Artificial intelligence in contract design: biodiversity offset contracts as an example

Information design and artificial intelligence (AI) offer interesting possibilities for environmental contracting. This article shows how AI can be used to design sustainable and responsible contracts, especially in the context of biodiversity offsetting (BO).

Biodiversity offset contracts are a relatively new concept in Finland, so they inherently run the risk of being burdensome, opaque and not aligned with the parties’ objectives. Nevertheless, these challenges can be mitigated by using the potential of AI-assisted contract design to optimize content, structure, language and presentation. In the past, (re)designing contracts was time-consuming and required a lot of manual work. Today, generative AI tools such as Open AI’s GPT-4 (available through ChatGPT Plus) can significantly assist in all these aspects. AI tools can translate from one language to another, summarize large amounts of information, simplify or explain complex text, and suggest and implement design improvements to help make contracts more accessible and understandable for everyone.

This article examines how AI tools can be used to address the challenges associated with offset contract design, with a focus on experiments that demonstrate the potential of AI-assisted contract design in practice. Particular attention is paid to the use of plain language and visualization. The experiments illustrate how contracts can be turned into scripts that clarify the roles and responsibilities of the parties involved and enable them to carry out the assigned activities. Moreover, the article integrates contract design and AI to advance sustainable and responsible contracting practices beyond biodiversity offsets. The integration of these tools enables the creation of user-friendly contracts that facilitate the achievement of environmental objectives. The findings provide valuable guidance on the application of similar tools to transform other complex contracts, benefiting all stakeholders and society as a whole.