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70 Can. Bus. L.J. 59 (2025)
Rage against the Machine: Artificial Intelligence and Mistaken Contracts

handle is hein.journals/canadbus70 and id is 65 raw text is: RAGE AGAINST THE MACHINE: ARTIFICIAL INTELLIGENCE AND MISTAKEN CONTRACTS Michael Ilg* Contracts made by algorithms with the capacity for artificial intelligence pose a problem of correspondence with contract law, particularly in regard to the doctrine of mistake. Artificial intelligence permits an unprecedented level of autonomous contract formation without human awareness, meaning that the traditional approach to setting aside contracts for unilateral mistake may well be unworkable. This article proposes an update to the doctrine of mistake for the purposes of artificial intelligence. It is suggested that contracts formed with artificial intelligence should be set aside for mistake when two conditions are met: 1) the transaction produces an unconscientious advantage or detriment for one of the parties; 2) the claimant machine owner does not bear greater responsibility for the mistake or its reasonable avoidance. The second step would consider the efficient allocation of risk, and whether a mistake was endogenous or exogenous to the computer program. While sound policy would dictate that all parties contracting through artificial intelligence exercise appropriate diligence in the design of their programs, it is proposed that endogenous mistakes should generally be treated more strictly than mistakes that are exogenous. INTRODUCTION If to err is human, and to forgive is divine,1 should mistakes made by machines be as forgivable as those made by humans? More to the point, should contracts entered by algorithms with the capacity for artificial intelligence (AI) be excused for mistake on the same basis as if they had been made by a human? Imagine an old-fashioned trading floor, on which one trader hands another trader a trading slip with an offer to sell one thousand shares of ABC Ltd. at $4.65. Moments earlier, the last displayed price on the market ticker for ABC shares was $46.50. ABC is a stable utility * Associate Professor, Faculty of Law, University of Calgary. 1. To err is human; to forgive, divine. Alexander Pope, An Essay on Criticism, London: printed for T. Daniel, W. Thompson, and J. Steele, and A. Todd. (1758); line 526. 59