Contract Law, Smart Contracts and Artificial Intelligence.
An essay on regulated tools for business
p. 337-348
Texte intégral
1At the dawn of Industry 4.0, combining automation, the Internet of Things and artificial intelligence1, the French legislator, with European impulse, had already taken a stand in favour of the digital economy, defining electronic commerce as “the economic activity by which a person offers or ensures the supply of goods or services at a distance and by electronic means”2. However, if the notion of electronic commerce and distance contracts is now integrated into the French and European legislative framework – but also into usage – a new disruptive innovation is turning contractual practices upside down.
2The smart contract is in fact an execution of a computer code backed by a blockchain3. Known for years in the United States but not yet widely used in France4, it is not a simple dematerialised contract, but an automatically executed contract subject to algorithmic conditions. This means that the smart contract is a protocol for executing pre-established computer orders, and only when the predefined conditions are met will it proceed automatically and instantaneously to execution. This can be illustrated in the context of insurance contracts: Axa, an insurance company, for example, has recently introduced the Fizzy service5, a so-called “parametric” insurance. These insurance contracts can be taken out when purchasing a train or plane ticket, and if a delay occurs it is automatically noted by the smart contract and reimbursement is automatically carried out. In this way, smart contracts save time, but also ensure reliability, since the conditions of execution are guaranteed by the blockchain.
3In addition to smart contracts, the issue of artificial intelligence is also at the heart of the lawyer’s concerns6. Although both technologies are integral parts of the digital revolution that is creating Industry 4.0, they must be distinguished. Artificial intelligence is a field of technology, digital or otherwise, which aims to imitate human intelligence to assist, support or even replace humans in their tasks7. There are several techniques for this purpose, the best known – because it is the most powerful and recent8 – being deep learning9. The latter is itself a form of machine learning10, which is only one of several artificial intelligence techniques. However, in view of the technical complexity and legal insufficiency, the European Union defines and classifies, in its draft regulation on artificial intelligence, several levels of risk, not in relation to the technique, but according to the risk that weighs on the users of artificial intelligence11. Particular attention is also paid to the personal data12 that feeds artificial intelligence through Big Data. It is therefore possible to see that the European approach seems to be built around risk, and seeks above all to set limits, to create prohibitions; but it is also aware of the inevitable innovation and its benefits13.
4Moreover, these two technologies, smart contracts on blockchain and artificial intelligence, also have multiple applications. We can mention, among others, FinTech in the financial sector14, LegalTech in the legal sector15, InsurTech in the insurance sector16, and MedTech in the medical sector17. Although different names are used in practice, these technologies are essentially the same use: an application of digital innovations to sectors already regulated by positive law. In the context of property exchanges between people, the contract is the legal tool of reference18. However, if positive contract law is built around the trust of co-contractors in the rule of law – which guarantees the respect of wills and good faith19 – the use of new digital tools transfers this trust to digital technology20. Whereas the law was the limit framing wills, technology becomes the guarantor of the exact will, of a precise and immutable, even mathematical will, unless the law frames the technology.
5Indeed, the will is necessarily a human characteristic that is different from necessity or obligation. The will is imbued with freedom, but in the context of a contractual execution by computer, it is sealed, engraved in the blockchain, and deprived of freedom, the keystone of the legal regime of contracts. Therefore, it is useful to study the impact of these technologies on contract law. The reform carried out by the ordinance of 10 February 201621 was intended to modernise French contract law, which had remained unchanged since the Napoleonic Code. Although it brilliantly enshrined developments in the field over two centuries22, it is regrettable that there was no legislative innovation anticipating digital developments, even though they were already flourishing when it was adopted. Moreover, the legislative rules governing digital technologies are also being developed under the impetus of the European legislator, particularly since the adoption of the General Data Protection Regulation (GDPR). However, unlike the European Union, which adopts a cautious approach, it must be demonstrated that digital tools can be favourable to the formation and proper performance of a contract.
6Therefore, it is essential to show first that positive contract law, although deliberately broad and flexible, cannot correspond to the reality of augmented, intelligent, or artificial intelligence-assisted contracts (I). Consequently, it appears that a framework for these practices, although not without a certain amount of freedom, would make it possible to promote their development with a view to benefiting the company using them (II).
