of the State of Delaware (for US/Global users) or the laws of Ontario, Canada (for Canadian users), without regard to conflict of law principles.

12.2 Binding Arbitration. Any dispute arising out of or relating to this Agreement, including the breach, termination, or validity thereof, shall be finally resolved by binding arbitration administered by the American Arbitration Association (AAA) under its Commercial Arbitration Rules. The number of arbitrators shall be one. The seat of arbitration shall be Wilmington, Delaware.

12.3 Class Action Waiver. YOU AND SARKIS AI AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER ONLY IN YOUR OR ITS INDIVIDUAL CAPACITY AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING.  

13. General Provisions

13.1 Force Majeure. SARKIS AI is not liable for delays or failures caused by events beyond its reasonable control, including acts of God, denial-of-service attacks, failure of Third-Party Models (e.g., OpenAI outage), or government regulatory changes banning specific AI technologies.

13.2 Entire Agreement. These Terms constitute the entire agreement between the parties regarding the subject matter and supersede all prior agreements.

13.3 Severability. If any provision of these Terms is held to be invalid, the remaining provisions shall remain in full force and effect.