International Journal of

ADVANCED AND APPLIED SCIENCES

EISSN: 2313-3724, Print ISSN: 2313-626X

Frequency: 12
line decor
  
line decor

 Volume 12, Issue 3 (March 2025), Pages: 225-237

----------------------------------------------

 Original Research Paper

AI-driven contract law processes and the efficient breach doctrine: A systematic review of legal challenges in common law jurisdictions

 Author(s): 

 Yuan Liu, Izura Masdina Mohamed Zakri *

 Affiliation(s):

 Faculty of Law, University of Malaya, Kuala Lumpur, Malaysia

 Full text

  Full Text - PDF

 * Corresponding Author. 

  Corresponding author's ORCID profile: https://orcid.org/0000-0002-9458-1226

 Digital Object Identifier (DOI)

 https://doi.org/10.21833/ijaas.2025.03.022

 Abstract

This study examines the changing role of artificial intelligence (AI) in contract law, focusing on how it interacts with the efficient breach doctrine in common law countries, including the United States, the United Kingdom, Canada, and Australia. A systematic review was conducted, analyzing 187 articles and 3 legal cases from Scopus and Google Scholar. From these, 56 articles and legal cases published over the last five years were selected for detailed analysis. The findings indicate that AI improves efficiency and accuracy in contract management and breach decisions, enhancing legal practice. However, it also raises significant legal and ethical challenges, such as issues of accountability, consent, transparency, and liability. The comparative analysis shows that courts in different countries are adopting AI at different rates, with regulatory frameworks still underdeveloped to address AI-related complexities in contract law. This study offers new insights by identifying areas for legal reform, such as creating new civil law rules, ethical guidelines, standardized documents, and stronger regulatory oversight. By contributing to the discussion on AI's impact on contract law, this research emphasizes the need for future legal frameworks that balance AI's benefits with principles of fairness and justice, promoting both innovation and ethical integrity in AI-based legal processes.

 © 2025 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords

 Artificial intelligence, Contract law, Efficient breach doctrine, Legal reform, Ethical challenges

 Article history

 Received 17 October 2024, Received in revised form 1 March 2025, Accepted 23 March 2025

 Acknowledgment

No Acknowledgment.

 Compliance with ethical standards

 Conflict of interest: The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

 Citation:

 Liu Y and Zakri IMM (2025). AI-driven contract law processes and the efficient breach doctrine: A systematic review of legal challenges in common law jurisdictions. International Journal of Advanced and Applied Sciences, 12(3): 225-237

 Permanent Link to this page

 Figures

 Fig. 1 Fig. 2 Fig. 3

 Tables

 Table 1 Table 2

----------------------------------------------   

 References (44)

