Thomas Southmayd

What’s Cool: Will Smart Contracts Automatically Alert for Protocol Infringement?

May 27, 2020

In our series on negotiation automation, we are covering everything from document automation tools, compliance tools, smart contracts and, of course, our favorite topic - clause language, knowledge and expertise capture. Clausehound’s document review and services team recently came across a thought-provoking article titled “Smart Contracts - A Legal Perspective Part I: Observability”, written by Jared Arcari, and the use case around information capture piqued our interest. Arcari takes an in-depth look at smart contract technology from a legal standpoint and focuses on some of the barriers it faces with entering the professional legal industry.

Our team was particularly interested in Arcari’s example of clause adherence/infringement notifications and timestamping. Arcari’s example, in brief, describes a smart contract which timestamps successful deliveries and acts according to the contract terms post-delivery.

We found this particularly interesting as we imagined other ways and industries this technology could be used. In sales, for example, we find that sales commissions often take forever to collect upon, because of the confirmations required that, (1) for example, the product or service has been successfully accepted, or (2) that a warranty or refund period has elapsed. Acceptance in itself is a “murky” provision and can be a “grey zone”. For a vendor managing a single contract, or only a few, obtaining acceptance can be carefully planned out.

Our very own services team is in the habit of confirming acceptance before sending an invoice, and that assists us to confirm that our product has been accepted.

However, many vendors are managing a multitude of clients and contracts, so: Challenge 1 is that obtaining acceptance on each may be a slow-moving train with missed stops. Challenge 2 is that for the person earning a commission, finding out that the very same train has returned to the station with payment ready (in the form of the commission) might be a delayed reaction. We envision smart contract technology to allow for teams to be notified through the press of an acceptance button that will automatically trigger payment, and automatically transfer commissions.

We like this example because it’s immediately actionable with a little bit of ”if this, then that” (IFTTT)-type technology and almost no coding - but there are dozens of other similar use-cases that are starting to come to light. For example, our document review teams are often tasked with listing compliance requirements within documents reviewed, related to compliance and work product delivery. Smart checklists can assist with those kinds of activities using software like ours that automatically extract compliance lists. Or for those that want to take a DIY approach, you can carefully compile manual lists of contract deliveries that trigger emails once their completed, using one of many IFTTT products.

Items Completed
Data privacy audit due June 30 []
Confirm that the confidential information has been returned and deleted by setptember 30 []
[]
[]

Early use cases of notification technology embedded into contracts are fun to test out, and we encourage you to think about how to work into your document delivery processes, too. Write to us at support@clausehound.com and share some of your challenges and use-cases!

About Us: Clausehound has supplied the first mobile first legal document review platform with document commenting, editing, and access to a document library completely accessible by “thumb”. Contact us to learn more!

Technology

Written by Thomas.