Six Levels of Contract Automation

Abstract

This chapter proposes a framework to assist development of legally enforceable automation of contractual performance by considering the digital evolution of contracts and, primarily, the question of what digital functionality is required of a contract for it to become a ‘smart legal contract’. It explores this distinction and orients it within the broader paradigm of a legal-led approach to digitalization and automation of contracts at different stages of the contract life cycle. Analysis is assisted by reference to the Blycha & Garside Model requirements for smart legal contracts. It studies the different characteristics of contracts along a proposed spectrum of contract automation by describing a conceptual model of levels of digitalization and resulting potential for automation of contracts, drawing analogies with the SAE International J3016 ‘Levels of Automation’ model for autonomous vehicles. It analysis example features of contracts for each level of contract automation and how these interact with specialized digital platforms. It considers proposed requirements of digital infrastructure or enterprise platforms intended to support smart legal contracts. Law is not immune from the forces of digital transformation (nor is the legal industry). In order to leverage the benefits of automation, digital connectivity, and the generation and processing of structured data in everyday business transactions, lawyers need to understand the implications of contractual obligations being expressed in machine-executable form and interacting with specialized digital platforms and infrastructure.