Legal Contracts Written in Code

Fri 23 April 2010

The SEC is considering mandating that Python be used to express certain financial contracts, allowing the potential buyer to 'programmatically input the user's own assumptions regarding the future performance and cash flows from the pool assets, including but not limited to assumptions about future interest rates, default rates, prepayment speeds, loss-given-default rates, and any other necessary assumptions.'

I love this idea!

Contract disputes, which unfortunately crop up every once in a while when you're a consultant, are horrifically expensive to adjudicate, because both sides invariably interpret some definitions in different ways and dispute which clauses have precedence.

Oh how I'd love to have a contract whose appendix was the behavior-driven steps of the various Cucumber-defined clauses!

[[Feature:]{style="color: #0000ff;"} ]{style="color: #3366ff;"}[Automated Resolution]{style="color: #008000;"}

[[In order to]{style="color: #0000ff;"} avoid expensive litigation]{style="color: #008000;"}

[[As a]{style="color: #0000ff;"} contract signatory]{style="color: #008000;"}

[[I want to ]{style="color: #0000ff;"}resolve disputes using a mechanical method]{style="color: #008000;"}

[[Scenario: ]{style="color: #0000ff;"}Invoice dispute over unsatisfactory work
]{style="color: #008000;"}

[Given ]{style="color: #0000ff;"}contractor submits an invoice in the amount of \$100

[And]{style="color: #0000ff;"} Contractee finds that work is unsatisfactory

[When]{style="color: #0000ff;"} Contractee disputes invoice

[Then]{style="color: #0000ff;"} the dispute shall be resolved by The Contract Program

Not that this would magically make contract disputes go away, but I can imagine it helping. At least until someone builds a recursive clause-defining clause and makes a Turing-complete Contract Program and then defines a non-computable contract.

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