‘Smart Agreement Firm’ Clause to be acquired by DocuSign
DocuSign, a Nasdaq-listed company, has acquired a ‘Smart Agreement’ Clause, a leading legal automation developer. The Clause was one of the first to develop smart legal contracts, which aim to add automated components to traditional contracts that can but do not have to use blockchain.
Clause was the brainchild of the Accord Project, a non-profit organization dedicated to smart legal contracts that counts among its members some of the world’s most prestigious law firms.
A service level agreement, such as server uptime, could be included in a contract and automatically trigger a penalty if it is not met. Payment is usually triggered by some action in most contracts, such as delivery.
The payment can be automatically initiated if the contract has a bank account associated with it and an API linked to a delivery receipt.
Clause collaborated on fuel surcharges with BakerHostetler in 2019. Fuel is commonly accounted for in many contracts at a specific cost. Clause created a smart legal contract that used inputs like miles, estimated fuel costs, and actual fuel costs to calculate the fuel surcharge using a predetermined algorithm.
The benefit is that all contract parties have access to the information, preventing a subsequent disagreement regarding the gasoline cost rate.
The majority of those contracts were blockchain-based in the beginning. However, that necessity was relaxed over time, and the smart programmable element is now frequently employed without the need for blockchain.
Clause’s $5.5 million Series A round in 2019 included Docusign as a strategic investor.
The Agreements Network and ConsenSys-affiliated OpenLaw, which counts Thomson Reuters as a partner, are two other blockchain players.
Icertis is another firm that uses blockchain for contract administration but does not refer to itself as a “smart legal contract.” Mercedes and the unicorn contract management startup teamed to address supply chain sustainability.