Contracts Formed by Software: An Approach from the Law of Mistake

(2022) Journal of Business Law (Forthcoming)

SMU Centre for AI & Data Governance Research Paper No. 2019/02

22 Pages Posted: 8 Feb 2019 Last revised: 16 Feb 2021

See all articles by Vincent Ooi

Vincent Ooi

Singapore Management University - School of Law; Singapore Management University - Centre for AI & Data Governance

Date Written: December 1, 2018

Abstract

A ‘Contracting Problem’ arises when software is used to autonomously enter into contracts without human input. Questions arise as to how and whether there can be an expression of an objective intention to be legally bound. This article considers three leading solutions to the Contracting Problem. The ‘Mere Tools Theory’, which views software as ‘mere tools’ of communication, is too harsh as it binds users to any software malfunction. The Agency Approach, which treats software as Electronic Agents, capable of contracting on behalf of their users, is untenable as it ascribes unrealistic characteristics to software. The article submits that the optimal solution is to extend the objective theory of contract. Where software produces an unintended consequence, this should be seen as a mistake. An optimal way of risk allocation is for parties to be bound by the representations of their software, unless the other party has knowledge of the mistake.

Keywords: Contract Law, Law and Technology

Suggested Citation

Ooi, Vincent, Contracts Formed by Software: An Approach from the Law of Mistake (December 1, 2018). (2022) Journal of Business Law (Forthcoming), SMU Centre for AI & Data Governance Research Paper No. 2019/02, Available at SSRN: https://ssrn.com/abstract=3322308 or http://dx.doi.org/10.2139/ssrn.3322308

Vincent Ooi (Contact Author)

Singapore Management University - School of Law ( email )

55 Armenian Street
Singapore, 179943
Singapore

HOME PAGE: http://vincentooi.com

Singapore Management University - Centre for AI & Data Governance ( email )

55 Armenian Street
Singapore
Singapore

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