An EREC framework for e-contract modeling, enactment and monitoring

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Abstract

A contract is an agreement between two or more parties to create mutual business relations or legal obligations. It defines a set of activities to be performed by different parties satisfying a set of terms and conditions (clauses). An e-contract is a contract modeled, specified, executed and enacted (controlled and monitored) by a software system (such as a workflow system). As contracts are complex, their enactment is predominantly established and fulfilled with significant human involvement. This necessitates a comprehensive framework for generic fulfillment of e-contracts. In this paper, we present an EREC framework for designing e-contract processes, a mechanism that allows modeling, enactment and monitoring. This framework centers on the EREC model that bridges between the XML contract document and Web Services based implementation model of an e-contract.

Introduction

A contract is an agreement between two or more parties to create mutual business relations or legal obligations. It defines a set of activities to be performed by each of the parties satisfying a set of terms and conditions (clauses). In a contract, different parties are obliged to make certain commitments. Such a contract may pass through different phases like identification of business partners, matching offers against the requirements, negotiation of terms, conditions and prices, signing and execution of contracts. These contracts are often voluminous documents filled with legal jargon and with no clear path for finding relevant clauses that need to be taken care of by the business partners.

Contracts can be categorized based on their nature of execution as Sequential, Cyclic or Turnkey. A sequential contract is a contract that executes sequentially in a step-by-step manner. A cyclic contract is a contract that exists even after the completion of one cycle of the contract, that is, the same contract holds good for a certain period of time, irrespective of the number of times the contract is fulfilled. For example, the contract between weavers and a textile company may be valid for 2–3 years, and the weaving will take place several times adhering to the same contract. A Turnkey contract has a specific goal that needs to be accomplished within certain time and with a certain budget, and is a special case of sequential contract. Turnkey contracts are most common for Governmental agencies to delegate and monitor a project (such as, building a new flyover).

A contract has three main stages: (i) contract preparation, (ii) contract negotiation, and (iii) contract fulfillment. The contract preparation stage provides the specifications for the fulfillment of contract. The contract negotiation stage facilitates arriving at a common strategy on payments, deliverables, milestones, etc. Finally, the contract fulfillment stage deals with the actual execution of the contract and specific tasks that are related to the contract.

Contracts are complex to understand, represent and process electronically. Contracts involve various entities such as parties, activities and clauses. The focus of this paper is on contract fulfillment which is supported through (e-)contract enactment and monitoring. An e-contract is a contract modeled, specified, executed and enacted (controlled and monitored) by a software system (such as, a workflow system). Electronic contracting as supporting services has been proposed to overcome delays and bureaucratic obstacles [21]. This calls for a concise and visual representation of an e-contract and its enactment. Several questions arise for enactment of contracts, such as: (i) How can we specify and deploy a contract? (ii) How can we manage e-contract and coordinate activities performed by different parties? (iii) How can we conceptualize the execution of an e-contract? (iv) How are e-contracts modeled? (v) How can we monitor the events of the e-contract?

Even though e-contracts can be specified, there has to be an underlying implementation technology that ensures their execution according to the specification. In particular, during execution, the contracts have to be consistently monitored with automated mechanisms, such as by events and rules. Further, there is a need to have a methodology for requirement elicitation from voluminous documents to workflows and rules.

The contract is valid for a specified time duration defined in the contract. This duration defines the active life stage of the contract and is expected to last until the contract is completed. A contract completion may not occur when some clauses beyond completion of activities need to be adhered to, for example, maintenance and warranty period. All activities have to be linked with parties, and each party will have to carry out one or more activities. The clauses in the contract may list out the activities, however the activities may not be linked with clauses. For example, “70% of the payment is made after the systems received and the remaining amount will be paid in two installments after six months and one year respectively from the date of installation”. In this example, the clauses are linked with payment activity, but not vice-versa. This helps us to have a library of common activities that cater to various clauses in the contracts.

This paper is focused on the execution of an e-contract. The main points considered for an e-contract execution are:

  • (a)

    Association with human beings, who have to make many critical decisions during the e-contract enactment.

  • (b)

    External events, which play a major thrust on the execution of e-contract. For instance, the changes in the taxes may have a cascading effect on the pricing issues.

  • (c)

    Exceptions (i.e., deviations from clauses/conditions) raised during the process.

  • (d)

    Sequence of the activities taking place, that is, involvement of several activities to be carried out either sequentially or in parallel. Some activities can also be nested.

  • (e)

    Subcontracts. A contract may have many sub-contracts, each of which is governed by the parent contract.

  • (f)

    Composite contract, that is, several independent contracts facilitate a contract. For instance, a textile contract may have independent contracts such as procurement of yarn, weaving, printing and sales.

  • (g)

    Intra- and inter-organization workflows that support the activities of an e-contract, together with the implementation model with Web Services.

  • (h)

    Handling of documents.


The goal of an e-contract execution is to provide deployable workflows. In this paper, we present a framework that integrates various components to address e-contract execution based on the current state of technologies and approaches. However, at many places, human intervention and ingenuity is required for the useful solution. The rest of the paper is organized as follows: Section 2 presents an overview of EREC framework and methodology for e-contract enactment. In Section 3, we describe the EREC conceptual model. Workflows and consistency aspects are described in Section 4 and the implementation architecture for e-contracts is presented in Section 5. Section 6 describes a case study on textile value-chain contract and Section 7 presents the related work. Finally, we present conclusions in Section 8.

