Smart contracts are defined as a programmed agreement on an open ledger (the blockchain) where the contract enforces itself, including the imposition of penalties where there are breaches. It is an example of where the blockchain does more than underpin a virtual currency.
When we think of execution of a contract, we think of the parties to the contract applying their signatures to an agreement. Some go on to say a contract has been fully executed where the terms and conditions of the contract have been carried out. When I picture the full execution of a smart contract, I just can’t see two digital signatures. There has to be more especially if the contract also imposes its own penalties for breach.
If x, then z, can’t be enough…
For example, if I agree to pay one hundred euros for a rare particular item, and there are terms and conditions in my agreement that help to ensure that the item is indeed rare, my smart contract has to be designed to capture data during the whole acquisition and delivery process that ensures that I am indeed receiving a rare particular product. All sources of information involved in the process will have to be captured and transmitted digitally, in my opinion, for a smart contract to be considered truly “smart.”
Otherwise, the smart contract would be nothing but a PDF on steroids.
In addition, for attorneys that are involved in the electronic discovery phase of litigation, they should also bear in mind how best to capture data from these smart contracts, especially where I suspect that in the very near future these contracts will include connections to various digital sources that may contain useful information for discovery.
22 August 2022
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