I. The limits of positive law
7The smart contract is not a contract in the sense of French positive law23; however, it is used for the same purpose. The aim of classic digital contractualisation or the smart contract is to create and regulate obligations between parties24. Now, it is possible to try to find a correspondence between the technique of smart contracts and artificial intelligence and contract law, but if it is possible to detect a will in the sense of the general regime during the formation of the smart contract (A), its technical execution is remote from legal considerations (B).
A. The formation of the smart contract
8“The contract is formed by the meeting of an offer and an acceptance by which the parties manifest their will to commit themselves”25, so in terms of positive law, it is possible to qualify the contract as soon as there is a manifestation of the will to contract. The will was set up by the classical theory as the basis of the contract26, and if modern theories have been able to question its fundamental place, it appears that ‘there is no contract without the will to contract and that, consequently, it is difficult to deny that the contract is based on an act of the will’27. The definition adopted by French positive law enshrines the will as a central notion28. However, it is possible to ask at what point the smart contract is really formed, or even if it is really a contract in the sense of positive law29. Indeed, several stages are necessary for its creation.
9First, the computer code that automatically executes the contract must be written by human intervention30. This step may in fact be like the negotiation of a classical contract, only the language differs. However, since it is a computer executable program, it is also possible to question whether copyright can be granted. Article L. 112-2, 13° of the Intellectual Property Code expressly mentions software as being protectable by copyright, and moreover the fact that this software constitutes a legal act does not seem to oppose the qualification of a work31, provided that it is original. This qualification would then place the designer of the execution program in a position of strength. However, the manifestation of the parties’ will is expressed when both parties accept the conditions of execution of the smart contract previously established or negotiated, even if it was created by one of the parties or a third party. In this sense, the parties must expressly accept the conditions of performance of the smart contract32. It appears then that in a legal sense the contract is formed at the moment when the parties have expressed their consent to the terms of the contract, and this provision seems to be appropriate for both classical and smart contracts.
10However, it is also appropriate to question the relevance of positive law on the formation of the contract when it is assisted by artificial intelligence. Indeed, the focus is no longer really on the formation of the contract but more on the negotiation33. When an artificial intelligence is involved in the making of the contract, it is indeed possible to validly question the principle of freedom of negotiation set out in Article 1112 paragraph 1 of the Civil Code. Assuming that an artificial intelligence could draft – or program – smart contracts34, the negotiations essential to the contract would be deprived of part of their substance. However, the actions of artificial intelligence save time; it is possible to imagine clauses automatically drafted according to the contractual habits of the parties or personalised performance conditions with a high probability of agreeing with the co-contractors. In this sense, it is possible to say that contractual freedom lies in the choice of whether or not to accept the conditions proposed by artificial intelligence. It appears then that positive contract law can be adapted to the integration of new digital technologies in the formation and negotiation of contracts. However, it is necessary to determine whether it can be adapted to the execution of the contract.
B. The execution of the smart contract
11The smart contract is the computer code that automatically executes the wishes of the parties. A first point of contention can be raised: language. Indeed, while legal language allows a certain margin of interpretation35, computer language, which is mathematical, is marked by formality. Therefore, a first argument in favour of smart contracts emerges: mathematical language succeeds where legal language fails in terms of precision. Smart contracts thus offer no room for subjective interpretation. But this mathematical precision is not necessarily an advantage; legal language allows the parties, or if necessary the judge36, to reinterpret the contract according to the case in question in order to reflect their actual wishes. The use of smart contracts makes it possible to express the will of the parties at the time of the conclusion of the contract in an inescapable way, but it does not make it possible to follow its evolution. This makes it difficult to renegotiate the terms, and the performance of the contract remains subject to predefined mathematical rules: this can be seen as an impediment to the fundamental principle of contractual freedom.
