Exploring the Legal Impact of Artificial Intelligence on Contract Interpretation and Execution

Abstract

The accelerated adoption of artificial intelligence in the contractual setting has brought forth some of the most significant legal consequences to date that are well beyond technical efficiency. This study focuses on the role of AI systems in interpreting and performing contracts based on the legal-analytical conceptualization of legal doctrines of consent, intention, good faith, evidentiary reliability, and distributing liability. The work is based on 120 law materials, including 80 contracts, 25 judicial rulings, 15 texts on legislation or other regulations, and 32 major academic works that were used directly to inform the legal study. The results indicate that two out of three contracts analyzed were based on AI at least on one interpretive or operational level, casting substantive doubts on the view that algorithmic interpretation is compatible with the relevant doctrines of ambiguity, contextual reading, and reasonable person test. The judicial cases demonstrated a new trend whereby 56% of the cases covered the evidentiary weight of the AI-generated interpretations, and 44% of the cases covered the legal implications of automated contract performance. The analysis demonstrates that AI may result in even more textual homogeneity and, simultaneously, the subversion of the law and the problems relating to the transparency and responsibility, along with the attribution of the contractual intent. The research ends with the remark that although the contractual processes have become predicted, AI still needs more legal frameworks to explain the range of the algorithmic decision-making, maintain the interpretive fairness and adherence to the core tenets of the contract law.