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This dissertation was written as part of the LLM in Transnational and European Commercial Law, Banking Law, Arbitration/Mediation at the International Hellenic University. The main aim of this thesis is to determine whether AI systems may be held liable for tort and contractual damages caused by their actions or even omissions. In the absence of direct legal regulation of AI, the thesis begins by recounting the history and definition of AI and examines current technological AI applications. This history raises critical questions as to how AI’s specific features impact tortious liability. In parallel, this thesis explores the applicability of existing liability regimes to AI and evaluates potential points of inadequacy. Moreover, this thesis will analyze the Product Liability regime in the European Union (“EU”) to determine whether it suitably addresses issues raised by increasing AI usage. Thereafter, the thesis examines other theories for allocating liability through the application of various other paradigms of legal responsibility, such as strict liability. Subsequently, this thesis will also identify certain scenarios where AI could enter into contractual obligations, or engage in tortious behaviors. At this point, the thesis will proffer possible solutions for adjudicating liability while, inter alia, elaborating on the issue of Robot Personhood, with a specific inquiry as to its impact on Europe. The fact that AI is not yet the subject of law or regulation raises both ethical and liability questions for the damages AI causes. Finally, the thesis examines whether proper regulation can be meaningfully impactful, but also under which circumstances regulation might carry risks, especially when considering its potential for hindering technological innovation.