12However, the smart contract is not a tool without advantages; on the contrary, there are quite a few. The execution of the contract is automatic37, reliable38 and instantaneous. The idea of an automatically executed contract is not new, it existed before the creation of the blockchain, but the advent of smart contracts allows, above all, the consolidation of a bond of trust between two or more individuals, which was previously non-existent39. However, if the securing of contractual exchanges by the blockchain opens up new economic possibilities, it calls into question the legal normative framework. Indeed, trust is a central notion in contract law40. It is therefore legitimate to ask whether it is possible to qualify smart contracts as contracts when the trust is artificial and based on technology and not on the co-contractor or the law.
13Moreover, the relevance of positive law is even more questionable when artificial intelligence is involved in the actual performance of the contract. Indeed, if one accepts the existence of a smart contract that is not simply automated but assisted by artificial intelligence in its performance41, it is possible to imagine a contract whose content is the collection of data so that they can be processed. An execution error attributable to the algorithm would lead to a fault in the execution of the contract. To guarantee good faith performance by the co-contracting parties, it is essential to provide for contractual adaptations, particularly regarding liability in the event of an error attributable to the artificial intelligence, but also for ethical provisions concerning its use. While positive law provides that contracts must be executed in good faith, it is possible to deny the existence of such a contract within an algorithm, unless the legal standard can provide for certain precautions to guarantee good faith.
II. The search for a forward-looking law
14Smart contracts or contracts assisted by artificial intelligence are business tools that escape the legal regulation of contract law. Therefore, it seems fundamental to seek a forward-looking law that allows for regulation favourable to the development of new digital contractual tools (A). However, this regulation must be marked by a certain liberty to allow the development of innovation (B).
A. The need for regulation
15First, the smart contract should be understood as an augmented and non-automated contract: in this sense, it is essential to argue in favour of a specific regulation42. Indeed, the smart contract is a digital solution that offers more possibilities than the classic contract or the electronic contract. It allows solutions to be set up according to external events and in an automated manner. It is in fact a real living contract that offers several possibilities and that can be adapted according to external hazards, as long as the computer code that executes it so provides43. However, as it has no legal recognition, it is inappropriate to speak of contracts in the legal sense, as the formation of the smart contract differs from the formation of the classic or electronic contract44; there is also no provision for any form of legal withdrawal – unless it is provided for in the computer code of the smart contract itself45 – as the commitment of the parties is definitively recorded in the blockchain. In this sense, it is desirable that the legal standard should regulate the formation of the smart contract, in order to avoid defects in consent, but also in its execution. Indeed, the execution may be subject to hazards external to the contract: although certified by the blockchain, the realisation of these hazards will automatically and definitively execute the contract, without taking into consideration events of force majeure. In short, the smart contract offers a certain security by making it impossible to breach the contract46, but at the detriment of the flexibility that is allowed by the legal standards governing traditional or electronic contracts. This argument can be put forward in particular with regard to consumer law47, which aims to protect consumers from abuse by professionals. Without a legal framework, the smart contract cannot be a technological advance in that it would jeopardise the protections granted to certain parties in the conclusion of contracts.
16The use of artificial intelligence in contractual relations is not new either. In the case of an online purchase, the contract is concluded in an automated manner without the need for any intervention on the company’s side. Similarly, intelligent stock management software can place an order automatically without a physical person having to give the order48. The use of artificial intelligence in contractual techniques can to some extent be considered as progress, but it increases the possibility of defects in consent and makes their proof more difficult49. Indeed, it is difficult to prove an error or fraud when it has been committed by an artificial intelligence that acts automatically, or even autonomously. This raises questions of liability and the burden of proof, which complicate contract law. The solution, however, lies in a clear legislative framework providing for rules of compliance by design50. It is in this sense that the future European regulation on artificial intelligence51 can be seen as a considerable step forward.
17The question of smart contract law also raises compliance prerogatives. There are no rules in French positive law imposing the regulation of artificial intelligence or the use of smart contracts, and even if there were, the law is only territorial in scope and may seem powerless in the face of the internationality of digital technology52. The regulation of digital tools cannot therefore come exclusively from the national legislator, but must come from a supranational entity, such as the European Union, which will be able to impose compliance. In this sense, it is essential that companies be able to apply compliance measures to a regulation that protects the parties to the contract and guarantees a certain legal certainty. Nevertheless, these measures should not be too restrictive in order to avoid inhibiting innovation.
