Unpacking Artificial Intelligence Contracts

By Riaan Basson | SchoemanLaw IncCategory: Technology Law

Artificial Intelligence (AI), according to John Frank, refers to any device or software capable of mimicking one or more aspects of human intellect. This means that tasks can be performed automatically without human input. AI is increasingly being used to improve lives in modern society, including as a method to create contracts with legal implications.

Defining AI Contracts

An AI contract is created when predetermined information is entered into a program, which then processes the data based on algorithms without human intervention. These algorithms operate independently, leveraging patterns and data analysis to generate outcomes.

Key features of AI contracts include:

• Autonomy: Algorithms independently generate work.
• Efficiency: Tasks are completed far faster than humans could achieve.
• Data Analysis: Large datasets are processed to produce diverse outputs.

While AI offers speed and innovation, it lacks the subjective and emotional elements that humans bring to decision-making, which can be seen as a limitation.

AI in Everyday Reality

Traditional contracts are agreements made between two or more parties with the intention of creating legal obligations. To be legally binding, a contract must satisfy certain conditions:

1. Consensus: A meeting of the minds.
2. Legal Capacity: Both parties must be of legal age.
3. Prescribed Formalities: The agreement must comply with specific legal requirements.
4. Legality: The contract must not violate legislation or common law.
5. Determinable Content: Obligations must be clear and performable.

In contrast, AI-generated contracts bypass some of these traditional requirements. While traditional contracts involve human oversight, AI contracts are created automatically, without the need for consensus.

Legal Enforcement Challenges

The human oversight in traditional contracts provides an element of legal certainty, making them easier to enforce in a court of law. In AI-generated contracts, the absence of human intent and intervention complicates enforcement.

South Africa’s Constitutional principle of legal certainty underpins the enforceability of traditional contracts. Courts will uphold a contract if it meets objective standards and demonstrates the parties' intent to form a binding agreement. AI contracts, however, present challenges due to the lack of subjective intent and human involvement.

Conclusion

AI is the future of contracting, offering innovative solutions and efficiencies. However, at this stage, AI should primarily be seen as an assistance tool. As technology evolves, AI-generated contracts may achieve broader acceptance and practical implementation.

For further assistance, consult SchoemanLaw Inc for expert advice on AI, contract drafting, and technology law.

Contact Information

Riaan Basson | Candidate Attorney

• Website: Commercial Law Services
• Website: Contract Drafting Services
• Website: Technology Law Services