Is a Contract with a Computer Program Enforceable?

Contracting with artificial intelligence in Pennsylvania

By Benjy Schirm, J.D. | Last updated on October 21, 2022

The common fears around giving AI power are firmly rooted in visions of HAL and Skynet—computers that are given full autonomy end up subverting the humans that created them. Taking this to the real world, Google Translate is a handy modern feature that translates between a multitude of languages using AI technology. It was coded by engineers to translate in the most efficient manner, and the software program wrote its own language to do so—a language no one knows or can fully explain. In a movie, this is where a dramatic noise would be inserted.

These days, humans enter into agreements with website programs every day—especially when goods are bought and sold online. But the legal question is: Are these contracts valid when they aren’t between two people, but a person and a machine?

One of the basic definitions of contract law is that there is an agreement between two or more parties (legal entities). Traditionally, this was two people that agree on the terms of the contract and the consideration or payment for various goods or services, which will be rendered by the party to the contract.

Google’s new assistant features include the ability to have a computer program schedule appointments for you—even if those appointments are dinner reservations with a non-refundable reservation fee. So, in essence, this is artificial intelligence forming contracts with businesses.

By the letter of the governing law, contracts may be made between parties through intermediaries or agents. And frequently contracts are made for businesses through agents that have been given the authority to act on the business’s or principal’s behalf. In many ways, our ability to contract is based around our legal status and who holds the authority to act on that status. As of now, the Pennsylvania Legislature hasn’t passed any laws controlling contracts with AI, but the common laws of contract in the state control where the legislature is silent.

The definition of an agent acting on behalf of a principle is that they have defined boundaries to their authority. Through one set of eyes, computers are simply machines that allow us to do things we tell them faster and more efficiently and, given the proper guidance, can make our lives so much easier. Through another lens, they create more grey areas and complications.

No matter where you sit, you will probably make a binding contract with a computer at some point. If you are entering into agreements without knowing the entity on the other end of the transaction, you are putting yourself at risk. If your company is utilizing new technology for efficiency, be certain that you have all of your policies labeling out the authority and limitations given to these programs to protect your future. And if ever you’re worried, consider contacting an experienced and reputable contracts attorney for legal advice and guide you along the way.

If you’d like more general information about this area of the law, see our contract law overview.

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