Proof of Concept Agreement: What In-House Counsel Should Check

A proof of concept agreement (POC agreement) sets the terms for testing a product, service, or integration before committing to a broader purchase. It should define what the parties will test, how they will judge success, and what happens to fees, data, and access when the test ends.

In-house counsel can use GC AI to review those terms against company policy and prepare a negotiation list. Our Playbooks feature applies your team's approved positions, and Exact Quote opens the cited language for you to check before accepting a provision or proposing a change.

GC AI is an enterprise legal AI platform built for in-house lawyers, trusted by over 2,200 legal teams as of October 2026, including Lockheed Martin, TIME, Wayfair, Columbia Sportswear, and Riot Games.

What to Check in a POC Agreement

• What the POC will test and how success will be judged: Name the product or service, permitted users, inputs, outputs, test conditions, measurement method, and who signs off on the result.
• Term and conversion: Set the start and end dates, any extension or wind-down period, and whether anything happens automatically when the test ends.
• Data, IP, privacy, and security: Define ownership, licenses, permitted data use, training or product-improvement rights, safeguards, retention, and deletion.
• Fees and commercial terms: State whether the POC is paid or no-cost, whether fees credit toward a later purchase, and how an order form or master agreement fits with the POC agreement.
• Confidentiality: Confirm whether an NDA or other agreement applies and what information, use restrictions, disclosures, and survival terms govern the test.
• Termination and exit: State who can end the POC, what notice is required, what happens to access and data, and which obligations survive.

POC Agreement vs. Pilot Agreement: What's the Difference?

Organizations use these labels inconsistently, so the title alone does not tell counsel what the document does. A POC often emphasizes whether a product can solve a defined problem; a pilot may test how the product works in a more operational setting.

The same evaluation may also be called a proof of value, evaluation, or trial. One agreement may govern an early feasibility test, a later pilot, or both. Read the actual obligations, identify what stage the business is testing, and confirm which document governs that stage.

Define What the POC Will Test and How Success Will Be Judged

The POC agreement should define the test: the product or service, permitted users, environment, documents or data, enabled features, requested work product, and any excluded uses. Success criteria define how the parties will decide whether the test worked. Put both in the agreement or an attached schedule, with measurable thresholds, a measurement method, a defined review window, and a person on each side responsible for sign-off.

Unclear test terms or success criteria can turn the end of the POC test into a disagreement about what was promised. The vendor may point to a functioning product while the customer points to a business requirement the test never measured. A written test plan gives both sides the same reference point.

Set the POC Term and Decide What Happens at the End

A POC should use a defined term that is long enough to test the agreed criteria and short enough to avoid an open-ended evaluation. State when the test begins and ends, whether the parties can extend it, and what happens when time runs out.

The POC agreement should also address any wind-down period so the parties know when access, services, and post-POC obligations change.

In a pilot exhibit Comstock Mining filed with the SEC, the agreement continued site access for “thirty (30) days after the expiration of the Pilot Period” (Exhibit 10.1 to an 8-K, June 2019). That explicit post-test period tells both sides when access ends.

State whether the POC simply expires, can be extended by written agreement, or converts only after an affirmative purchase decision. Flag any automatic conversion or renewal mechanism, make the commercial consequences and cancellation mechanics clear, and check the rules that apply to the transaction, customer type, and governing jurisdiction.

Define Data, IP, Privacy, and Security Rules

The POC agreement should define what each side owned before the test, what each side may use during it, who owns or may use configurations, integrations, prompts, outputs, feedback, or other work created during the POC, and what happens to that material afterward. If the vendor may use data for model training, product improvement, analytics, or another secondary purpose, state that expressly and define the limits.

For a POC involving confidential, regulated, or personal data, map the data flow and identify the privacy and security documents that apply. GC AI's intellectual property clause examples and data protection clause examples show the kinds of ownership, license, and processing terms counsel should inspect.

Set Fees and Other Commercial Terms

State whether the POC is paid or no-cost, and make clear which payment obligations apply if the test fails.

For a paid POC, state the amount, payment timing, expenses or taxes, whether fees are refundable, and whether any amount credits toward a later subscription or services agreement. If payment depends on milestones or success criteria, define those triggers precisely.

If pricing sits in an order form or another document, review that document and confirm how it interacts with the POC agreement and any master services agreement. If several documents apply, check the order of precedence rather than assuming one controls because of its title.

For a no-cost POC, check any liability cap tied to fees paid: the formula could produce a zero-dollar cap. Assess that result against the data and systems involved, and negotiate an appropriate cap and exceptions.

Define Confidentiality, Termination, and Exit

Confirm whether an existing NDA or master agreement governs confidentiality. If not, define the protected information, permitted use and disclosure, exclusions, required safeguards, and the survival period after the POC ends. GC AI's confidentiality clause examples show common structures to review.

Define who can terminate the POC and how much notice they must give. For both expiration and termination, specify when access ends, who returns or deletes data, how each side handles confidential materials, and how the parties settle unpaid fees or credits. Confirm which obligations survive and whether either side has committed to a broader purchase.

