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    25.02.2020

    Robot-proof contracts. Artificial intelligence and contracting: limits and perspectives.


    1. The terms of the problem: artificial intelligence and law

    The frequency with which artificial intelligence is used in the contractual activity makes it necessary to assess, first of all, whether contracts concluded by means of intelligent machines are compatible with the rules already governing contractual relationships and, secondly, whether there is therefore a need to lay down a system of new provisions designed to adapt said rules to the different situations arising from contracts concluded via artificial intelligence, such as smart rights.

     

    Indeed, when it is accepted that an artificial intelligence designed to conduct contracting activity and, consequently, to choose its counterparties, negotiate the terms of the contract and conclude the contract itself, may play a part in the contracting process, it must be ascertained whether, and to what extent, that contracting party is as independent and willing to negotiate as any other human contracting party.

    2. Consequences of digital contracting: smart contracts and blockchain explained

    The digitization of contracts has led, over time, to blockchain technology and smart contracts.

     

    As is well known, blockchain is a technology aimed at managing transactions through the creation of a distributed public ledger shared across the network by the participants, who manage it in a “peer to peer” mode.

     

    Said distributed ledger is structured as a chain of blocks, each one containing one or more transactions, so that the addition of each block takes place by irreversibly linking the new block to the previous one through a logarithmic operation, called “hash function”.

     

    The addition of new blocks necessarily depends on a validation process carried out by the network participants themselves and consists in solving a complex mathematical problem whose result will be shared by the other users, called miners.

     

    This is how the use of the blockchain technology has resulted in the creation of smart contracts, which are destined to be automatically self-executed when specific conditions provided in the instructions are met.

     

    Hence, the irreversible outcome of smart contracts based on blockchain technology provides an almost absolute guarantee that the contract has been executed.

     

    So, the contract becomes suitable to regulate new forms of rights (smart properties) which, although automated, remain associated with elements of the physical world.

    3. Machines as “subjects of law”

    So, the idea of “automatic” contract gives rise to the question whether this contract really needs the law in order to exist and produce its own effects.

     

    The problem arises, in particular, in all those cases in which the artificial machine becomes capable of making more or less complex decisions on its own, up to the point of being able to replace human intervention even in those moments or aspects of the contractual process that imply the implementation of “choices”, since it can be considered somehow “autonomous”.

     

    Artificial machines thus acquire their own autonomy, determining only an apparent dissociation between the contracting party and the contracting party’s cognitive and volitional faculties.

     

    In fact, a machine, inasmuch as it produces contractual effects that are unpredictable and not predetermined by the “human” contracting party, would have its own will and, consequently, its own responsibilities.

     

    One wonders, therefore, whether this decision-making autonomy reflects the existence of a distinct subject of law from the human contracting party, so as to attribute to the machine its own heritage and responsibility distinct from that of the human contracting party.

     

    What is certain, in any case, is that artificial intelligence operates autonomously, depriving the human contracting party of full control over the results.

     

    It is precisely this consideration that gives rise to the problem of the unpredictability of the outcome of a contract whose content is the result of choices, in whole or in part, made by the machine itself.

     

    It is, however, a false problem arising from the idea of the contract as an exclusive product of the will of the contracting parties, on the basis of a conscious representation of reality and full control of the information.

     

    Indeed, in reality, the parties represent to each other only the practical result that they intend to pursue with the contract, neglecting the set of rules intended to regulate the contractual relationship arising therefrom.

     

    It follows that the unpredictability of the result is a “problem” always affecting any contractual relationship.

    4. The legal remedies: quid iuris?

    That being said, the real problem is, therefore, to adapt to the new ways of concluding the contract all those remedies that the law provides for the cases where there is a discrepancy between the will of the contracting parties and the results that the contract has actually produced.

     

    The advantage of “automatic” contracts is that the use of artificial machines can allow the objective verifiability of the processes forming the contract. The practical purposes, intentions and expectations to be taken into account are exclusively those of the human contracting party.

     

    Thus, legal remedies can be activated only if and to the extent that the malfunctioning of the machine has led to a defect in the contract valued on the basis of the purposes, intentions and expectations of the human contracting party.

     

    The psychology of the machine cannot be relevant since the machine is not the contracting party: it is merely the author of the cognitive and volitional processes to which the human contracting party entrusts the conclusion of the contract.

     

    The real problem is, therefore, that of mutual understanding between the intelligent machine and the human contracting party so that the expectations of the latter correspond to the results of the contractual activity carried out by the machine.

     

    Therefore, one can only speak of legal remedies only if the discrepancy between human expectations and the contractual activity carried out by the machine becomes apparent externally.

    5. Conclusions

    Therefore, in the light of the above considerations, it seems evident that it is necessary to design a system of remedies to be implemented at an earlier stage than the one in which traditional remedies operate, regulating and conforming the digital instruments involved in the negotiation and regulating the digital environment where the negotiation takes place in order to make it transparent and controllable ex ante.

     

    Only in this way it is hoped that, with the implementation of technology and the numerous regulatory and legislative innovations, smart contracts and the potential of blockchain technology can be increasingly applied to the world of law, thus leading to a real legal-informatics revolution.

     

     

     

     

     

    This article is for information purposes only and is not, and cannot be intended as, a professional opinion on the topics dealt with.

     

    For further information please contact your counsel or send an email to the following address: corporate.commercial@advant-nctm.com

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