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Contracts Without Lawyers?

June 25, 2009
ICT Results
Computer systems that dynamically create, monitor, manage or suspend online contractual agreements are being developed to deliver greater reliability and security to service-oriented e-business applications.

Computer systems that dynamically create, monitor, manage or suspend online contractual agreements are being developed to deliver greater reliability and security to service-oriented e-business applications.

Lawyers have refined and developed their vocabulary over hundreds of years to eliminate uncertainty and vagueness from their terminology. Achieving clarity in human terms is one thing, developing contractual terms that can be interpreted by computers, adds a requirement for further levels of specification.

A team of European researchers are developing computer systems that automatically verify and monitor contractual agreements.

One of the biggest successes of the research programme has been a set of verification algorithms that enable effective on- and offline validation of e-business interactions based on contracts.

An individual or organisation can use the verification process to test for conflicts between a contract they are about to enter and their obligations under existing contracts. The verification process can also spot potential obligation bottlenecks that may affect fulfilment, deadlocks or never-ending delays.

A set of tools and libraries for inspecting the execution of contracts has also been developed. All the technologies developed by the Contract team are publicly available.

Obligations, permissions, violations…

 “In advancing the development of an electronic contractual language, we had two major challenges,” says Contract project coordinator, Javier Vázquez-Salceda of the Department de Llenguatges i Sistemes Informàtics, at the Universitat Politècnica de Catalunya in Barcelona.

“We had to find a contractual language that was expressive enough to be able to offer a wide variety of contractual agreement scenarios, but at the same time could be translated into terms that were computable.

“For that, we used a lot of research from the artificial intelligence and legal communities that explored these issues from a theoretical perspective. They had defined formal theories [of] important concepts, such as ‘norm, obligation, permission, violation’ etc, and some approaches on norm verification, compliance and monitoring. But most of these theories had not been translated into practical systems.”

The second challenge was to increase the level of semantic abstraction that current service-oriented agreement technologies can handle at execution time.

The EU-funded project team found there was a gap. At the lowest level, computers were capable of undertaking tasks such as transferring money between accounts and indicating when a time limit had expired. But linking the expressive, high-level contractual concepts, such as obligation and permission to low-level actions, proved problematic.

The Contract researchers have developed a two-level architecture to facilitate their electronic contracting language. This provides flexibility in electronic contracts, according to Vázquez-Salceda. At the higher level, a contract may specify that a ‘payment’ needs to be made for a certain amount before a certain date. The system then tries to map, at a lower level, what ‘payment’ actually means and which services best fulfil that obligation.

The electronic contracting language developed by the team breaks new ground because it includes more than defined contractual clauses; the language’s operational descriptions include the protocols to enable the computer system to manage the contract process. The computer system can automatically activate or cancel contracts in certain circumstances, or temporarily suspend them.

Keeping it real

A series of case studies involving real business situations were undertaken by the research team to help keep the system practical and grounded.

Case studies included systems that automatically monitor the fulfilment of complex maintenance contracts that keep aircraft supplied with spare parts and properly serviced at all times.

A second case study focused on automatic monitoring of car repair contracts for insurance companies to ensure that repair companies meet their quality criteria and repairs are carried out to time.

Students and lecturers in a Czech education institute signed up to education commitments that were automatically monitored in a third case study. And research partner Fujitsu is developing a fourth case study designed to track and manage contracts for custom software.

In the world today, we already rely on complex contractual relations to deliver the goods and services we need. e-Business leads to the creation of billions more contractual agreements. Web services, for instance, rely on applications that loosely couple operating systems, programming languages and other technologies, sometimes only for a few minutes. An ability to automatically and dynamically create contracts (sometimes only for a few seconds while the service is delivered) takes e-business to a new level.

The Contract project received funding from EU’s eTEN programme for market validation and implementation, designed to help make e-services available throughout the European Union.

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