  1. Al-Kaabi MH (2020). Is it possible to introduce efficient breach theory to a civil law country? The case of Qatar. Arab Law Quarterly, 36(3): 291-323. https://doi.org/10.1163/15730255-BJA10025   [Google Scholar]
  2. Al-Obeidi A and Hussein S (2023). The legal nature of contracts concluded by artificial intelligence according to the UAE electronic transactions and e-commerce law No. 46 of 2021. In the 24th International Arab Conference on Information Technology, IEEE, Ajman, United Arab Emirates: 1-8. https://doi.org/10.1109/ACIT58888.2023.10453892   [Google Scholar]
  3. Armbrüster C and Prill J (2022). Einsatz von KI im versicherungssektor–mit schwerpunkt versicherungsmedizin. Zeitschrift Für Die Gesamte Versicherungswissenschaft, 111(2): 177-189. https://doi.org/10.1007/s12297-022-00527-2   [Google Scholar] PMCid:PMC9316861
  4. Cohen MC, Dahan S, Khern-Am-Nuai W, Shimao H, and Touboul J (2023). The use of AI in legal systems: Determining independent contractor vs. employee status. Artificial Intelligence and Law: 1-30. https://doi.org/10.1007/s10506-023-09353-y   [Google Scholar] PMid:37361711 PMCid:PMC10061388
  5. Crawford K and Schultz J (2019). AI systems as state actors. Columbia Law Review, 119(7): 1941-1972.   [Google Scholar]
  6. Ebers M, Poncibò C, and Zou M (2022). Contracting and contract law in the age of artificial intelligence. Bloomsbury Publishing, London, UK. https://doi.org/10.5040/9781509950713   [Google Scholar]
  7. Fathima M, Dhinakaran DP, Thirumalaikumari T, Devi SR, Bindu MR, and Shanthi P (2024). Effectual contract management and analysis with AI-powered technology: Reducing errors and saving time in legal document. In the 9th International Conference on Science Technology Engineering and Mathematics, IEEE, Chennai, India: 1-6. https://doi.org/10.1109/ICONSTEM60960.2024.10568733   [Google Scholar]
  8. Fine A and Marsh S (2024). Judicial leadership matters (yet again): The association between judge and public trust for artificial intelligence in courts. Discover Artificial Intelligence, 4: 44. https://doi.org/10.1007/s44163-024-00142-3   [Google Scholar]
  9. Gadlin H and Welsh NA (2020). Evolution of a field: Personal histories in conflict resolution. DRI Press, Saint Paul, USA.   [Google Scholar]
  10. Gandhi K and Whitman V (2022). Disputes and litigation. In: Kerrigan C (Ed.), Artificial intelligence: 251-265. Edward Elgar Publishing, Cheltenham, UK. https://doi.org/10.4337/9781800371729.00025   [Google Scholar]
  11. González RI (2024). The use of efficient breach of contracts in the automotive cluster of Querétaro, Mexico. Mexican Law Review, 16(2): 55-70. https://doi.org/10.22201/iij.24485306e.2024.2.18893   [Google Scholar]
  12. Herian R (2021). Smart contracts: A remedial analysis. Information and Communications Technology Law, 30(1): 17-34. https://doi.org/10.1080/13600834.2020.1807134   [Google Scholar]
  13. Ismayilzada T (2024). Technical overview of AI and its participation in the contract formation. In: Ismayilzada T (Ed.), A framework for AI-made mistakes in German and English contract law: A legal, psychological and technical inquiry: 115-185. Volume 5, Springer, Cham, Switzerland. https://doi.org/10.1007/978-3-031-61999-1_4   [Google Scholar]
  14. John AM, Aiswarya MU, and Panachakel JT (2023). Ethical challenges of using artificial intelligence in judiciary. In the IEEE International Conference on Metrology for eXtended Reality, Artificial Intelligence and Neural Engineering, IEEE, Milano, Italy: 723-728. https://doi.org/10.1109/MetroXRAINE58569.2023.10405688   [Google Scholar]
  15. Kaspar J, Harrendorf S, Butz F, Höffler K, Sommerer L, and Christoph S (2023). Artificial intelligence and sentencing from a human rights perspective. In: Završnik A and Simončič K (Eds.), Artificial intelligence, social harms and human rights: 3-34. Springer International Publishing, Cham, Switzerland. https://doi.org/10.1007/978-3-031-19149-7_1   [Google Scholar]
