Automatic Negotiation of Contracts Using Context

FM Liberman signs agreement with OECD Secretar...

Image by IsraelMFA via Flickr

I had some great discussions with Renee Lloyd of Project VRM this week at Kynetx Impact on the subject of legal agreements and context. I don't pretend to understand the legal issues sufficiently well to exilian them here, so I'll just summarize my understanding and let Renee and others correct me where necessary.

The problem is that the terms and condition agreements that most Web sites use ubiquitously have some legal issues that make them less than ideal. Moreover people dislike them. Their inflexibility leads to lost business and opportunity.

What if we had the ability to automatically negotiate agreements based on various context available when the transaction is being completed? What do I mean by "context?". Here's a few examples:

  • because you're a repeat customer I might offer an agreement without certain clauses that I would require of a new customer
  • I might offer you a lower price if you choose to forego indemnification in certain situations
  • based on the fact that you're a male I don't have to give you clauses regarding dangers to pregnancy
  • customers might be able to shop based own agreement terms rather than just price, shipping cost, etc.

In short, agreements could be generally less complex because they would not have to cover every conceivable problem.

The problem is how to automate these negotiations because companies and individuals don't have the resources to do it manually. I see it as a subset (mostly) of the more general VRM problem. In an earlier blog post, I posited that rules acting on behalf of the customer and rules acting on behalf of the merchant could use contextual data, including data from the customer's personal data store (or exchange, depending on your view), to automatically negotiate deals. Why not terms also? Indeed.

KNS and the Personal Data Store

The diagram (see a description in in the post) shows rules acting on behalf of the customer and rules acting on behalf of the merchant interacting inside the Kynetx Rules Engine to produce a custom, negotiated result based on the desires and situation of both parties. The engine has contextual data about the transaction as well data from the personal data store (as permissioned by the customer). The details of the transaction and, more importantly, the customers personal data don't have to be revealed to the merchant to negotiate the agreement. Neither do the details of the transaction or the merchant's position need to be revealed to the customer.

Clearly the result of the negotiation might not always be a complete agreement, but it could give the user the specific points of the agreement that have to be agreed to beyond what the customer's rules dictate are automatically ok in the specific context of this transaction. These are just some initial thoughts on how this might work and they clearly need to be built out for us to understand just how well they'd work. But if they do, contextual negotiation of custom agreements (as simple contracts rather than a contract of adhesion) could provide significant benefits to both customers and merchants.