claim: What does it mean to have machines that can read, explain, and evaluate contracts? Recent advances in machine learning have led to a fundamental breakthrough in machine language models, portending a profound shift in the ability of machines to process text. Such a shift has far-reaching consequences for diverse areas of law, which are predicated on, and justified by, the existence of information barriers. Our object here is to provide a general framework for evaluating the legal and policy...

paper_title: Contracts in the Age of Smart Readers

evidence_quote: [p. 1] \\jciprod01\productn\G\GWN\90-1\GWN102.txt unknown Seq: 1 17-FEB-22 12:20 Contracts in the Age of Smart Readers Yonathan A. Arbel* & Shmuel I. Becher** ABSTRACT What does it mean to have machines that can read, explain, and evaluate contracts? Recent advances in machine learning have led to a fundamental breakthrough in machine language models, portending a profound shift in the ability of machines to process text. Such a shift has far-reaching consequences for diverse areas of law, which are predicated on, and justified by, the existence of information barriers. Our object here is to provide a general framework for evaluating the legal and policy implications of employing language...

citation: Yonathan A. Arbel & Shmuel I. Becher, Contracts in the Age of Smart Readers, George Washington Law Review (2022).

confidence: machine-linked

limitations: Machine-linked claim. Use the evidence quote and PDF before treating it as a quotation or as a complete statement of the paper's position.


claim: AI-powered "smart readers" represent a significant breakthrough in contract analysis, capable of simplifying, personalizing, and benchmarking terms for consumers. While offering profound benefits like increased understanding, improved market competition, and enhanced access to justice, these tools also introduce serious risks such as errors, bias, adversarial exploitation, and discrimination. Arbel calls for a new legal and regulatory framework to navigate these complex implications, as current doctrines are unprepared for this technological shift and its impact on contract law and consumer protection.

evidence_quote: [p. 9] \\jciprod01\productn\G\GWN\90-1\GWN102.txt unknown Seq: 9 17-FEB-22 12:20 2022] CONTRACTS IN THE AGE OF SMART READERS 91 do not feel the risk of boilerplate is similar to “lay[ing one’s] head into the mouth of a lion.”27 Part III examines the social implications of smart readers. Even with limited adoption, smart readers can have broad market effects, plausibly jumpstarting term competition in dormant markets. But along with their many salutary effects, smart readers also carry significant risks. These include discrimination, bias, and errors—risks that further merit taking this technology seriously. One novel concern we address is that of adversarial attacks by sophisticated...


claim: AI-powered "smart readers" are emerging from machine learning breakthroughs, poised to disrupt the "dismal equilibrium" where consumers ignore complex contract terms. these tools can simplify, personalize, interpret, and benchmark contracts, offering a technological solution to information barriers. His work explores their capabilities, potential uptake, and broad implications for contract law, including market competition, errors, access to justice, and discrimination, highlighting the need for new regulatory responses as current legal doctrines are unprepared for these advancements and their associated risks like bias and exploitation.

evidence_span: [p. 1] \\jciprod01\productn\G\GWN\90-1\GWN102.txt unknown Seq: 1 17-FEB-22 12:20 Contracts in the Age of Smart Readers Yonathan A. Arbel* & Shmuel I. Becher** ABSTRACT What does it mean to have machines that can read, explain, and evaluate contracts? Recent advances in machine learning have led to a fundamental breakthrough in machine language models, portending a profound shift in the ability of machines to process text. Such a shift has far-reaching consequences for diverse areas of law, which are predicated on, and justified by, the existence of information barriers. Our object here is to provide a general framework for evaluating the legal and policy implications of employing language...


claim: Smart readers, powered by AI like GPT-3, possess core capabilities crucial for consumer empowerment: simplification of complex legal text, personalization to individual user needs (including linguistic and cognitive adaptations), construction of contractual meaning through explanations, and benchmarking contracts against market alternatives. these tools can make obscure clauses understandable, provide scores for privacy policies, and allow interactive questioning, offering advantages in cost, speed, and accessibility over human lawyers, thereby helping consumers comprehend fine print and understand market choices.

evidence_quote: [p. 35] \\jciprod01\productn\G\GWN\90-1\GWN102.txt unknown Seq: 35 17-FEB-22 12:20 2022] CONTRACTS IN THE AGE OF SMART READERS 117 terms, and there is little variety of policies in the market. Once consumers start using smart readers and particularly their benchmarking capabilities, firms might witness a change in market behavior. There would be some migration of consumers toward firms with better privacy policies, even if these policies are still far from what consumers desire. Importantly, smart readers do not need to be perfectly accurate for this to happen. Even if smart readers only give a general sense of which privacy policies are better, they might be effective. Once firms...


claim: Consumer uptake of smart readers, while potentially limited by reading aversion and cognitive biases, could significantly impact markets even with modest adoption by an "informed minority," fostering term competition. these tools can act as behavioral nudges, countering cognitive overload by summarizing complex information, addressing myopia by highlighting risks like warranties, and helping consumers overcome price manipulations. The success or failure of uptake will offer insights into theories on why consumers don't read contracts, with quality, cost, and user experience being critical factors.

evidence_quote: [p. 49] \\jciprod01\productn\G\GWN\90-1\GWN102.txt unknown Seq: 49 17-FEB-22 12:20 2022] CONTRACTS IN THE AGE OF SMART READERS 131 F. Nudging with Smart Readers Behavioral biases and cognitive constraints are said to undermine the ability of consumers to make prudent decisions.196 To counter some of these biases, behavioralists often recommend using various nudges that improve the decision-making environment.197 There are many different types of biases, and although smart readers do not address all of them, they do seem well poised to tackle a few major types. These include (1) cognitive overload, (2) myopia and risk discounting, and (3) price-related manipulations. Cognitive overload...


claim: Smart readers carry significant risks, including errors (isolated or correlated), which must be evaluated against human error rates. more pernicious are adversarial attacks, where firms use subtle textual manipulations to mislead AI, and the potential for discrimination, as firms might offer inferior terms to non-users or leverage smart reader data for redlining. There's also a risk of overcompliance if smart readers don't distinguish unenforceable terms, and bias within the AI models themselves, necessitating caution despite their potential.

evidence_quote: [p. 38] \\jciprod01\productn\G\GWN\90-1\GWN102.txt unknown Seq: 38 17-FEB-22 12:20 120 THE GEORGE WASHINGTON LAW REVIEW [Vol. 90:83 benchmarks today evaluate language models on performance in this domain. Based on our experience using the models, we expect a large degree of error in the near future and a nontrivial improvement within a relatively short time. Critically, smart readers are useful even if they are not as accurate as their human counterparts, so long as they have a cost, consistency, and accessibility advantage over the alternatives. We already noted how, despite the potential for occasional error, firms stake billions of dollars on investment analyses produced by smart...