UNCITRAL Model Law on Automated Contracting (2024)
Date of adoption: 11 July 2024
Purpose
The UNCITRAL Model Law on Automated Contracting (Model Law or MLAC) is aimed at facilitating the use of automation in contracts, including through the deployment of artificial intelligence (AI) techniques and “smart contracts”, as well as in machine-to-machine transactions. Building on the Model Law on Electronic Commerce (1996) and the United Nations Convention on the Use of Electronic Communications in International Contracts (2005), the Model Law provides national legislators with a set of internationally acceptable rules to overcome legal obstacles to automated contracting. Specifically, it establishes a framework for legally recognizing the use of automation and AI in the formation and performance of contracts.
Like other UNCITRAL electronic commerce texts, the Model Law articulates the fundamental principles of technology neutrality and non-discrimination against the use of electronic means. It also supports the principle of party autonomy, respecting the freedom of the parties to use – or not to use – automated systems in their contractual relations and to regulate that use by agreement, within the limits of mandatory law.
Why is it relevant?
Automated systems are widely used throughout the contract life cycle. Examples include the supply of goods and services online and the operation of algorithmic trading platforms. As technology advances, particularly in AI, automated systems are being designed and programmed to operate with even less human intervention, which may give rise to questions as to the validity of contracts formed and performed using automated systems and, more broadly, the applicability of existing law, notably the rules of contract law.
The Model Law responds to these questions. In doing so, it does not seek to establish a complete code for automated contracting, nor does it seek to address legal issues related to the use of automation and AI beyond the contractual setting. It does not establish or affect rules regulating the ethical use and governance of AI.
Key provisions
The Model Law is designed to complement existing laws on electronic transactions and electronic contracting, in particular those based on the Model Law on Electronic Commerce (1996) and the substantive provisions of the United Nations Convention on the Use of Electronic Communications in International Contracts (2005), which already contains some provisions on automated contracting.
The Model Law establishes supplementary legal recognition rules that are specifically adapted to automated contracting. In addition to refined and expanded rules on the validity and legal effectiveness of automated transactions in the formation and performance of contracts using automated systems, it establishes new rules on the legal recognition of the use of computer code and dynamic information that power these transactions. It also establishes rules for the attribution of “outputs” of automated systems, as well as an optional rule on “unexpected” outcomes in the use automated systems. In addition, the Model Law signals the importance of information disclosure in the operation of automated systems and acknowledges that automated systems cannot be used simply to avoid or excuse non-compliance with other legal requirements.
Additional information
The Model Law is accompanied by a Guide to Enactment (forthcoming), which provides background and explanatory information to assist States in preparing necessary legislative provisions and offers guidance to other users of the text.