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The “computable contract” is a standard that many in the legal community have aspired to over the last few years. Researchers at Stanford’s CodeX and Singapore-based Legalese are both also attempting to create standards and prototypes of code-enabled contract work. Still, many of the technology functions that lawyers’ would prefer in a computable contract remain out of reach.

UK-based dynamic contract startup Clause is now in the process of demoing its “data-driven contracts,” and the company is promising its solution will integrate live data directly into the binding text of a contract. Clause’s data-driven contract is clearly a step towards a functioning, enforceable computable contract, but it’s not yet a be-all end-all solution.

Here’s an inside look at some things the contract is capable of, and some things we’ll have to wait for:

What It Can Do

Embedded internet of things (IoT) data streams: Clause’s signature feature is its ability to reflect real-time changes in data streams drawn from IoT devices, meaning that things like temperature tracking, resource flow, and time stamps can be reflected in the body of the contract without a manual language change. “You can essentially set it and forget it. You don’t have to do any manual reconciliation,” said Clause co-founder Peter Hunn.

Automatically generate invoicing: Hunn and fellow Clause co-founder Houman Shadab explained that with integrated data streams, the data-driven contract can automatically generate invoicing consistent with changes in conditions reflected in IoT data. This could eliminate or reduce the need to have individuals monitor contract compliance and manually manage invoicing.

Maintain a record of changes to the contract: Though Clause’s contracts update themselves, keeping a full record of any changes to the contract can be useful. “If there is a dispute about what the terms were, or if there is a breach, parties would not have a problem resolving that problem,” explained Shadab of the contract’s recordkeeping capabilities.

What It Can’t Do Yet

Greater contract analysis: Contracts don’t exist in a vacuum; they’re surrounded by a set of interacting dynamics, laws, and situations that can influence the ways that contract terms are enforced. Unfortunately for technologists, programming contract analyses of these moving pieces is a tall order, and this is probably a challenge Clause will need to tackle a little further down the line.

Contract execution: Many legal technologists are hoping that contracts can one day truly be “set it and forget it” ordeals, where contractual terms can be automatically implemented by the contract itself based on its connection to data streams and databases. Hunn noted that while some of these actions could potentially be executed with Clause’s technology, the company’s cofounders want to take computable contracts one step at a time so attorneys can acclimate to the technology. “The most important thing is to go incrementally,” he said.

Understand ambiguous conditions: Data-driven contracts can be extremely useful for easily quantifiable contractual terms, but they can’t currently account for more subjective conditions. Harm Bavinck, a CodeX fellow, previously told The Recorder that computable contracts down the line may be able to generate responses based on previous actions. “It may be possible to have a data-driven definition of what constitutes ‘best efforts’ in a particular industry,” Bavinck said.

The “computable contract” is a standard that many in the legal community have aspired to over the last few years. Researchers at Stanford’s CodeX and Singapore-based Legalese are both also attempting to create standards and prototypes of code-enabled contract work. Still, many of the technology functions that lawyers’ would prefer in a computable contract remain out of reach.

UK-based dynamic contract startup Clause is now in the process of demoing its “data-driven contracts,” and the company is promising its solution will integrate live data directly into the binding text of a contract. Clause’s data-driven contract is clearly a step towards a functioning, enforceable computable contract, but it’s not yet a be-all end-all solution.

Here’s an inside look at some things the contract is capable of, and some things we’ll have to wait for:

What It Can Do

Embedded internet of things (IoT) data streams: Clause’s signature feature is its ability to reflect real-time changes in data streams drawn from IoT devices, meaning that things like temperature tracking, resource flow, and time stamps can be reflected in the body of the contract without a manual language change. “You can essentially set it and forget it. You don’t have to do any manual reconciliation,” said Clause co-founder Peter Hunn.

Automatically generate invoicing: Hunn and fellow Clause co-founder Houman Shadab explained that with integrated data streams, the data-driven contract can automatically generate invoicing consistent with changes in conditions reflected in IoT data. This could eliminate or reduce the need to have individuals monitor contract compliance and manually manage invoicing.

Maintain a record of changes to the contract: Though Clause’s contracts update themselves, keeping a full record of any changes to the contract can be useful. “If there is a dispute about what the terms were, or if there is a breach, parties would not have a problem resolving that problem,” explained Shadab of the contract’s recordkeeping capabilities.

What It Can’t Do Yet

Greater contract analysis: Contracts don’t exist in a vacuum; they’re surrounded by a set of interacting dynamics, laws, and situations that can influence the ways that contract terms are enforced. Unfortunately for technologists, programming contract analyses of these moving pieces is a tall order, and this is probably a challenge Clause will need to tackle a little further down the line.

Contract execution: Many legal technologists are hoping that contracts can one day truly be “set it and forget it” ordeals, where contractual terms can be automatically implemented by the contract itself based on its connection to data streams and databases. Hunn noted that while some of these actions could potentially be executed with Clause’s technology, the company’s cofounders want to take computable contracts one step at a time so attorneys can acclimate to the technology. “The most important thing is to go incrementally,” he said.

Understand ambiguous conditions: Data-driven contracts can be extremely useful for easily quantifiable contractual terms, but they can’t currently account for more subjective conditions. Harm Bavinck, a CodeX fellow, previously told The Recorder that computable contracts down the line may be able to generate responses based on previous actions. “It may be possible to have a data-driven definition of what constitutes ‘best efforts’ in a particular industry,” Bavinck said.