Pactum, a startup backed by the founders of Skype and TransferWise, released its first self-named tool on Wednesday. The solution puts artificial intelligence (AI) squarely in the pilot seat of vendor and service contract renegotiations, joining the pantheon of solutions attempting to put a dent in some of the agreement-related tasks log-jamming corporate to-do lists.

Martin Rand, Pactum's CEO, seems confident that the solution's data-driven approach to negotiations is enough to separate it from players on the field that tend to operate in more of a third-party intermediary capacity, requiring both sides to submit their negotiation preferences.

"But this is not optimal because it requires a lot of trust in the third party mediator system. What we do is actually [we] don't need the other party to enter any of their preferences. We negotiate as a normal human would," Rand said.

What it is: Pactum is a tool that brandishes AI in the hopes of helping corporate entities manage the bundles of contracts and agreements taking up space on their servers, only this time the focus is negotiating terms. The tool focuses primarily on basic vendor or service contracts.

"We built a system that can massively negotiate and renegotiate contract terms. And the opportunity that we saw is the whole world's economy is running on negotiations," Rand said.

And those negotiations run on conditions. Pactum can automatically renegotiate terms surrounding prices, payment schedules, penalties or something as specific as weekend rates. The overarching goal is for the end result to be favorable to both parties—or at least something they are willing to sign off upon.

"The system knows how to identify the priorities of [the client]," Rand said.

Under the Hood: The tool is AI-based and therefore relies on data to establish what Rand refers to as the "value function"—or what clients might simply consider to be their negotiation priorities.

The data the tool uses to understand what such priorities are flows from a variety of sources, including a company's contract management system or interviews with the client.

"We talk [to the client] about different trade-offs, about what they would value and why," Rand said.

As for the vendor a client is negotiating with, they receive an email with a link to a chat function that reviews existing contract terms, explains the client's priorities with regards to a renegotiation and proposes different trade-offs in the aim of finalizing a deal.

Like other AI solutions, Rand said the tool will continue to grow smarter over time.

"We are [gathering] data on how people negotiate, how they perceive different trade-offs and different ways of wording propositions and so-on," Rand said.

Why it's Necessary: Among the simplest explanations that Rand offers is that some companies are growing too quickly to keep up with the number of deals in their pipeline that are in need of renegotiation. Time is a factor, and in Rand's experience, people don't always use it wisely.

"I saw how difficult some of these negotiations were due to cultural differences, due to human biases, due to lack of preparation before a meeting, and this creates unoptimal terms," Rand said.

However, time isn't the only resource that can be drained during the negotiations process. Basic vendor or service contract renegotiations can also rob other, more complex agreements of much needed human attention.

"[The tool] frees those people up for more important deals. So people are needed. We're not claiming that we'll start negotiating M&A deals or really big and complicated commercial contracts," Rand said.

The Competition: Pactum isn't the first company to address the glut of contracts flowing through organizations or even to apply a level of automation to the contract and agreement market.

Contract provider Clause, for example, allows users to build contracts with conditions that are automatically executed upon signature. Wolters Kluwer has also bolstered its contract management offerings, acquiring both CLM Matrix and Legisway within the last 11 months.

Still, Rand doesn't believe that there are many direct competitors to Pactum.

"Most of the competitors right now are legal tech companies, but they're mostly either focused on putting the contract together or negotiating as a mediator," Rand said.