FORMATION AND FULFILLMENT OF ELECTRONIC

CONTRACTS IN ICS

Nathália R. S. Oliveira, Sofiane Labidi, Edson Nascimento and Carlos R. B. Almeida

Eletrical Engineering Department, Federal University of Maranhão, Campus do Bacanga, São Luís-MA, Brazil

ywords: Electronic Commerce, Intelligent Agents, Contract Formation, Contract Fulfillment, Ontology, Temporal

Workflow

Abstract: This work is part of the ICS project (Intelligent Commerce System) whose aim is to design and implement

an effective B2B E-commerce system based on mobile and intelligent agents. The ICS lifecycle is based on

five phases: User Modeling, Matchmaking, Negotiation, Contract Formation and Contract Fulfillment. We

propose here an automated process for the Contract Formation and Fulfillment phases. We propose ontology

for sharing knowledge between agents that participate in the configuration process of contract, besides a

repository to store contract templates and contract instances. For managing the contract fulfillment, a

Temporal Workflow and active rules based on ECA paradigm of Active Database System are applied in

order to develop this process.

1 INTRODUCTION

Electronic commerce is increasingly applied in

organizations. This is encouraged by the fact that it’s

offering opportunities to discover new ways and to

improve the existing ones. E-commerce aggregates

more activities than purchase and sale: marketing,

invoicing, negotiation, contracting, payment,

delivery and so on. This and other facts prove that

doing electronic commerce on the Internet became

attractive and made it one of the most important

areas of investment in information technology.

Researches showed that the progress on

sophistication of automation turns the e-commerce

more dynamic and personalized. Examples are

applications that use intelligent agents to act on

behalf of its users, developing things like: making

commercial decisions, negotiations, participating on

auctions, playing important roles on electronic

markets as mediators, matchmakers, and other ones

(Jennings, 1998). One of the most growing e-

commerce areas are B2B applications that had

received increased interest by companies. But many

still have worried about the trust in transactions

made through Internet. To resolve this problem, the

ICS included two important phases on it lifecycle:

Contract Formation and Contract Fulfillment. This

paper focuses on the development of these two last

phases of ICS (Intelligent Commerce System)

(Labidi et al., 2003). We adopt the use of electronic

contracts on ICS to provide guarantees and,

consequently, to reduce the uncertainty associated

with transactions realized through this system.

Defining obligations that each party must fulfill and

making it enforceable by law, could reach these

guarantees we are referring.

We propose an automated process to implement

the Contract Formation phase. It uses intelligent

agents, ontology and XML. This includes two

aspects: a modeling of contracts that are manipulated

by a special agent and the behaviour of this agent.

We decide to apply the concepts of Semantic Web to

deal with this project because it makes possible the

improvement of the interpretation and recuperation

of information by agents, besides the exchange

information between them.

In the Fulfillment phase, we propose the use of

Temporal Workflow and active rules based on

ECAA paradigm’s Active Database System to

achieve the monitoring and management of the

activities to be performed by the parties of a

contract.

The paper is structured as follow. The section 2

presents the ICS system and its architecture. This is

continued by a brief description of ICS life cycle and

its phases. Section 4 and 5 details the process of

Contract Formation and Fulfillment phases. Finally,

section 6 outlines our conclusions and future works.

R. S. Oliveira N., Labidi S., Nascimento E. and R. B. Almeida C. (2004).

FORMATION AND FULFILLMENT OF ELECTRONIC CONTRACTS IN ICS.

In Proceedings of the Sixth International Conference on Enterprise Information Systems, pages 24-30

DOI: 10.5220/0002648700240030

 SciTePress

2 THE INTELLIGENT

COMMERCE SYSTEM - ICS

The ICS is an implementation of Business to

Business Electronic Commerce that apply mobile

and intelligent agents to carry out the process of

business making. The mobiles are responsible to

represent the ICS’ users, while the others have to

implement internal functions that take this system

work.