A Proof of Concept Agreement Checklist You Can Use

These six illustrative provisions give counsel a starting point for drafting. Adapt the defined terms, dates, and remedies to the POC, the other governing documents, applicable law, and your company's approved positions.

• Define the test and success criteria with named inputs, permitted users, requested outputs, metrics, a measurement window, and a sign-off owner on each side. Model language: “The POC covers the use cases and inputs listed in Schedule A and succeeds if the Product meets the criteria in that Schedule during the Measurement Period, as the Customer Representative confirms in writing.”
• Fix a start date, an end date, and any wind-down period. Model language: “The POC Period begins on the Effective Date and ends 60 days later. Access ends 10 days after the POC Period unless the parties agree otherwise in writing.”
• Require an affirmative election to convert if that is the customer's position. Model language: “This Agreement expires at the end of the POC Period. The Customer has no obligation to purchase, and no additional fees accrue unless the parties execute an Order Form.”
• Keep ownership and license rights explicit. Model language: “The Customer retains all right, title, and interest in Customer Data and grants the Vendor a nonexclusive license to use it solely to perform the POC. The Vendor will not use Customer Data for model training or another purpose not stated in this Agreement and will delete it within 30 days after the POC Period ends, except as the Agreement or applicable law permits.”
• State the price, or state that there is none, and say whether any fee credits forward. Model language: “The POC Fee is $[amount], payable on the Effective Date and creditable against the first-year subscription fee if the parties execute an Order Form within 30 days after the POC Period.”
• Define confidentiality and termination consequences. Model language: “Either party may terminate this Agreement on 10 days' written notice. On termination, each party will return or destroy the other party's Confidential Information as required by this Agreement, and Sections [X] survive for [two] years.”

These six terms are not exhaustive. Depending on the POC, counsel may also need to address liability limits, warranties and disclaimers, security obligations, indemnity, governing law, regulatory requirements, insurance, or other terms that matter to the product and data involved.

How GC AI Helps Review a POC Agreement

Start with the proposed POC agreement and every document it incorporates, including the order form, MSA, and any data-processing terms. Ask the business owner to confirm the test's purpose, approved inputs, deadline, and budget. Those instructions give counsel a basis for deciding which terms to accept and which need negotiation.

Assign a lawyer to supply and maintain the company's approved positions, such as requiring a signed order form before conversion or restricting the vendor's use of company data.

Use our Playbooks to apply those positions consistently. Ask the business owner to explain any requested exception, and identify who can approve it under company policy.

Run the agreement against the Playbook and use Exact Quote to inspect the cited provisions in context. For example, if the POC calls for a separate purchase decision but the attached order form starts a paid subscription automatically, counsel should reconcile the documents and propose consistent conversion language.

GC AI can also help draft language when the review identifies a missing provision.

Tiffany Lee, General Counsel and Corporate Secretary at Liquid Death, describes how she handles a missing confidentiality clause:

If it sees a missing confidentiality clause, I'll just ask it to draft one I can drop right into the agreement

For a POC agreement, counsel should check the proposed clause against any existing NDA and confirm that its permitted uses, disclosures, and survival terms cover the test.

Finish with a negotiation list or approval note that identifies the issue, proposed position, decision owner, and any outstanding document. If an incorporated order form is missing, ask the business owner to obtain it and keep the conversion recommendation open until counsel reviews it.

How to Run a POC That Supports a Buying Decision

Once the parties agree on the contract, use its success criteria to run and evaluate the test.

1. Choose representative work: Use authorized or synthetic inputs that resemble the work the product will handle.
2. Include a meaningful edge case: For contract review, that might be an amendment that changes the operative term or an incomplete document set that should remain unresolved.
3. Define the expected output before the test: Decide whether the team needs an issue list, cited findings, a draft, a redline, an extracted field set, or another work product.
4. Measure the quality of the result and the human work required: Track missed issues, incorrect findings, unsupported conclusions, source or citation errors, unresolved evidence, setup time, review time, and correction burden.
5. Make the buying decision against the agreed criteria: Counsel verifies the result, records open questions, and tells the business whether the POC met the legal and operational requirements that mattered at the start.

For an illustrative legal-AI POC, use a standard SaaS agreement, an amended agreement, and one deliberately incomplete file set. When comparing platforms, give each the same documents, company positions, and instructions for a cited issue list and proposed redlines. Require the output to identify the operative amendment, flag the missing document, and leave conclusions that depend on it unresolved. Measure review time through counsel's source checks and corrections.

Include the lawyers who will use the product in the evaluation and record whether they can verify, correct, and use its output. Name who will administer access, maintain company guidance, and train users. Give the buying owner the reviewed results and remaining limitations, alongside subscription charges, implementation costs, and the staff time needed for setup, maintenance, and review. For a first-year cost model, see legal AI pricing for in-house teams.

Review a POC Agreement With GC AI

Upload the POC agreement, apply your organization's approved positions with Playbooks, and use Exact Quote to inspect the contract language behind each flagged issue. GC AI can help you organize the review and draft language that needs attention; counsel stays in control of the final redline, escalation, approval, and buying recommendation.