B. The need for liberty
18A solution that would allow some regulation of the new contractual tools without inhibiting their development would be to ensure that the provisions protecting the parties are included in smart contracts or contracts developed by artificial intelligence in an automatic manner53. This provision would not be contrary to the principle of contractual freedom, but it would allow public policy provisions to be inserted into smart contracts or computer programs governing the formation and performance of the contract. To do this, it is necessary to enshrine a law of augmented contracts, or contracts assisted by digital technologies. It is not a question of creating a sui generis right but, as in electronic contracts54, only of saying that the public policy provisions of the Civil Code relating to contract law must be able to be applied to augmented or smart contracts.
19However, this solution poses technical difficulties, since it amounts to regulating by law a contractual technique which is based on digital technology. In this sense, it is important that the computer developer and the engineer be associated with the lawyer in the creation process. This implies the advent of new, hitherto unknown professions55 such as legal engineer or legal developer. The advent of these professions also marks an evolution in the role of the lawyer within the company. Indeed, the lawyer will no longer only have to be able to master the law but also the technology that will implement it in the future. The advent of artificial intelligence and digital techniques, such as the blockchain, show a clear evolution in the purpose of law56.
20In short, the solution aimed at regulating the technique that executes the law will only really be put in place when the developers and users of these techniques have a dual competence. However, in order to give impetus to these innovations, which have multiple advantages, it is essential that a normative framework pushes the lawyer to take a closer interest in them57. Legal developments can be devoted to each legal aspect that has its legal equivalent, but the digital world no longer spares any sector; it is a virtual mirror of real society, or even the reality of tomorrow. In this sense, it is essential to promote digital rights and to encourage their development, which will be useful to companies, by means of a law of innovation.
Notes de bas de page
1 M. Blanchet, “Industrie 4.0, Nouvelle donne industrielle, nouveau modèle économique”, Outre-Terre, 2016, n° 46, p. 62-85, §1.
2 “L’activité économique par laquelle une personne propose ou assure à distance et par voie électronique la fourniture de biens ou de services”: Loi n° 2004-575 du 21 juin 2004, pour la confiance dans l’économie numérique, Article 14, JORF, 22nd June 2004, n° 0143 text 2.
3 The most widely used being Ethereum, but the protocols are executable on any blockchain. See in this sense : S. Tikhomirov et al., SmartCheck: static analysis of ethereum smart contracts, in: Proceedings of the 1st International Workshop on Emerging trends in Software Engineering for Blockchain - WETSEB’18, Association for Computing Machinery, 2018, pp. 9-16; on the notion of blockchain: Th. Douville, Blockchain et protection des données à caractère personnel, AJ Contrat, 2019, p. 316; J. Gossa, Les blockchains et smart contracts pour les juristes, Dalloz IP/IT, 2018, p. 393; M. Mekki, Les mystères de la blockchain, Dalloz IP/IT, 2017, p. 2160.
4 J.-Ch. Roda, Smart contacts, dumb contracts?, Dalloz IP/IT, 2018, p. 397.
5 Axa’s Website, « Axa se lance sur la Blockchain avec fizzy », [online] available on : https://www.axa.com/fr/magazine/axa-se-lance-sur-la-blockchain-avec-fizzy (accessed on 1st September 2021).
6 Ch. Caron, L’IA, ou le retour de HAL, Communication, Commerce Électronique, 2018, n° 5, p. 1.
7 B. Barraud, Le droit en datas : comment l’intelligence artificielle redessine le monde juridique, Revue Lamy Droit de l’Immatériel, 2019, n° 164.
8 E. Charniak, Introduction au Deep Learning, Dunod, 2021.
9 Y. Le Cun, Quand la machine apprend, La révolution des neurones artificiels et de l’apprentissage profond, Éd. Odile Jacob, 2019, spéc. p. 225 et s.
