Algorithmic Contracts and the Equitable Doctrine of Undue Influence: Adapting Old Rules to a New Legal Landscape

Recent scholarship engaging with the impact of digital technology on contract law has suggested that practitioners and researchers will need to give proper consideration to the ‘role of equitable remedies in the context of contracts drafted in whole or part in executable code’. More generally, a raft of challenges stem from the increasingly active role digital technologies play in contractual relations. Faced with these challenges, instinct may dictate attempting to tame the technological beast with a variety of regulatory responses spanning the full spectrum of possibilities, from legal requirements to voluntary codes of conduct or standards. While regulatory action may be a priority from a public policy perspective, the seeming trustworthiness of algorithms, and the consequent reliance placed on them by contracting parties carry the inherent risk of lack of autonomy and fully‐informed independent decision‐making that, in Australia at least, is addressed by equity through the doctrine of undue influence. This article explores whether this traditional doctrine can adapt to operate alongside regulation in dealing with some of the challenges presented by algorithmic contracting. Specifically, it focuses on those contracts where algorithms play an active role not only in the execution, but in the formation of the contract, as these are the “algorithmic contracts” that challenge the very fundamentals of contract law.