3 Ways Technology is Changing B2B Contracts

The nature of business-to-business contracts has changed considerably over the years. Technology has played a prominent role in the evolution of these types of business relationships. Businesses should be aware of major technological trends in 2018 and the ways that they will transform their contracts.

Here are some of the biggest technological trends shaping B2B contracts this year.


Blockchain, the ledger management and transaction authentication technology that was developed for bitcoin, is having a major impact on industries outside of the cryptocurrency market. It is playing a key role in the development of smart contracts. Forbes writer and keynote speaker Bernard Marr writes that smart contracts are disrupting every industry in fascinating ways.

Artificial Intelligence (AI)

AI has had many practical applications over the years. It has played a role in the development of video games, risk management, military protocols, insurance actuarial analyses and much more.

However, few people expected AI to influence contract law. Beverly Rich of Harvard Business Review wrote an insightful post about the impact that AI is having on the future of contracts, particularly with B2B business agreements.

One of the biggest ways that AI is changing contracts is by making it easier to evaluate existing contracts with sunset periods that are closing on them. Rich points out that it would take hundreds of hours for a large firm to go through all of its outstanding contracts to see which ones are set to expire in the near future. This forces the firm to decide whether to spend thousands of dollars analyzing contracts or risking losing out on future business opportunities by allowing them to expire without following up with the client.

AI makes it much easier to identify contracts that are expected to expire soon. This can save the firm upwards of $10,000 by eliminating the need for a paralegal to assess all of them.

According to Tara Naughter of ContractWorks, machine learning can help create contracts, based on the terms that you need. They can scan existing contracts to use as templates and provide reasonable modifications to suit your needs.

“One hot subfield in artificial intelligence is “machine learning,” by which computers can learn to classify unknown items and make better decisions just by having access to more data. Machine learning is used for everything from speech recognition to medical diagnosis, and now, legal firms are taking it up in order to write better contracts. Many contracts include boilerplate languages such as commonly used clauses and sentences that are repeated between documents. Current CLM software can store these frequent phrases so you can recall them for later use. However, machine learning can go one step further: it can identify the type of contract you’re working with and then suggest the appropriate stock parts to use it. For example, AI-enhanced software may suggest that a contract between two companies who are frequent partners include similar language to past contracts, or that contracts between two companies in different countries should include a clause to deal with currency fluctuation issues.”

Digital Agreements

Before the adoption of the World Wide Web, companies needed to sign contracts in person. This is no longer necessary since contracts are formed over the Internet every day.

Digital contracts are legally recognized in almost all jurisdictions. However, they have raised some concerns about authentication. People could claim that somebody else impersonated them online, which could leave the validity of the contract in doubt.

In order to enforce contracts, it needs to be shown that both parties actually consented to the agreement. In addition to blockchain authentication methods, there are other ways that technology helps establish a contract’s legality.

Companies can sometimes use IP addresses to show that a digital contract was signed from a corporation’s address. However, this isn’t always entirely enforceable. Internet Service Providers usually only keep records of IP addresses for 60 days. If a contract is disputed outside of this window, it can be difficult to use IP records to prove the other party consented.

Fortunately, there are other ways technology can show a chain of digital breadcrumbs to ensure the contract is valid. They can require people to have created an account with their verified email address to sign an agreement. Most third signature tools are very careful about verifying every member’s true identity.

Businesses can also require both parties to show a video indicating their consent or show a picture of them holding a written contract. All of these measures help authenticate a contact by showing mutual consent.

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