A breach-only clause covers material model incidents | AIGP
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A breach-only clause covers material model incidents: Which prior assumption no longer holds?

AIGP Understanding How to Govern AI Deployment and Use Hard

A breach-only clause does not cover suspected material model-performance incidents.

The question

A manufacturer’s vendor model flags defective components. The supplier’s contract requires notification of confirmed breaches but says nothing about suspected model failures. A software update causes a sudden increase in false defect flags, and production managers need prompt investigation while responsibility remains unclear. Which prior assumption no longer holds?

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  1. Internal escalation can begin before supplier notification.
    The manufacturer can begin internal investigation even if the supplier’s breach-notification trigger is not met.
  2. Post-update performance evidence can be requested.
    Requesting evidence after an update remains a reasonable governance action and does not depend on the breach clause.
  3. Outputs remain useful for quality investigations.
    The outputs may still support investigation; the incident instead exposes a gap in notification and response coverage.
  4. A breach-only clause covers material model incidents. ✓
    The contract addresses confirmed breaches, not suspected performance failures, so it cannot be assumed to support timely notification and investigation of this event.
The trap
Compare the actual event with the contract’s trigger; model incidents and security breaches are not interchangeable categories.

How to remember it

A breach-only clause does not cover suspected material model-performance incidents.

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