Section snippets

Overview of the EREC framework and methodology

Contracts are associated with several entities, processes and procedures. The elements in an e-contract are Parties, Activities, Clauses and Payments. Parties play different roles in a contract. Two or more parties are involved in performing activities of a contract. A contract has a set of clauses. Each party has a well-defined role in a contract, which is specified in the contract document. For example, in a purchase of goods contract, one party is a buyer and there can be many sellers. Each

EREC conceptual model

The EREC meta-model has the following constructs for modeling e-contracts:

  • 1.

    Contracts––A contract is a legal agreement between multiple parties.

  • 2.

    Clauses––A contract consists of many interdependent clauses that need to be fulfilled.

  • 3.

    Activities––A clause is fulfilled by successfully executing one or more activities.

  • 4.

    Parties––One or more parties undertake an activity.

  • 5.

    Exceptions––Exceptions model deviations from fulfillment of contracts.


Fig. 3 shows the EREC meta-model for a contract [15]. In addition

Contract workflow and consistency

Activities are performed by the parties and continuously checked against the concerned clauses during execution of the activity. In order to establish the consistency, it is essential to identify the relationship among the activities, parties and clauses. APC constructs are extracted from the contract document and are specified in XML (www.w3.org/xml) syntax as shown in Table 2. The APC specifications consist of three sets of tags, namely, the parties involved, the activities involved and the

Implementation architecture

In this section, we present implementation architecture for the EREC framework and outline the Web Services design required for inter-organizational communications during contract enactment.

Case study––textile value-chain contract

We studied the contract associated with a State Textile Corporation (STC), which is functioning as the nodal agency for one of the State Governments in India, for protecting and promoting the interests of a large number of weavers engaged in self-employment in the handloom sector. This contract involves subcontracts and multiple individual contracts are grouped as a composite contract. This may give rise to both inter- and intra-organizational workflows.

STC has established around 28 number of

Related work

Contracts are an explicit way to express agreement of two to more parties to enter a business relationship. Considerable work has been carried out on the legal aspects and negotiation stages of e-contracts [8], [17], but, to the best of our knowledge, sufficient attention has not been paid to conceptually visualize the e-contracts. Gisler et al. [8] developed a framework for legal e-contracts, but without a mechanism for modeling e-contracts. Smith [23] invented a contract net protocol for

Discussions and conclusions

The implementation architecture for the EREC framework has been designed in a way that the EREC contract support system can be plugged into and interoperate with existing application software component or systems. Further with the implementation based on contemporary Web Services, it streamlines data and event support across organizational boundaries of the business partners involved in the contract. In addition to component software and WFMS support, wrappers may be built around legacy systems

Radha Krishna received his Ph.D. in 1996 from the Osmania University, and M.Tech. in Computer Science from Jawaharlal Nehru Technological University, in Hyderabad, India. Currently, he is working as Associate Professor at IDRBT.

Prior to joining IDRBT, he was a Scientist at National Informatics Centre (NIC), India. He has involved in various research and developmental projects, including implementation of data warehouse in banks, and standards and protocols for e-check clearing and settlement.

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    Radha Krishna received his Ph.D. in 1996 from the Osmania University, and M.Tech. in Computer Science from Jawaharlal Nehru Technological University, in Hyderabad, India. Currently, he is working as Associate Professor at IDRBT.

    Prior to joining IDRBT, he was a Scientist at National Informatics Centre (NIC), India. He has involved in various research and developmental projects, including implementation of data warehouse in banks, and standards and protocols for e-check clearing and settlement. He has to his credit two books and quite a few research papers in referred journals and conferences. His research interests include Data Mining, Data Warehousing and Fuzzy Computing.

    Kamal Karlapalem got his Ph.D. in Computer Science from Georgia Tech. in the area of database systems in 1992, M.Tech in Computer Science and data processing from IIT, Kharagpur, India in 1986, and Master in Statistics from Indian Statistical Institute, Kolkata, India in 1985. He was a faculty member in Computer Science department of Hong Kong University of Science and Technology from 1992 to 2000.

    Since 2000 he is Associate Professor at IIIT, Hyderabad leading the Centre for Data Engineering. Kamal Karlapalem has published over 80 papers in the areas of distributed database systems, object oriented databases, workflow management systems, workflow security, data warehousing and data mining, and multi-agent systems.

    Dickson K.W. Chiu was born in Hong Kong in 1966. He received the B.Sc. (Comp. St.) degree from the University of Hong Kong in 1987. He received the M.Sc. (1994) and the Ph.D. (2000) degrees in Computer Science from the Hong Kong University of Science and Technology, where he worked as a Visiting Assistant Lecturer after graduation. He founded his own computer company Dickson Computer Systems while studying part-time. In 2001, he joined the Department of Computer Science at The Chinese University of Hong Kong as Assistant Professor. His research interest is in Information Systems Engineering for e-/m-commerce with a cross-disciplinary approach, involving Internet technologies, software engineering, agents, workflows, information system management, security, and databases. His research results have been published in more than 45 technical papers in international journals (such as Information Systems, IEEE Transactions on Systems, Man, and Cybernetics, Distributed and Parallel Databases) and conference proceedings (such as ICWS, HICSS, ER, CAISE, COMPSAC, SEKE). He received a best paper award in the 37th Hawaii International Conference on System Sciences on “Alert-driven E-services Management”. Dr. Chiu is a member of ACM, IEEE, and Hong Kong Computer Society.

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