By: Liam S. Waugh
A promise was made at 11:47 p.m. on a Tuesday night. On one side of the screen was a customer with a question and no interest in waiting until morning. On the other side was a business whose employees were all asleep. Nobody drafted the answer, nobody approved it, and by morning the customer had a screenshot, and the business had a problem. What the AI Chatbot said explicitly contradicts the policy sitting two clicks away on the same website. Both sides usually assume the same thing: what an AI Chatbot says doesn’t really mean anything, but both sides are usually wrong. North Dakota has recognized machine-made agreements, and the statute governing them was written for situations like these.
North Dakota Law Already Has a Name for the AI Chatbot
The North Dakota Electronic Transactions Act calls it an “electronic agent”: “a computer program or an electronic or other automated means used independently to initiate an action or respond to electronic records or performances, in whole or in part, without review or action by an individual.” N.D.C.C. § 9-16-01(6). A deal made that way is an “automated transaction,” meaning the acts of “one or both parties are not reviewed by a person in the ordinary course in forming a contract.” N.D.C.C. § 9-16-01(2).
That means a contract may be formed between AI chatbots “even if no individual was aware of or reviewed the electronic agents’ actions or the resulting terms and agreements,” or between AI chatbots and an individual. N.D.C.C. § 9-16-13(2)-(3). So, “nobody here approved that” is likely not, by itself, a defense.
An AI Chatbot is not a Person, and here’s why Businesses Should Care
In 2023, the North Dakota Legislature amended the definition of “person” in the Century Code. A person means “an individual, organization, government, political subdivision, or government agency or instrumentality,” and the term does not include “environmental elements, artificial intelligence, an animal, or an inanimate object.” N.D.C.C. § 1-01-49(17). This means a business is responsible for the actions of its Chatbot, since the AI Chatbot is an instrument rather than a person that can be sued.
When a Canadian Airline Blamed Its Own Chatbot
In Moffatt v. Air Canada, a passenger asked an airline’s Chatbot about bereavement fares before booking a last-minute flight. The Chatbot told him he could apply for the reduced fare within 90 days after traveling. However, a different page on the airline’s website said otherwise, and the airline refused to honor it. Despite the airline arguing the chatbot was essentially a separate legal entity responsible for its own statement, the Canadian tribunal rejected that argument and held the airline is responsible for all the information on its own website.
If you are a Business
North Dakota’s statute does not make every conversation in a chat window into a binding deal. The chapter applies only between parties who each agree to conduct business electronically, judged from the context, surrounding circumstances, and conduct. N.D.C.C. § 9-16-04. Whether an electronic record is attributable to a company depends on whether it was the act of that company, which may be shown in any manner. N.D.C.C. § 9-16-08. Additionally, the terms of any resulting contract are still “determined by the substantive law applicable to the contract,” so offer, acceptance, consideration, actual or apparent authority, and disclaimers are still important. N.D.C.C. § 9-16-13.
If you are a Consumer
The same rules mean a company generally cannot escape liability by pointing at its own AI Chatbot. This also means that a promise is not automatically enforceable, since the chat transcript still has to add up to a contract or a misrepresentation someone reasonably relied on, and the terms of service matter.
Records are also very important in these disputes. Chat logs are electronic records, the company likely keeps its own copy, and evidence of a record or signature may not be excluded from a proceeding simply because it is electronic. N.D.C.C. § 9-16-12. The statute also has a section that runs in the consumer’s favor: when an individual makes an error dealing with a company’s AI Chatbot and the Chatbot gives no opportunity to prevent or correct the error, the consumer may be able to avoid the resulting record under certain conditions. N.D.C.C. § 9-16-09.
Conclusion
Automation does not create a gap in responsibility. North Dakota law attempts to fill it by treating an AI Chatbot as the business’s agent and/or instrument, and the resulting agreement as the business’ deal. Whether your company is facing a claim over something its Chatbot said, or a company has refused to honor what its own Chatbot told you, contact SW&L Attorneys for a consultation. Past results do not guarantee future outcomes; every case depends on its own facts.
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