Providing for Autonomous Electronic Devices in the Electronic Commerce Act 1999

Providing for Autonomous Electronic Devices in the Uniform Electronic Commerce Act

By: Dr. Ian R. Kerr, Faculty of Law, Faculty of Information and Media Studies and Department of Philosophy, The University of Western Ontario, London, ON. I would like to thank the Uniform Law Conference of Canada, Working Group on Electronic Commerce and the Canadian Foundation For Legal Research for their generous contribution to the funding of this project. I would also like to convey my deepest gratitude to Brett Harrison, Carole Johnson, Corey Levin, Bernard Sandler, and Katie Warfield for all of their extraordinary efforts and for the high quality of research assistance that they provided.


Despite the fact that most entrepreneurs of the new economy fancy the idea of sky rockets in flight, the exponential growth of online interaction poses a serious threat to the future success of electronic commerce. Many computer and information scientists are concerned that the Internet is becoming too big, too fast. Its diversity, not to mention its perceived ubiquity, pushes the boundaries of human comprehension, making the Internet more and more a difficult place for most folks to visit and interact. Here is how two computer scientists describe it:

Put simply, the sheer volume of information available to us via the Internet and World Wide Web (WWW) represents a very real problem. The potential of this resource is immediately apparent to anyone with more than the most superficial experience of using the WWW. But the reality is often disappointing. There are many reasons for this. Both human factors (such as users getting bored or distracted) and organizational factors (such as poorly organized pages with no semantic markup) conspire against users attempting to use the resource in a systematic way. ...

One important contributing factor to information overload is almost certainly that an end user is required to constantly direct the management process. But there is in principle no reason why such searches should not be carried out by agents, acting autonomously to search the Web on behalf of some user.1

The “agents” referred to by the authors in the above passage are not human agents, they are in fact electronic devices. Often referred to in the computer science and business literature as “intelligent software agents,”2 these electronic devices are thought by many to be a promising solution to the current threat of “information overkill.”3 As one author has recently predicted, “[a]gents will be a highly necessary tool in the information supply and demand. However, agents will not be able to replace skilled human information intermediaries. In the forthcoming years their role will be that of a valuable personal assistant that can support all kinds of people with their information activities.”4

One obvious application for agent technology is electronic commerce. Commerce is an information intensive activity. Traditionally, the informational transactions required for engaging in commerce have been driven mostly by human interaction. Typical interactions include: a determination of unmet business or consumer needs (need identification), the retrieval of information about what to purchase in order to fulfill those needs (product brokering), an evaluation of merchant-specific information in order to determine who to buy needed products from (merchant brokering), a method of determining the terms and conditions for the purchase or sale of products (negotiation), and a determination of the perceived level of the quality and service of the products purchased (customer satisfaction).5 However, as commercial enterprise migrates further into electronic environments, it is unlikely that all of these interactions will continue to be carried out exclusively by humans.6 Intelligent software agents will be employed to assist people in the elimination of many of these time consuming activities and will thereby reduce transaction costs.

For example, recent innovation in the field of artificial intelligence makes it possible for electronic devices to interact, exchange information and engage in operations that from all outward appearances look very much like the negotiation and creation of contractual agreements.7 These interactions can be distinguished from an earlier generation of automated transactions in which computer networks were merely the electronic conduit for human trading. The newer technology makes it possible for computers to initiate and complete a transaction autonomously, i.e., without human intervention. In fact, the entire point of the new technology is to allow such transactions to take place without any need for human traders to review or even be aware of particular transactions.8 Such innovation is revolutionary. It transforms the role of computer hardware and software in electronic commerce from that of a passive pipeline to that of an animated associate.

How the law responds to such innovation will have an important effect on the future development and growth of electronic commerce. In order to fully enjoy the benefits of automation, human and corporate traders need to be confident that the transactions generated by and through their computers are legally enforceable. This need notwithstanding, it is quite clear that the involvement of an autonomous computer or mobile computer program in the contract formation process, especially in an online environment, generates considerable doctrinal difficulties.9 Electronic devices are not legal persons. Although these devices are generally referred to as “software agents”, they are not contracting agents in the traditional legal sense. This is because electronic devices currently lack the legal capacity to enter into contracts. Likewise, electronic devices are unable to form the requisite intention to enter into legal relations. Whether one contemplates future automated transactions as between two electronic devices or between one electronic device and a human individual or corporation, it is difficult to conceive of any such transaction as achieving the fundamental traditional prerequisite to contract formation, viz., the parties formation of a “meeting of the minds.”

In keeping with the spirit underlying the UNCITRAL Model Law on Electronic Commerce,10 this article is meant to provide an in-depth analysis of the contract formation issues peculiar to automated electronic commerce. The central aim of this study is to provide the Uniform Law Conference of Canada, Electronic Commerce Working Group with a critical evaluation of the various possible solutions that might be adopted by a legislator seeking to cure formal defects in agreements that are negotiated and entered into by one or more intelligent software agents. Part I of this article includes a description of the essential aspects of current agent technology and surveys the technological and commercial promise of autonomous electronic devices. In Part II, the barriers to automated electronic commerce are highlighted via a brief examination of the relevant traditional contract doctrine. Part III canvasses the recent academic interest in attempting to cure the doctrinal difficulties raised in Part II by treating electronic devices as independent legal persons. Part IV contains the most technical part of the study, from a legal point of view. In it, the approaches currently adopted by the Model Law,11 UETA12 and UCITA13 are investigated in detail.14 Each of the relevant provisions of these proposed pieces of legislation posits in its own way the general rule that automated electronic devices are treated merely as an extension of human and corporate interactions. The analysis in Part IV aims to uncover the profits and pitfalls of each of these approaches in order to determine whether any provisions currently lacking in the proposed legislation are needed to accompany such a general rule. In Part V, a different approach is offered. The attempt in Part V is to take seriously the agency metaphor in order to determine whether the law of agency has anything useful to contribute to the question about how to treat autonomous electronic devices in electronic commerce. Part VI provides a brief summary of each of the issues canvassed and the resultant recommendations offered to the Uniform Law Conference of Canada, Electronic Commerce Working Group.

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