Finding International Contracting Opportunities: AI Extensions to EDI

Electronic Data Interchange (EDI) offers a telecommunications infrastructure for inter-business communications. This paper proposes a particular use of that infra-structure to aid firms in identifying contracting opportunities, particularly where international trade is involved. We focus on two aspects of this problem: navigating the legal procedures relating to such contracts and managing the multi-lingual communications. 1. THE INTERNATIONALIZATION OF BUSINESS complexities. The model supports the formation and execution of contracts over a telecommunications network Increasing competition and the globalization of markets by providing a multi-lingual interface and, equally imporrequire that businesses large and small interact effectively tant, by capturing the expertise needed to reason about the on an international scale. A basic problem of doing procedures and to guide the parties' communications to a business internationally is differences in language. Formersuccessful outcome. ly, Britain's success as a colonial power and America's economic dominance after World War II established 2. ELECTRONIC CONTRACTING English as a lingua fmnca, a language adopted (sometimes imposed) to facilitate communication between parties with Contracting is one of the most fundamental concepts of different native languages. However, the utility of English Western economics. Essentially, a contract is a generalizaas a lingua ,/hmca is nearing its limit. Many nations, tion of the notion of direct exchange that supports crosshaving achieved economic status in the world community, temporal transactions, allowing one party to offer goods or seek to maintain their cultural identities, especially as services at one time in exchange for other goods or embodied in their languages. For example, the European services at another time.2 In doing so, an enormous gain Economic Community recognizes the languages of all its in flexibility is achieved in that the contracting parties are members and designates nine official languages in which able to negotiate complex arrangements specialized to the its policies, regulations, and other official documents must needs of the parties involved (Williamson 1975, 1979). be pubushed. Precise language and carefully specified procedures help to reduce the potential confusion and disagreement in Another obstacle to international business are the legal contracting, but they also add greatly to the expense and procedures ("red tape") required for most international time required to form and execute a contract. An appartransactions. Within a single legal system, conventions, entlystraightforwardarrangementmaybecomelengthyand trading practices, and statutory law (e.g., the Uniform complex as contingencies and details are worked out. For Commercial Code in the US) simplify and expedite the this reason, certain types of contracts have been standardcontractingprocess. However, when international contracts ized and streamlined to facilitate negotiation, e.g., the involve diverse legal systems and trading practices, addicommodities contracts used by organized exchanges such tional precautions must be taken to ensure that each as the Chicago Board of Trade. Also helping to reduce party's interests are protected. These extra steps greatly contracting overhead are statutes such as the Uniform increase the paperwork required and extend the contract Commercial Code (UCC), which provides default terms negotiating time several-fold, 1 significantly handicapping and standardized interpretations for contracts involving companies too small to employ their own legal staff and sales of goods within the US. too inexperienced to cope with these bureaucratic complcxities. Today, despite the availability of instantaneous and worldwide electronic communications (phone, telex, This paper presents a prototype model of a computerelectronic mail), contracts are still recorded mostly in the mediated contracting system whose purpose is to facilitate medium of paper documents. In this section, we consider the entrance of smaller business firms into the global how contracting can be and is supported by information marketplace by enabling them to identify contracting technology. Clearly, telecommunications and database opportunities and to navigate the legal and bureaucratic management can be and are used to speed communi-