When AI Systems Make Contracting Errors: Analyzing Legal Implications

The increasing reliance on AI for contract formation raises significant legal questions, particularly when mistakes occur. Martin Herbosch's analysis suggests that existing legal frameworks are adaptable enough to address these complexities while ensuring AI deployers receive adequate protection.

• Herbosch critiques two prevailing views: one posits that AI cannot form contracts due to lack of human intent, while the other asserts deployers bear all risk when AI errs. He argues that both perspectives overlook the flexibility of contract law to accommodate AI-generated agreements.

• The dual functions of intent in contract formation are emphasized, where the deployment of AI itself satisfies the safeguard of intent, while the perceived intent governs the interaction with the counterparty, regardless of the AI's output.

• The application of the unilateral mistake doctrine to AI-generated contracts provides legal recourse for deployers when AI outputs diverge from reasonable expectations, likening AI errors to clerical mistakes that can be corrected under law.

• Watch the video for a deeper exploration of these concepts and their implications in contract law.