Computerized Contracting

In times when everything seems to have to be fully automated and computerized, perhaps even the driving of our cars, might contract drafting and execution become fully computerized as well?

Perhaps, but likely not in the near future, according to this article in the Economist.

How would computerized contracting even work? It might thorught so-called “blockchains,” pieces of software that represent a business arrangement and execute themselves automatically under pre-determined circumstances. For example, agricultural rainfall policies could retrieve weather data and pay the farmers automatically if a damagingly low amount of rainfall has fallen in the area and time period in question.

However, such contracts have also been called “candy for hackers.” “Once contracts are set in cryptographic stone, the whole idea is that they cannot be changed, even though updates are usually how software matures … But that creates more problems: if code is law, so are bugs in the code—and correcting them may itself mean a breach of contract.”

This discussion continues and is not new. In 1994, Nick Szabo coined the term “smart contracts” for the process. 20+ years later, we have progressed some in this area, but not all that much. In similarity, computers were also thought to be able to translate documents, eliminating the need for human translators. That has only become reality to a very rough and limited extent. The issue there as well as in computerized contracting is the level of complexity of human communication and intent. For many of us, it’s probably also still a matter of resisting jobs taking over what could be jobs for some of our students, many of whom in today’s job market may prefer even a relatively monotonous job (as is thought to be the case with computerized contracting) over no legally relevant job at all. Of course, it is not a matter of what we and our students prefer, it’s a matter of what the market develops and adopts. Time will tell how much of this is hype and how much reality.

(On a side note about self-driving cars: those may also not be as safe as previously thought. This past summer, a “passenger” in a self-driving Tesla famously got killed in Florida when his car’s cameras failed to distinguish the white side of a turning tractor-trailer from a brightly lit sky and didn’t automatically activate its brakes.)