Hybrid Contract Execution System for Real-Time Visibility
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Solution Overview
Problem
Existing technologies for managing contracts, including CLM software and smart contracts, are limited in providing real-time visibility and management of contract performance, and they lack the ability to dynamically update or amend legally enforceable contract terms.
Innovation Solution
A system and method that enables the formation, versioning, execution, and management of computable legal contracts, allowing for partial or full automation of contract execution and management through programmable clauses that can interact with external resources and execute logic both on-chain and off-chain.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Loss of information
If contracts are managed using traditional CLM software or static digital representations, then contract formation and storage are simplified, but real-time visibility and dynamic management of contract performance cannot be achieved
Solution Approach 1:
The patent segments the contract into distinct programmable clauses that can be independently executed and monitored. Each clause represents a discrete unit of contractual obligation that can be automated and tracked separately, enabling real-time visibility without requiring a complete system overhaul.
Solution Approach 2:
The patent creates a multi-functional system where a single contract management platform handles formation, execution, monitoring, and amendment of contracts. The system serves multiple purposes including legal document management, automated performance tracking, and dynamic term modification, eliminating the need for separate systems for each function.
2Extent of automation
If smart contracts are used to automate contract execution, then automation capability is improved, but scalability and privacy issues arise due to on-chain execution requirements
Solution Approach 1:
The patent divides contract execution into segments that can run off-chain while maintaining legal enforceability. Non-critical clauses are executed offline to reduce blockchain transaction loads, improving scalability while critical clauses that require trustlessness remain on-chain.
Solution Approach 2:
The patent introduces an intermediary layer between the blockchain and contract execution. This mediator handles off-chain computation and verification, allowing the system to maintain automation benefits while reducing the burden on the blockchain network and improving overall scalability.
3Extent of automation
If smart contracts are used for contract execution, then automation is improved, but computation costs increase due to on-chain execution requirements
Solution Approach 1:
The patent applies partial automation by selecting only essential contract clauses for on-chain execution. Non-critical clauses are executed off-chain, reducing the number of expensive blockchain transactions while maintaining sufficient automation for key contractual obligations.
Solution Approach 2:
The patent assigns different execution locations to different contract clauses based on their specific requirements. Critical clauses requiring high trust and immutability execute on-chain, while less critical clauses execute off-chain, optimizing computation costs based on local needs of each clause.
4Reliability
If contracts are executed in static state with fixed terms, then legal enforceability is maintained, but flexibility to amend terms in response to changing environments is lost
Solution Approach 1:
The patent transforms static contract terms into dynamic, programmable clauses that can be modified during execution. The system maintains legal enforceability through structured amendment processes while enabling flexible adaptation to changing circumstances through code-based term modifications.
Solution Approach 2:
The patent implements feedback mechanisms that monitor contract performance and environmental conditions. When predefined conditions are met or parties request amendments, the system facilitates controlled term modifications while maintaining legal validity through structured processes that ensure proper authorization and recording.
Data Source
AI summary
A system and method for managing an electronic contract for hybrid runtime execution, which includes a contract execution service that comprises an internal runtime environment and a set of integrations to external resources with at least one integration to an on-chain runtime, wherein the contract execution service comprises configuration to: establish the electronic contract, wherein the electronic contract comprises a set of executable programmable components and a set of natural language components; change the state of the electronic contract and generate a contract event; and in response to the contract event: extend execution of the electronic contract to an on-chain environment, when the contract event includes an associated on-chain integration; and extend execution of the electronic contract to an external application resource, when the contract event includes an associated external service integration.