10 E. Charniak, ibid.
11 CNIL, CNIL’s website, Intelligence artificielle, l’avis de la CNIL et ses homologues sur le futur règlement européen, 8 juill. 2021, [online] available on: https://www.cnil.fr/fr/intelligence-artificielle-lavis-de-la-cnil-et-de-ses-homologues-sur-le-futur-reglement-europeen accessed on 1st Sept. 2021).
12 CNIL, ibid.
13 CNIL, ibid.
14 See : B. Nicolleti, The Future of FinTech, Integrating Finance and Technology in Financial Services, Springer, 2017.
15 See : M. Corrales, M. Fenwick, H. Haapio, Legal Tech, Smart Contracts and Blockchain, Springer, 2019.
16 A. Charpentier, Big Data, GAFA et assurance, Annales des Mines – Réalités industrielles, 2020, n° 1, p. 53-57.
17 See : C. Grenier, H. Hudebine, B. Pauget, Innovation en santé : un renouvellement conceptuel et méthodologique pour transformer durablement le champ de la santé, Innovations, 2021, n° 65, p. 5-19.
18 Ch. Larroumet, S. Bros, Les obligations, Le contrat, in : Traité de Droit civil, (dir.) Ch. Larroumet, tome 3, Economica, 9th ed., 2018, §3 et s.
19 B. De Bertier-Lestrade, La bonne foi dans la réforme française des contrats, in : Le contrat dans tous ses états, (dir.) C. Le Gallou et A. Marmisse-D’abadie D’arrast, PUT1, Actes de colloque de l’IFR, n° 41, p. 141-160.
20 B. Barraud, Le droit en datas : comment l’intelligence artificielle redessine le monde juridique, Revue Lamy Droit de l’Immatériel, 2019, n° 164.
21 Ordonnance n° 2016-131 du 10 février 2016 portant réforme du droit des contrats, du régime général et de la preuve des obligations, JORF, n° 0035, du 11th Feb. 2016, text n° 26 ; S. Lequette, La réforme du droit commun des contrats et contrats d’intérêt commun, Recueil Dalloz, 2016, p. 1148.
22 S. Lequette, ibid. ; V. Valais, La réforme du code civil : quels enjeux pour nos contrats ?, Dalloz IP/IT, 2016, p. 229.
23 A.-C. Mansion, L’émergence des smart contracts : une future révolution juridique, in: L’impact des nouvelles technologies sur le droit et ses acteurs, Colloque ADDCDA, Annales de l’Université Toulouse 1 Capitole, tome LIX, 2019, I, p. 382 ; Y. Cohen-Hadria, Blockchain : révolution ou évolution ?, Dalloz IP/IT, 2016, p. 537.
24 N. Szabo, Formalizing and Securing Relationships on Public Networks, First Monday, 1er sept. 1999; F. Terré, Ph. Simler, Y. Lequette, F. Chénedé, Droit civil, Les obligations, Dalloz, 12e éd., 2019, §17.
25 Article 1113 al. 1, French Civil Code.
26 J. Ghestin, La notion de contrat, Recueil Dalloz, 1990, chron. 147.
27 Ch. Larroumet, S. Bros, op. cit., §87.
28 Article 1101, French Civil Code.
29 A.-C. Mansion, op. cit. : C. Zolynski, Fintech – Blockchain et smart contracts : premiers regards sur une technologie disruptive, Revue de Droit bancaire et financier, 2017, n° 8.
30 C. Barreau, La régulation des smart contracts et les smart contracts des régulateurs, Annales des Mines – Réalités industrielles, 2017, n° 3, p. 74-76.
31 Which one could be retained for an AFNOR standard: CE, 6e Ch., 28 juill. 2017, M. A. c. Ministère de l’Environnement : Communication, Commerce Électronique, 2017, com. 78, note Caron ; Propriétés Intellectuelles 2018, n° 66, p. 59 obs. Bruguière ; but also for a legal treaty, Cass. 1ère Civ., 9 janv. 1996 : Revue Internationale du Droit d’Auteur, 1996, n° 169, 331, obs. Kéréver.
