Who Is The Contracting Party When AI Acts For A Company? Agency, Authority And Liability In AI-Assisted Contracting
Shubham Kumar Madhesia, Campus Law Centre, Faculty of Law, University of Delhi
ABSTRACT
Artificial intelligence is increasingly being incorporated into corporate decision-making and commercial transactions. AI-enabled systems can analyse offers, negotiate contractual terms, communicate with counterparties and, in some circumstances, conclude transactions with limited human intervention. This development raises a fundamental question for contract and company law: when an artificial intelligence system acts on behalf of a company, whose act is the resulting contractual act?
Indian law does not presently recognise artificial intelligence as an independent legal person or contracting entity. Nevertheless, the Indian Contract Act, 1872, the Information Technology Act, 2000, and the Companies Act, 2013 contain principles capable of addressing substantial parts of this problem through electronic attribution, agency, actual authority, apparent authority and corporate authorisation. Section 11 of the Information Technology Act is particularly significant because it expressly addresses electronic records generated by information systems programmed to operate automatically.
Internationally, the UNCITRAL Model Law on Automated Contracting, 2024, adopts a technology-neutral approach and provides specific rules concerning attribution of actions generated by automated systems.
This article examines whether India's existing legal framework can determine when an AI-generated contractual act should be attributed to a company. It argues that AI should ordinarily be treated as a technological instrument through which a company acts, rather than as an independent contracting party. However, the increasing autonomy of AI systems exposes uncertainty concerning the limits of actual authority, apparent authority, unexpected automated outcomes, corporate responsibility and allocation of losses between companies and AI providers. The article proposes a framework based on attribution, defined authority parameters, human oversight for significant transactions, auditability and contractual allocation of technological risk.
Keywords: Artificial Intelligence, Automated Contracting, Agency, Actual Authority, Apparent Authority, Corporate Authority, Electronic Contracts, Contract Law, Company Law, UNCITRAL.