  16. Koos S (2021). Machine acting and contract law–The disruptive factor of artificial intelligence for the freedom concept of the private law. UIR Law Review, 5(1): 1-18. https://doi.org/10.25299/uirlrev.2021.vol5(1).6890   [Google Scholar]
  17. Kovac M (2023). Autonomous AI torts: A comparative law and economics approach. In: Morgan P (Ed.), Tort liability and autonomous systems accidents: 188-210. Edward Elgar Publishing, Cheltenham, UK. https://doi.org/10.4337/9781802203844.00012   [Google Scholar]
  18. Księżak P and Wojtczak S (2023). Introduction: Is a new conceptual network necessary to adapt the civil (private) law to the development of AI and robotics development? In: Księżak P and Wojtczak S (Eds.), Toward a conceptual network for the private law of artificial intelligence: 1-12. Springer International Publishing, Cham, Switzerland. https://doi.org/10.1007/978-3-031-19447-4_1   [Google Scholar]
  19. Kudeikina I and Kaija S (2024). Limits of the use of artificial intelligence in law–ethical and legal aspects. In the International Scientific and Practical Conference Environment, Technologies, Resources, Rezekne, Latvia, 2: 188-191. https://doi.org/10.17770/etr2024vol2.8016   [Google Scholar]
  20. Kull A (2020). Restitution as a remedy for breach of contract. In: Smith L (Ed.), Restitution: 293-346. 1st Edition, Routledge, London, UK. https://doi.org/10.4324/9781003073321-14   [Google Scholar]
  21. Lagioia F, Jabłonowska A, Liepina R, and Drazewski K (2022). AI in search of unfairness in consumer contracts: The terms of service landscape. Journal of Consumer Policy, 45(3): 481-536. https://doi.org/10.1007/s10603-022-09520-9   [Google Scholar]
  22. Linna DW (2021). Evaluating artificial intelligence for legal services: Can “soft law” lead to enforceable standards for effectiveness? IEEE Technology and Society Magazine, 40(4): 37-51. https://doi.org/10.1109/MTS.2021.3123732   [Google Scholar]
  23. Lutman K (2023). Artificial intelligence and the prohibition of discrimination in the EU: A private law perspective. In: Završnik A and Simončič K (Eds.), Artificial intelligence, social harms and human rights: 77-97. Springer International Publishing, Cham, Switzerland. https://doi.org/10.1007/978-3-031-19149-7_4   [Google Scholar]
  24. Martinelli S (2023). AI as a tool to manage contracts consequences and challenges in applying legal tech to contracts management. European Review of Private Law, 31(2/3): 411-426. https://doi.org/10.54648/ERPL2023016   [Google Scholar]
  25. Mik E (2022). Much ado about artificial intelligence or: The automation of contract formation. International Journal of Law and Information Technology, 30(4): 484-506. https://doi.org/10.1093/ijlit/eaad004   [Google Scholar]
  26. Montagnani ML, Najjar MC, and Davola A (2024). The EU regulatory approach (ES) to AI liability, and its application to the financial services market. Computer Law and Security Review, 53: 105984. https://doi.org/10.1016/j.clsr.2024.105984   [Google Scholar]
  27. Nowik P (2021). Electronic personhood for artificial intelligence in the workplace. Computer Law and Security Review, 42: 105584. https://doi.org/10.1016/j.clsr.2021.105584   [Google Scholar]
  28. Papadouli V and Papakonstantinou V (2023). A preliminary study on artificial intelligence oracles and smart contracts: A legal approach to the interaction of two novel technological breakthroughs. Computer Law and Security Review, 51: 105869. https://doi.org/10.1016/j.clsr.2023.105869   [Google Scholar]
  29. Poncibò C (2023). Artificial intelligence as a communication tool in contract law. European Review of Private Law, 31(2/3): 239–260. https://doi.org/10.54648/ERPL2023012   [Google Scholar]
  30. Qasim A, El Refae GA, and Eletter S (2023). A proposed model to integrate drone technology in accounting for long term contracts: A cash flow management perspictive. International Arab Journal of Information Technology, 20(3 Special Issue 2023): 477-484. https://doi.org/10.34028/iajit/20/3A/5   [Google Scholar]