32 A.-C. Mansion, op. cit.
33 M. Danis, Ch. Bouffier, Th. Feigean, L’intelligence artificielle appliquée au secteur de la finance : enjeux contractuels et responsabilités, Annales des Mines – Réalités industrielles, 2019, 1, p. 65-68 ; Ph. Mathieu, M.-H. Verrons, GeNCA : Un modèle général de négociation des contrats, Revue des Sciences et Technologies de l’Information – série Revue d’Intelligence Artificielle, 2005, vol. 19, n° 6, p. 837-884.
34 Although artificial intelligence is present in the design of smart contracts, it has not, to date, been a content creator: C. Barreau, op. cit.
35 H. Claret, Interprétation des contrats d’assurance et droit de la consommation, Recueil Dalloz, 2003, p. 2600 ; M. Lamoureux, L’interprétation des contrats de consommation, Recueil Dalloz, 2006, p. 2848.
36 Article 1188, French Civil Code. ; Article 12, al. 3, French Civil Procedure Code.
37 See on the example of the execution of a shareholders’ agreement in case of a sale of shares: J.-Ch. Roda, Smart contacts, dumb contracts?, Dalloz IP/IT, 2018, p. 397.
38 See : D. Houtcieff, Droit des contrats, 6e éd, Bruylant, 2021, spéc. §132-10.
39 M. Mekki, Blockchain, l’exemple des smart contracts, Entre innovation et précaution, mai 2018 [online] available on: https://lesconferences.openum.ca/files/sites/97/2018/05/Smart-contracts.pdf (accessed on 1st Sept. 2021).
40 L. Aynès, La confiance en droit privé des contrats – Rapport de synthèse, in : La confiance en droit privé des contrats, (dir.) V.-L. Bénabou et M. Chagny, 2008, Dalloz, p. 151 ; V. Edel, La confiance en droit des contrats, (dir.) R. Cabrillac, thèse dactyl. Montpellier I, 2006.
41 M. Danis et al., op. cit.
42 E. Orenna, préf. in : G. Babinet, Big data. Penser l’homme et le monde autrement, Le passeur, 2015, p. 6.
43 A.-C. Mansion, op. cit. ; N. Szabo, op. cit.
44 C. Boismain, Quelques réflexions sur les contrats intelligents (smart contracts), LPA, 2021, n° 158, p. 6.
45 C. Boismain, op. cit. ; A.-C. Mansion, op. cit.
46 This is the principle, but there are exceptions: Article 1103, French Civil Code.
47 H. Claret, op. cit. ; M. Lamoureux, op. cit.
48 H. Jacquemin et J.-B. Hubin, Aspects contractuels et de responsabilité civile en matière d’intelligence artificielle, in : L’intelligence artificielle et le droit, (dir.) H. Jacquemin et A. De Streel, Larcier, 2017, p. 104, §30.
49 P. De Filippi, S. Hassan, Blockchain technology as a Regulatory Technology: From Code is Law to Law is Code, First Monday, 8 janv. 2018.
50 I. A. Omar et al., Ensuring protocol compliance and data transparency in clinical trials using Blockchain smart contracts, BMC Medical Research Technology, 2020, n° 20, 224.
51 CNIL, Intelligence artificielle, l’avis de la CNIL et ses homologues sur le futur règlement européen, op. cit.
52 N. Martial-Braz, Le droit des contrats à l’épreuve des géants d’Internet, in : L’effectivité du droit face à la puissance des géants de l’Internet, vol. 1, (dir.) M. Behar-Touchais, IRJS éditions, tome 63, p. 61.
53 P. De Fillipi, S. Hassan, op. cit.
54 Loi n° 2004-575 du 21 juin 2004, pour la confiance dans l’économie numérique, Article 14, JORF, 22 juin 2004, n° 0143 texte 2.
55 B. Deffains, Le monde du droit face à la transformation numérique, Pouvoirs, 2019, n° 170, p. 43-58.
56 B. Deffains, ibid.
57 See : E. Chenut, D. Quercioli, Le numérique au service de l’humain, ou comment promouvoir un usage facteur d’émancipation individuelle collective, in : Numérique, action publique et démocratie, (dir.) Ph. Bance, J. Fournier, PURH, 2021, p. 237 et s.
Auteur
Doctorant,
Université Toulouse 1 Capitole, CDA
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