Challenges of Smart Contracts

Abstract

The chapter focuses on an important part of contract law, namely the law of excuses, in the context of smart contracts development. Smart contracts are supposed to secure actual performance, but to be able to do so appropriately, they need to take into account the possibility that a contract party may raise a valid excuse for non-performance of his obligations. Smart contracts should be able to deal with the possibility of at least some excuses; hence, this analysis may test the suitability of smart contracts for actual contracting. The chapter provides a comparative overview of excuses and hardship, culminating in a “common core” of the rules of various jurisdictions, and investigates whether and how excuses can be dealt with in smart contracts. This analysis shows some limitations of smart contracts, which leads to a more general discussion about possibilities and limitations of smart contracts.