The opportunity to automate and monitor the execution of legal contracts is gaining increasing interest in Business and Academia, thanks to the advent of smart contracts, blockchain technologies, and the Internet of Things. A critical issue in developing smart contract systems is the formalization of legal contracts, which are traditionally expressed in natural language with all the pitfalls that this entails. This paper presents a systematic literature review of papers for the main steps related to the transformation of a legal contract expressed in natural language into a formal specification. Key research studies have been identified, classified, and analyzed according to a four-step transformation process: (a) structural and semantic annotation to identify legal concepts in text, (b) identification of relationships among concepts, (c) contract domain modeling, and (d) generation of a formal specification. Each one of these steps poses serious research challenges that have been the subject of research for decades. The systematic review offers an overview of the most relevant research efforts undertaken to address each step and identifies promising approaches, best practices, and existing gaps in the literature.

The aim of the research is to semi-automate the process of generating formal specifications from legal contracts in natural language text form. Towards this end, the paper presents a tool, named ContrattoA, that semi-automatically conducts semantic annotation of legal contract text using an ontology for legal contracts. ContrattoA was developed through two iterations where lexical patterns were defined for legal concepts and their effectiveness was evaluated with experiments. The first iteration was based on a handful of sample contracts and resulted in defining lexical patterns for recognizing concepts in the ontology; these were evaluated with an empirical study where one group of subjects was asked to annotate legal text manually, while a second group edited the annotations generated by ContrattoA. The second iteration focused on the lexical patterns for the core contract concepts of obligation and power where results of the first iteration were mixed. On the basis of an extended set of sample contracts, new lexical patterns were derived and those were shown to substantially improve the performance of ContrattoA, nearing in quality the performance of experts. The experiments suggest that good quality annotations can be generated for a broad range of contracts with minor refinements to the lexical patterns.