In the ICS system, negotiating agents work in an

open environment like Internet (or Intranet), moving

through the network to meet a potential negotiation

area with other agents looking for opportunities to

do business.

Fig. 1 shows the architecture of ICS that is made

by eight main components: marketplace, region,

matchmaker, mediator, contractor, negotiators,

ontology repository and contracts repository.

A marketplace is an environment that provides a

context within the system in which an agent

performs its tasks.

These tasks include details about communication

protocols, negotiation, storage information in

repositories, contract formation, besides functions

like access and control negotiation.

A region is a cluster of marketplaces operating

on the same domain ontology that represents the

business areas (sales of vehicles, food, electronic

products, etc). It also provides a higher level of

abstraction for communication among agents from

different regions. Whenever a new marketplace is

created it is identified as member of a region.

Only marketplaces of the same region can

communicate with each other. The objective is to

resolve the context problems.

The negotiators are mobile agents that represent

the users of ICS (companies that want make

business on the Internet). They should be

responsible for making commercial transactions

such as making survey of prices, analyzing business-

oriented proposals, etc, and put announcements in

appropriate repositories placed on regions.

The matchmaker agent makes queries in these

repositories to match similar interests and contact

possible business partners. There is just one instance

of this agent per region. This agent with its complete

functional and design requirements is detailed in

(Tomaz et al., 2003).

The mediator agent treats to guarantee the

management of the process negotiation governed by

a protocol – placed in the ontology repository -,

coordinating the participation, execution, resolution

and termination of negotiation.

In the case of a successful negotiation, the

contractor should validate the contract obtained

through negotiation using the same protocol, store it

in the repository (contracts repository) and produces

a workflow with the obligations established between

the parties.

The used protocol, called Negotiation Protocol,

coordinates messages flow among participants and

imposes rules for negotiation “game”. Each

marketplace implements a kind of it, which can be:

auction, procurement, bargain, etc.

3 ICS LIFECYCLE

The ICS lifecycle adopted in our system is an

extension of the model proposed in (Jennings, 1996)

and (Bartolini, 2001). A previous work (Fonseca et

al., 2003) has already introduced the user modeling,

matchmaking and negotiation phases, concept of

information feedback and has described ontologies

for each of these phases. As shown in Fig. 2, the

new model is composed by five phases.

User Modeling: In this phase the system capture

the users’ preferences and restrictions from queries

based on a domain specific ontology (Mukherjee,

2000).

Matchmaking: A trader locates other traders that

could potentially do business. This is made placing

advertisements in a shared repository.

Negotiation: The trader enters into negotiation

with one or more of these potential business partners

to agree or disagree to mutually acceptable terms of

business. These terms are placed in contract

templates and include some definitions like the

goods or service being traded, price, delivery date,

etc.

Contract Formation: All agreed terms are placed

into a legally biding contract and it is stored in an

appropriate repository.

Contract Fulfillment: The parties carry out the

agreed transaction, within the parameters specified

in the contract, monitored by workflow.

Figure 1: The ICS Environment

FORMATION AND FULFILLMENT OF ELECTRONIC CONTRACTS IN THE ICS

The results of Contract Fulfillment may be

returned, giving a feedback and reused during a new

modeling enriching the user models. The next

sections detail the Contract Formation and

Fulfillment phases of ICS lifecycle.

4 CONTRACT FORMATION

4.1 Definition

Contract is an agreement between two or more

parties about certain object that establishes rights

and obligations to each one. As a legal standpoint, a

contract serves to alleviate mistrust in a world of

uncertainty by constraining the unpredictable

activities of the other autonomous parties

(Milosevic, 1995).

We are working on B2B contracts - contracts that

deal with business transactions. For a while, the ICS

aims to provide some species of contracts that are

more common in B2B transactions: buy and sell,

rent, permute and service.

