AI in Negotiating and Entering into Contracts

Chapter in forthcoming book edited by Larry DiMatteo "AI & Private Law"

12 Pages Posted: 8 Jul 2021

See all articles by Eliza Mik

Eliza Mik

The Chinese University of Hong Kong (CUHK) - Faculty of Law; TILT; Melbourne Law School

Date Written: June 1, 2021


This chapter retains a safe working distance from the usual hype surrounding AI as well as from theories that seek to replicate human intelligence or intention. Taking into account the current state of the art, it explores whether a difference in the degree to which AI can augment or optimize human performance in the contracting process necessitates an adaptation of the law. After all, much of legal scholarship seems to have been seduced by technological progress, the popular assumption being that a change in technology necessitates a change in the law. The chapter distinguishes between entering into contracts, defined as a mechanistic form of transacting that involves unilaterally imposed terms and fixed prices, and negotiating contracts, which involves a complex multi-attribute decision-making process. The starting hypothesis is that AI cannot negotiate contracts because the negotiation requires understanding and the ability to reason about the mental states of other market participants. Nonetheless, even the less complex process of entering into contracts by means (or with the assistance) of AI may expose latent problems in existing legal principles. Abstracting from futuristic visions of “intelligent machines gone mad,” it is necessary to confront the purported absence of human intention in the transacting process and examine the legal implications, if any, of interposing one or two AIs between the contracting parties. If no humans are present at the time of contract formation – can we still speak of states of mind? While the complexity of an algorithm must not be regarded as a proxy for intelligence or intention, it must be acknowledged that more sophisticated information systems are prone to emergent behavior, including entering into unintended [unplanned] or commercially unfavorable transactions.

Keywords: artificial intelligence, contract law, automated trading, transaction automation

JEL Classification: K12, K22, K11, K20, 033

Suggested Citation

Mik, Eliza, AI in Negotiating and Entering into Contracts (June 1, 2021). Chapter in forthcoming book edited by Larry DiMatteo "AI & Private Law", Available at SSRN:

Eliza Mik (Contact Author)

The Chinese University of Hong Kong (CUHK) - Faculty of Law ( email )

6/F, Lee Shau Kee Building
Shatin, New Territories
Kowloon, Sha Tin
Hong Kong

TILT ( email )

P.O.Box 90153
Prof. Cobbenhagenlaan 221
Tilburg, 5037

Melbourne Law School ( email )

185 Pelham Street
Melbourne, VIC 3010

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