Guest Post: Should We Stop Worrying and Learn to Love Smart Readers?
Should We Stop Worrying and Learn to Love Smart Readers? Contracts in the Age of Real-Life Babel Fish
By Yonathan Arbel & Samuel Becher
Famously, the Hitchhiker’s Guide to the Galaxy features a Babel fish, which is a fictional “small, bright yellow fish, which can be placed in someone’s ear in order for them to be able to hear any language translated into their first language.”
Much of consumer contract law rests on the assumptions that consumer form contracts are unreadable, that consumers in fact do not read such contracts, and that consumers are unable to properly assess the content of these complex forms. This reality facilitates a market failure in the form of information asymmetry, which allows sellers to offer low-quality non-salient contract terms.
Interestingly, however, this troubling equilibrium is now facing disruption. Advances in language models, a branch of artificial intelligence, have given rise to a new type of technology – one we dub “Smart Readers.” As we note in Contracts in the Age of Smart Readers, smart readers are a real-life version of Babel fish. In essence, they are capable of no less than simplifying, personalizing, constructing, and even benchmarking contracts.
Smart readers can effectively read contracts and explain their content to ordinary people, employing plain language. Using a Smart Reader, a prospective consumer can pull out her phone, scan any contractual clause, and click ‘explain.’ The smart reader will respond by providing a summary that is succinct, personalized, and direct.
In our article, we consider a few interesting illustrations. One of them is the following standardized clause, which is packed with legalese:
- Controlling Law and Severability. This License will be governed by and construed in accordance with the laws of the State of California, excluding its conflict of law principles. This License shall not be governed by the United Nations Convention on Contracts for the International Sale of Goods, the application of which is expressly excluded. If you are a consumer based in the United Kingdom, this License will be governed by the laws of the jurisdiction of your residence. If for any reason a court of competent jurisdiction finds any provision, or portion thereof, to be unenforceable, the remainder of this License shall continue in full force and effect.
By clicking ‘explain’, the smart readers produces the following:
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[The clause] means that if there are any disputes about the contract, the courts will rely on the law of the state of California to make their decision. |
If the reader is young, the smart reader will tailor its explanation to the reader’s age, by clarifying that:
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The parties want the law that will apply to this contract to be California law. This is where the company is located. If there is a problem with the contract, the judge will look to California law to solve it. |
At the same time, for users who think better in terms of examples, tapping on the ‘example’ function of the smart reader produces the following illustration:
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Lets [sic] say you and the record company disagree about something to do with this contract . . . So the judge will rely on California state law when deciding what the contract means. |
We did not write these examples. It is GPT-3, a recently released version of a language model, that produced these outputs. Remarkably, we used a weak version of this model, and we did not use any fine-tuning.
Some readers may nevertheless think that consumers would be unwilling to read even such simplified terms or able to understand them. Here comes handy the capability of smart readers to benchmark; that is, to mark the contract at stake and compare with other contracts offered in the market. Smart readers can even suggest specific alternative contracts that have a better overall score.
An app’s ability to respond intelligently to queries about an unfamiliar legal text, score it and suggest seemingly superior alternatives, represents a technological breakthrough. What would such innovation entail for the law of consumer contracts?
Ideally, smart readers would be affordable (if not free of charge) and accessible. Used by many consumers, these readers will make consumers more aware of their contracts and the risks in accepting them. Smart readers will also empower consumers to compare various contracts, so to choose the ones that best suit their preferences. This, in turn, will pressure firms to compete over contract terms and offer contracts that better serve consumers.
But if this optimistic scenario materializes, what remains from the case for pro-consumer regulation? If consumers can easily read, understand, compare, and shop among contracts, the fundamental market failure of information asymmetry will cease to exist. If consumers are well-informed about their contracts, consumer protection tools and justifications ought to be revisited and refined.
That said, smart readers are not a panacea and it would be imprudent to adopt Dr. Strangelove’s advice and stop worrying. For starters, there are also less optimistic scenarios that require attention. For instance, what if consumers are reluctant to adopt such apps, even if they are cheap, quick, and user-friendly? Surely, low consumer uptake will undermine the potential to improve the market for contract terms. But would that also entail that, contrary to what many consumer protection proponents believe, consumers truly don’t care about their contracts? And if consumers are not concerned about their contracts, to what extent should the law nevertheless strive to protect them?
There are also various risks involved in the emergence of smart readers. One risk is that courts and policymakers will over-rely on such apps, hastily relaxing consumer protection principles. Some consumers may not be able to afford smartphones, or not use such app for other legitimate reasons. Furthermore, these apps are black boxes that can be attacked by sophisticated parties. Smart readers may as well make innocent mistakes, or just oversimplify legal text and thus mislead users.
Either way, smart readers can have broad implications on the law of contracts, and they should get us all thinking about the future of contract law. As the cliché goes, the future is already here.
This post is based on Yonathan Arbel & Shmuel I. Becher, Contracts in the Age of Smart Readers, available here. Comments and criticism are most welcome; please email Samuel.becher@vuw.ac.nz or yarbel@law.ua.edu.