Regulating Algorithm-Based Contracts: How the Eu Artificial Intelligence Act Is Reshaping Risk Allocation in International B2b Transactions

This article examines how the EU Artificial Intelligence Act (the “EU AI Act”) transforms the allocation of risk in cross-border B2B contracts built on algorithmic and automated decision-making systems. Drawing on doctrinal and comparative legal analysis of the EU AI Act, related EU instruments - the Model Contractual Clauses for AI Procurement and initiatives of the European Law Institute - and UNCITRAL’s Model Law on Automated Contracting, the study shows that before the EU AI Act, risk distribution in international B2B transactions involving intelligent systems was governed mainly through contractual mechanisms (limitation-of-liability clauses, warranties, indemnities) and general rules of tort and contract liability, while regulatory intervention remained fragmentary (the GDPR, sector-specific rules). The EU AI Act introduces binding obligations concerning risk management, data quality, transparency, and human oversight, addressed primarily to providers and deployers of high-risk AI systems, including those located outside the EU. This reinforces the public-law dimension of risk allocation, narrows freedom of contract in shifting certain risks onto counterparties, and encourages a redistribution of risk across AI supply chains. The article argues that, in international B2B transactions, the EU AI Act functions as a “background mandatory layer” that rewrites the conventional architecture of contractual regulation, establishing new baseline reference points for negotiating warranties, limitation-of-liability clauses, due-diligence obligations, and compliance-cost allocation mechanisms. The article concludes that risk distribution in international B2B transactions is becoming a hybrid of contractual and regulatory allocation, and that businesses outside the EU need to treat the EU AI Act as a de facto global standard. Downloads