  31. Rajendra JB and S Thuraisingam A (2022). Artificial intelligence and its impact on the legal fraternity. UUM Journal of Legal Studies, 13(1): 129-161. https://doi.org/10.32890/uumjls2022.13.2.6   [Google Scholar]
  32. Scalise RJ (2007). Why no “efficient breach” in the civil law?: A comparative assessment of the doctrine of efficient breach of contract. The American Journal of Comparative Law, 55(4): 721-766. https://doi.org/10.1093/ajcl/55.4.721   [Google Scholar]
  33. Schmitz AJ (2019). Expanding access to remedies through e-court initiatives. Buffalo Law Review, 67(1): 89-163. https://doi.org/10.20885/PLR.vol1.iss1.art5   [Google Scholar]
  34. Schulze-Horn I, Hueren S, Scheffler P, and Schiele H (2020). Artificial intelligence in purchasing: Facilitating mechanism design-based negotiations. Applied Artificial Intelligence, 34(8): 618-642. https://doi.org/10.1080/08839514.2020.1749337   [Google Scholar]
  35. Shen Z and Jin L (2024). Bargaining with algorithms: How consumers respond to offers proposed by algorithms versus humans. Journal of Retailing, 100(3): 345-361. https://doi.org/10.1016/j.jretai.2024.05.001   [Google Scholar]
  36. Sivasankar S (2024). A comparative study on artificial intelligence and courtroom practices with India, UK, and USA. In: Dadwal S, Goyal S, Kumar P, and Verma R (Eds.), Demystifying the dark side of AI in business: 1-19. IGI Global, Pennsylvania, USA. https://doi.org/10.4018/979-8-3693-0724-3.ch001   [Google Scholar]
  37. Stahl BC, Antoniou J, Bhalla N, Brooks L, Jansen P, Lindqvist B, Kirichenko A, Marchal S, Rodrigues R, Santiago N, and Warso Z (2023). A systematic review of artificial intelligence impact assessments. Artificial Intelligence Review, 56(11): 12799-12831. https://doi.org/10.1007/s10462-023-10420-8   [Google Scholar] PMid:37362899 PMCid:PMC10037374
  38. Stathis G, Trantas A, Biagioni G, van den Herik HJ, Custers B, Daniele L, and Katsigiannis T (2023). Towards a foundation for intelligent contracts. In the 15th International Conference on Agents and Artificial Intelligence, SciTePress, Lisbon, Portugal, 2: 87-98. https://doi.org/10.5220/0011628200003393   [Google Scholar]
  39. Thirumagal PG, Raj MMA, Naser SJ, Hussien NA, Abbas JK, and Vinayagam S (2024). Efficient contract analysis and management through AI-powered tool: Time savings and error reduction in legal document review. In the 9th International Conference on Science Technology Engineering and Mathematics, IEEE, Chennai, India: 1-6. https://doi.org/10.1109/ICONSTEM60960.2024.10568823   [Google Scholar]
  40. Tung K (2019). AI, the internet of legal things, and lawyers. Journal of Management Analytics, 6(4): 390-403. https://doi.org/10.1080/23270012.2019.1671242   [Google Scholar]
  41. Tzimas T (2023). Algorithmic transparency and explainability under EU law. European Public Law, 29(4): 385-411. https://doi.org/10.54648/EURO2023021   [Google Scholar]
  42. Walters R and Novak M (2021). Artificial intelligence and law. In: Walters R and Novak M (Eds.), Cyber security, artificial intelligence, data protection and the law: 39-69. Springer, Singapore, Singapore. https://doi.org/10.1007/978-981-16-1665-5_3   [Google Scholar]
  43. Wilkinson S (2023). As interest in using artificial intelligence increases, can UK and EU compliance legislation keep pace with the rate of change? Journal of Data Protection and Privacy, 6(1): 9-23. https://doi.org/10.69554/VMRS8882   [Google Scholar]
  44. Zavhorodnia V, Slavko A, Shvaher O, Kamionka M, Cojocari I, and Polyakova L (2022). Artificial intelligence in the judiciary: Challenges and tools for achieving sustainable development goals. International Journal of Global Environmental Issues, 21(2-4): 322-342. https://doi.org/10.1504/IJGENVI.2022.126199   [Google Scholar]