4.2 Contract Template and Instances

In our work, we propose modeling electronic

contracts through a kind of representation that are

orient to the reading and understanding of intelligent

agents. To deal with this modeling of contract

formation, we propose the use of a repository to

store contract templates (Ludwig, 2001) and contract

instances. Contract templates, in our approach, are

full standard contract forms that include fields to be

filled. These forms, in principle, correspond to the

species above mentioned. So, we decided to use

XML and build ontology.

The templates were modeled using XML, giving

structuring and representation to textual information.

We present in this paper a simple contract template

modeled with XML given in Appendix.

However, contract instances are contracts agreed

by parties, i.e., templates that already have been

filled after a successful negotiation.

The full standard contract forms have their

structure fixed and pre-defined. So, the negotiation

is obtained through the agreeing on the values in the

contract as defined in the standard contract forms.

Templates were introduced to reduce the cost of

setting up the contract formation, based on our

observation that there are a number of elements

which are common to many contracts and that this is

a frequently practice adopted by lawyers.

In addition, the repository should provide related

management operations, for example: addition of

new contract templates, specialization of contract

templates from existing ones, establishing other

possible relationships between them, besides add

and remove contract instances.

4.3 Contract Ontology

In the Negotiation phase, as we have already

mentioned, the negotiators agents start the process of

negotiation following a protocol. This protocol is a

common sense knowledge shared into ICS’s

marketplace, which was modeled as ontology like

proposed by (Tamma, 2002).

We extend this ontology adding the concept of

Contract, its types and parameters, bringing

advantages such as improving the negotiation and

allowing validation of templates.

The Fig. 3 shows the new Negotiation Protocol

ontology modeled on Protegé Ontology Editor (Noy

et al., 2001). This ontology approach has been

designed to support multiple kinds of negotiation,

cardinality among traders and some species of

contracts. It is stored in the marketplaces – on

ontology repository - and shared by all agents that

participate in the negotiation.

4.4 The Automated Process of

Electronic Contract Formation

One of the paper’s objectives was the development

of contractor agent’s function: management of

electronic contract configuration. To develop this,

the contractor should make a lot of activities. The

scene where interactions among contractor and

Figure 2: The ICS E-Commerce Lifecycle

ICEIS 2004 - SOFTWARE AGENTS AND INTERNET COMPUTING

negotiators agents happen is illustrated below on the

Fig.4.

A sequence of contractor’s actions is:

1) The negotiators that had closed an agreement

should communicate this to contractor;

2) Contractor accesses the repository to take an

appropriate template;

3) After, it requests the negotiation parameters

from these negotiators;

4) When it had received, should validate it using

the Protocol ontology already showed;

5) Then, it fills the template and stores it on the

repository – now becoming a contract instance – to

keep the evidence of transaction.

In Fulfillment phase, the contractor will produce

a workflow based on parties’ obligations.

5 CONTRACT FULFILLMENT

Although the parties have compromised to each

other, there is the possibility of contract breach.

Contract Fulfillment phase treats to verify the

execution of obligations defined by parties. So, if a

contracting part deviates from its prescribed

behavior, - intentionally or not – some mechanism

should be programmed to inform what kind of

problem has occurred.

A contract can be seen as a kind of business

process that usually defines deadlines dates to it

execution, fact that made us apply one of execution

system technologies existents - Temporal Workflow

- in conjunction with active rules to coordinate this

whole process.

Temporal Workflow produces all the obligations

and related activities that each party must fulfill,

defining the start time, duration and finish time. This

temporal model used is based on work in (Labidi,

2000). Active rules enable monitoring the

obligation’s deadlines, based on finish time of each

obligation and notify the agent to verify the status of

next activity. This approach was adapted from

(Kappel, 1998) work.

The results of the Fulfillment phase –

performance or non-performance of obligations –

will be returned to User Modelling phase. This fact

helps to enrich the User Model through the reusing

of these informations during a new modeling

(Fonseca, 2003).

Fig. 5 shows an example of temporal workflow

produced from a buy and sell contract.

6 CONCLUSION AND FUTURE

WORKS

The fast growing of electronic commerce, mainly in

B2B, requires a sophistication of its functionality.

