Computable Contracts?

Via @chbusca and the Legal Informatics blog, I learned that Harry Surden of the University of Colorado Law School has published in the UC Davis Law Review an article with the concise title Computable Contracts. (It makes a change from the tedious business of cutesy title, colon, long-winded subtitle.)

Here’s the abstract:

It is possible to formulate contractual obligations so that computers can “understand” and make prima-facie compliance assessments with specified terms and conditions. Such a contractual obligation, formulated specifically for computer processability, is what this Article terms a “computable contract.” Computable contracts are not merely theoretical, but instead are increasingly being used in economically significant domains. Certain widely used financial contracts exemplify this model. The emergence of computable contracts has largely been unrecognized in the legal literature. However, computable contracting is not extensible across all, or even most, contracting scenarios. Rather, it is limited to a small subset of contracting scenarios involving standardization, and relative legal and factual certainty.

Drawing upon computer science research, this Article provides a theoretical account of computable contracting. It first explains how firms can communicate contracting information to computers by representing contracts as data instead of (or in addition to) the traditional written language form. Formalizing contractual obligations in this way is what is termed “data-oriented” contracting. The representation of contractual obligations as data, in turn, allows for novel contracting properties. For example, parties can effectively “translate” certain contractual criteria into a comparable set of computer-processable rules. To make contracts “computable”, parties provide computer systems with external data that is relevant to performance. This model is supported by contemporary examples of computable contracts in domains ranging from finance to intellectual property. This Article also provides principles for distinguishing contracting scenarios that are amenable to computability from those that are not.

What the article describes might seem like a utopian vision of the sort that cybertypes have wistfully outlined to me in the course of brainstorming. But in the limited context specified in the article, it seems a feasible idea.

But I confess that I’ve only scanned the article, as it is and, I suggest, always will be irrelevant to the broader world of contracts.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.