Contract Management Blockchain Use Cases With AI-Powered Negotiations
While blockchain-based smart contracts may be new to most executives, this emerging technology promises several benefits across a range of contracting scenarios. Advantages arising from the contract management blockchain include the following:
- Real-Time Updates: Automated task completion eliminates the need for manual data entry and expedites the process of contract review, negotiation, and implementation.
- Accuracy: Automated transactions are not prone to manual, human-based errors.
- Security: Decentralized processing eliminates risks of manipulation or nonperformance.
- Trust: Fewer intermediaries mean less reliance on third parties that could erode trust.
- Cost: Less human intervention reduces process and handling expenses.
Fortunately, for executives interested in exploring these innovations, contract management blockchain use cases are readily available and can be applied to common contract types like Non-Disclosure Agreements, Software License Agreements, and Master Service Agreements, which are the business staples of corporate legal departments.
How Blockchain Contract Management Works
Fundamentally, smart contracts are digital contracts. In this way, agreements are translated into blocks of code that may include conditional if / then statements that will execute an automated chain of contract events once predetermined conditions are met.=
For instance, consider a company that has taken out a bank loan. In this case, the smart contract could be coded to store the loan amount, interest rate, and other conditions. Blockchain automation would allow the contract to self-close once the company has fulfilled its obligation and paid off the debt. Verification could be automatically sent to all parties as soon as the last payment has been processed, without the need for further human oversight and paperwork. In a traditional setting, this process would require human intervention to complete the related tasks that accompany the contract’s completion. With the help of blockchain contract management, these tasks can be automated and legal departments can be relieved of the work surrounding, in this example, a contract’s completion.
From employment contracts to service agreements, blockchain contracts promise to transform a wide range of corporate contract management needs.
Contract Management Blockchain Use Cases
The Blockchain Ethereum update launched the beginning of its use in contract management in 2015. Since then, the technology has been applied across wide-ranging industries, from finance and healthcare to telecom and energy, to resolve common pain points specific to each industry. Two common blockchain use cases among corporate legal departments include Non-Disclosure Agreements and Master Service Agreements.
- Non-Disclosure Agreements: When a company shares competitive, proprietary information with another person or entity, risk is introduced. NDAs and confidentiality clauses are necessary to help companies protect their proprietary assets.
By applying blockchain contract management to NDAs, companies can automate access restrictions and automatically block employees or other entities from privileged information and project access once their relationship with the company has ended. Blockchain’s encoded timestamps clarify precisely when a party’s access to confidential information was shared or revoked.
- Master Service Agreements: These complex documents outline the nature of a business relationship. Provisions may include payment terms, intellectual property ownership, social responsibility and ethics policies, dispute resolution procedures, termination provisions, and warranty protocols.
Blockchain contract management can automate MSAs by allowing certain aspects of the contract to trigger as specific conditions are met. As a result, payments can be processed without human intervention and commence the start of a project or the delivery of a service. Likewise, penalties for missed deadlines or payments may be applied automatically to an upcoming invoice. Depending on the specific nature of the contract, unique conditional contractual actions may be automated using blockchain technology.
How Contract Management Blockchain Can Leverage AI-Powered Negotiations
Innovations in legal applications for blockchain technology now offer a blockchain's immutable framework for contract management. However, corporate legal departments and procurement teams must still complete the initial contract review and negotiation phases to establish guidelines that will inform the conditions of the immutable contract.
An AI-powered contract review and negotiation platform offers the perfect complement to blockchain contract management. By automating the review and negotiation process for wide-ranging business contracts, legal departments can arrive at approval-ready agreements in minutes or hours instead of days or weeks. Consequently, companies can leverage the speed and accuracy of an AI-powered negotiation platform to accelerate their transition to blockchain contract management. Key negotiated terms of the final agreement can be automatically transferred to a blockchain which mirrors the traditional paper agreement that would have normally been signed by both parties to consummate the business.
Learn how LexCheck's AI-powered contract review and negotiation platform can optimize your blockchain contract management process. Contact us at firstname.lastname@example.org to learn more. To experience the technology for yourself, request a demo.
Gary Sangha | Founder & CEO
Gary Sangha is the Founder and CEO LexCheck. He's a serial entrepreneur and an academic. Gary previously founded Intelligize, a legal technology company that was acquired by LexisNexis. He's affiliated with the University of Pennsylvania and Stanford University and started his career as an attorney at Shearman & Sterling and White & Case.