The applications of intelligent and mobile agents

bring many advantages as personalized queries of

consumers and business suppliers, real-time access

from remote resources, lower computational cost

and so on.

The contributions of ICS relative of ontologies

proposed on some phases, permit sharing the

knowledge about negotiation and contracting

process between all agents that shall communicate.

Figure 4: The Contractor Agent Scenario

Figure 3: The Shared Protocol Ontology

Negotiator

Agents

Contractor

Agent

Repository Protocol

send_message_agreement

get_template

request_parameters

send_parameters

validate_parameters

fill_tem plate_with_parameters

store_template

FORMATION AND FULFILLMENT OF ELECTRONIC CONTRACTS IN THE ICS

Contracts make any business more attractive. The

fulfillment of obligations enforceable by law

provides some guarantee that either it will be done

or the legislation will carry out until the final

resolution.

Future works in this area can include a feedback

of contract filled to the users of ICS (companies)

that had closed an agreement. This make that they

can confirm if what did they negotiate is correct.

This implies in adoption of infrastructure’s supply

security in transactions involving the transference of

contract information. Issues like Cryptography and

Digital Signatures must be considered in terms of

Contract Formation’s implementation.

REFERENCES

Bartolini, C., and Preist, C. A Framework for Automated

Negotiation. 2001. HP Labs Technical Report.

Bechhofer S., Horrocks I., Goble C., Stevens R. OilEd: a

Reason-able Ontology Editor for the Semantic Web.

Proceedings of KI2001, Joint German/Austrian

Conference on Artificial Intelligence, September 19-

21, Vienna. Springer-Verlag LNAI Vol. 2174, pp 396-

-408. 2001.

Fonseca, Luis C. et al. ICS-An Agent Mediated E-

Commerce System. In Proceedings of 5th International

Conference on Enterprise Information Systems,

Angers – France, p.23-26, April, 2003.

Jennings, N. R., Faratin, P., Johnson, M. J., O'Brien, P. O.,

and Wiegand, M. E. 1996. Using intelligent agents to

manage business processes. In First International

Conference on the Practical Application of Intelligent

Agents and Multi-Agent Technology (PAAM-96)

(April 1996), pp. 345–360.

Jennings, N.R. and Wooldrigde M. Applications of

intelligent agents. 1998.

Kappel, G., Rausch-Schott, S., Retschitzegger, W.,

Coordination in Workflow Management Systems - A

Rule-Based Approach, in: W. Conen, G. Neumann

(eds.) Coordination Technology for Collaborative

Applications - Organizations, Processes, and Agents,

Springer LNCS 1364, 1998, pp. 99-120.

Labidi, Sofiane et al. Intelligent B2B Commerce System.

In: INNOVATEX/FORMATEX. (Org.). Techno-

Legal Aspects of Information Society and New

Economy: an Overview. Badajoz, 2003, v. I.

Labidi, Sofiane; Hammodi, Slimane; Gannoun, Lassaad.

Integrating Cooperation and Temporal Organization in

Workflow Management. In: The 2000 International

Conference on Artificial Intelligence (IC-AI'2000).,

2000, Las Vegas. The 2000 International Conference

on Artificial Intelligence (IC-AI'2000). Las Vegas:

World Scientific Engineering Society, CSREA Press,

2000. p. 229-235.

Ludwig, H.; Gisler M.. Electronic Contracts and Contract-

Based Computing. Invited Tutorial at the IFIP I3E

Conference, Zurich, October 2001.

Milosevic, Z. and Bond A. Electronic Commerce on the

Internet: What is Still Missing? In Proceedings of the

5th Conference of the Internet Society, Honolulu, June

1995.

Mukherjee R. et al. Analysis of domain specific ontologies

for agent-oriented information retrieval. In the

working notes of AAAI 2000 Workshop on Agent

Oriented Information Systems, Austin, TX.

