AI GOVERNANCE

Vibe-Coded Your Product? Tool Terms, Licenses and Investor Questions

By Nadine Deeb, Esq. · Published October 5, 2026 · 5 min read

Picture a hypothetical founder who built a product by prompting an AI tool on a personal account. Then suppose a diligence request asks which tools were used, on whose terms, and what records exist.

Quick Answer

Vibe coding is a term commonly used for building software mainly by prompting an AI tool and accepting what it generates. It raises three questions: whose terms govern the tool, whether generated code can bring open-source license conditions, and what records you can show an investor or buyer. The sections below take each, then customer contracts and a checklist.

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Five things to consider first

Items to consider, not a template; what fits depends on your company.

A list of each AI coding tool, its account owner, plan and dated terms.
A written, dated AI-use policy.
A check for signed assignments and any contractor AI-use disclosure requirements.
A license scan and human review of AI-assisted code before merge.
One dated file holding these records.

What does "vibe coding" mean, and which legal questions does it raise?

"Vibe coding" is informal shorthand: you describe what you want, the tool writes the code, and you accept what it generates. For a company, that raises three questions:

Whose terms apply, and who accepted them?
Can you tell whether generated code resembles open-source code?
What records could you show an investor or buyer?

Who owns generated code under copyright law is a separate question, discussed in Who Owns What Your Team Makes With AI?.

Which terms come with your AI coding tool, and who accepted them?

For every tool, ask:

Whose account, and who clicked "I agree"? A founder, an employee, or a contractor on a personal login?
Training and retention? On your plan, are prompts and code used for training, and how long are they kept? On confidential code, see Employee NDAs and AI Tools in 2026.
IP indemnity? Does the agreement that governs your subscription include a defense or indemnity for third-party IP claims? If it does, which claims does it cover, on what conditions, and with what exclusions?
License compliance? Does the agreement that governs your subscription address third-party code and licenses in generated output? If it does, what does it say about who must determine whether output requires a license, and who must comply?

Read the agreement that governs your own plan, not a summary of it. What do its output clauses say about rights in generated material? Is it the version currently in force?

Can AI-generated code bring someone else's open-source license with it?

Open-source code is published under licenses that allow use on conditions. Open-Source Licenses Are Hiding in Your Product explains them. Practical steps:

Scan AI-assisted commits for license matches.
Have a person review generated code before merge.
Check whether your tool has a setting that limits suggestions matching public code. A setting like that does not answer the license question by itself.
Record what was accepted, from which tool, and when.

This article takes no position on whether using any particular output infringes copyright or breaches a license. That depends on the facts.

What questions might investors and acquirers raise about AI-built code?

Our guides to technology M&A diligence and selling a tech company cover the general areas, and item 6 of our AI legal checklist discusses AI-related diligence questions. Questions of this kind, adapted to AI-assisted code:

Question to be ready for	What a clear answer rests on
Which AI tools, on whose accounts and plans?	A tool list with account owner, plan and terms in force
Is there a written AI-use policy, and since when?	The dated policy and who received it
Do open-source inventories and scans cover AI-assisted commits?	An SBOM and scan reports that cover the AI-assisted code
Are assignments signed, and do contractor agreements require AI-use disclosure?	Signed assignments of the rights the signer holds (chain of title: Do You Really Own Your Company's IP?) and the disclosure clause
Has any third-party notice or claim been received?	A dated log of notices and claims received
Was customer or confidential data entered into AI tools?	The applicable policy and, where available, a record of relevant tool use or disclosures

Diligence varies by deal; the right column lists records, not what any investor or buyer requires. The rows follow or adapt questions in our AI legal checklist, M&A guide and contractor article.

What does your customer contract promise about code you did not write by hand?

Check your MSAs and order forms for three things:

Ownership. Who does the contract say owns the software?
Non-infringement. Does it promise non-infringement? Our enterprise SaaS contracts guide discusses IP infringement indemnities in enterprise software agreements.
Open source. What does it say about open-source code?

Could the records above back each statement? For what an AI feature produces for customers, see Your Product Uses AI. What Your Customer Contract Must Say. These are questions to check, not advice to change any contract.

What should a small team put in place before the first diligence request?

Items to consider, not a template; what fits depends on the engagement.

Contractors

Signed present-assignment language covering the contractor's rights in AI-assisted work, to the extent the contractor holds those rights, plus a requirement to disclose the tools used (clause list: contractor article).

Tools and policy

An approved-tool list on company-owned accounts, with a dated copy of each tool's terms.
A written AI-use policy (what it should say) and employee agreements covering AI-assisted work and confidential information.
One dated file of tool terms, scan reports and signed assignments, with a named owner.

Need contracts or policies for how your team builds with AI? Learn more about our AI Governance services, or schedule a consultation with Accord & Shield Legal.

What else do founders ask about vibe-coded software?

Is vibe coding legal?

There is no single answer based solely on how the software was built. Relevant questions include the applicable tool terms, third-party code and licenses, rights obtained from contributors, confidentiality obligations, and customer-contract promises. The answer for a particular product depends on its facts and agreements.

Does your plan or agreement type change the terms?

It can. A provider may publish different terms for personal use, direct business purchases, or purchases through another provider. Check the agreement governing your actual subscription.

Should contractors be allowed to use AI coding tools?

Your contract can set rules on whether and how AI tools may be used, including disclosure, approval and confidentiality requirements. Whether a particular restriction makes sense depends on the engagement. Our contractor article lists terms to consider.

This article is provided for general informational purposes only and does not constitute legal advice. Reading this article or contacting Accord & Shield Legal does not create an attorney-client relationship. It does not address securities, tax, or litigation strategy. Several of the licensing and contract questions discussed above are fact-dependent and are identified as such rather than resolved. Laws and contract terms can change, and their application depends on specific facts and jurisdictions. Do not act or refrain from acting based on this article without obtaining advice from qualified counsel regarding your circumstances. This material may be considered attorney advertising in some jurisdictions. Past results do not guarantee future outcomes.