Mateusz Grochowski (Tulane University – Law School; Yale Law School; Yale Law School – Center for Private Law) has posted Innovative Complements and Substitutes for Contracts in U.S. Law on SSRN. Here is the abstract:
The displacement of traditionally negotiated contracts by technological substitutes—smart contracts, decentralized autonomous organizations (DAOs), platform-governed gig arrangements, and AI-generated agreements—poses foundational challenges to U.S. contract law that existing doctrine is ill-equipped to resolve. This article examines how code- and algorithm-based governance restructures contractual relationships, analyzing fragmented legal responses at both the federal and state levels. It further distinguishes between complements (mechanisms that enhance contractual efficiency and enforceability) and substitutes (instruments that displace contractual governance functions altogether). The article argues that U.S. federalism generates a characteristic problem: the same jurisdictional competition that enables rapid regulatory experimentation simultaneously produces temporal fragmentation, interpretive divergence, and compliance asymmetries, imposing disproportionate costs on smaller commercial actors. The staggered state adoption of the 2022 U.C.C. amendments exemplifies this structural tension. The analysis contends that distinctive features of the U.S. civil litigation system—including broad discovery, the American Rule on attorney fees, and opt-out class actions—create an enforcement gap that drives endogenous market demand for self-executing substitutes and automated complements as alternatives to costly formal adjudication. Critically, this litigation-driven technological innovation is not normatively neutral: while it enhances efficiency and reduces transaction costs, it simultaneously erodes public accountability and renders large portions of state-made law practically ineffective. Unresolved questions of worker classification, platform accountability, and AI-generated intellectual property ownership reveal the outer limits of a legal order confronting technologies indifferent to territorial boundaries, necessitating a deeper reassessment of assent, unconscionability, fairness, and accountability in modern U.S. contract law.
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