Noy N. F. Creating Semantic Web Contents with Protégé-

2000. IEEE Intelligent Systems 48(2):60-71, 2001.

Tamma V., Wooldridge M., and Dickinson I.. An

Ontology for Automated Negotiation. In Proceedings

of the Workshop on Ontologies in Agent Systems,

Bologna, Italy, July 2002.

Tomaz R. F. et al. A Semantic Matching Method for

Clustering Traders in B2B Systems. In IEEE/LA-Web

First Latin American Web Congress, Santiago, Chile,

November 2003.

Figure 5:

Example of Temporal Workflow

Send confirmation

payment

confirmation

arrived?

Business

Consumer

Business

Supplier

Check receiving of

confirmation

Delivery product Cancel contract

Check delivery

product

arrived?

Cancel contract

Receive product

ST = 0

D = 5

FT = 5

ST = 6

D = 10

FT = 16

ICEIS 2004 - SOFTWARE AGENTS AND INTERNET COMPUTING

<Title>Contrato de Compra e Venda</Title>

<Party_ID>

<body>This private Agreement Promise of Buying and Selling which is done between (hereby

called The Seller) , located at here being represented according to the Social Contract, and on the other

side (The Buyer), located at here being represented according to the Social Contract have the following

agreement according to the clause and conditions below:</body>

<cod1/>

<cod2/>

</Party_Identification>

<ClauseI.I Name="First Clause">

<body_cI.I>The seller is the legally onwer of the instrument which is being described

below:</body_cI.I>

</ClauseI.I>

</ChapterI>

<ClauseII.I Name="First Clause">

<body_cII.I>On this selling and buying instrument and in the best way the seller

compromises to sell to buyer and this is compromises to buy form buyer the instrument above described

by the price of to be paid on the following conditions:

</body_cII.I>

<price_desc/>

<paym_cond/>

</ClauseII.I>

<ClauseII.II Name="Second Clause">

<body_cII.II>It is determined the equivalent fee to be applied in case of unjustified

delay applicable in the payment of remaining parcels paid by buyer to seller plus interests every month

and monetary update.</body_cII.II>

<fee_value/>

<fee_desc/>

<interests_value/>

<interests_desc/>

</ClauseII.II>

</ChapterII>

<ClauseIII.I Name="First Clause">

<body_cIII.I>The time of delivery has to be in , counted from the date of signature of

the agreement except in case of happening any disaster or inevitable actions.</body_cIII.I>

<n_days/>

</ClauseIII.I>

</ChapterIII>

APPENDIX: THE SIMPLE CONTRACT TEMPLATE MODELLED IN

XML

FORMATION AND FULFILLMENT OF ELECTRONIC CONTRACTS IN THE ICS

<ChapterIV Name="Chapter IV

Obligations">

<ClauseIV.I Name="First Clause">

<bodyc_IV.I>Obligations Seller:</bodyc_IV.I>

<list_obligations1/>

</ClauseIV.I>

<ClauseIV.II Name="Second Clause">

<bodyc_IV.II>Obligations Buyer:</bodyc_IV.II>

<list_obligations2/>

</ClauseIV.II>

</ChapterIV>

<ClauseV.I Name="First Clause">

<bodyc_V.I>Responsibilities of Seller:</bodyc_V.I>

<list_responsabilities1/>

</ClauseV.I>

<ClauseV.II Name="Second Clause">

<bodyc_V.II>Responsibilities of Buyer:</bodyc_V.II>

<list_responsabilities2/>

</ClauseV.II>

</ChapterV>

</Chapters>

<Final>

<body_dg>Is elected the Court of to have all the registration and not any other one to be

questioned in case of any doubts about this agreement.

Being this the agreement the parties below agree and sign this present instrument in 02 (two) copies of

equal form and pages in the presence of witness:</body_dg>

<date/>

<name_witness1/>

<cod_witness1/>

<name_witness2/>

<cod_witness2/>

</Final>

</Contract>

ICEIS 2004 - SOFTWARE AGENTS AND INTERNET COMPUTING