Blockchain-Enabled Smart Legal Contracts

Abstract

A smart legal contract is a binding contract in which some or all the contractual terms are defined in and/or performed automatically by a computer program. It runs on a blockchain platform and carries the features of the blockchain of being automatically self-executed, and immutable, providing permanent records with real-time information, and reducing cumbersome documentation using high processing power. In major jurisdictions around the world, it is generally recognised that the smart legal contract is capable of having contractual force just like a traditional natural language contract. It has the potential to have entire complex commercial contracts written in and executed by computer codes. This chapter explains the concept and operation of the smart legal contract. Its advancement as an integral part of legal practices and a mainstream area of law is described in chronological order. The judgement of the first significant case relating to the use of smart contracts is unpacked. Whilst the acceptance of smart contracts by legal practices has gained pace, novel legal issues have been emerging in this area of law. This chapter identifies and proposes solutions to key legal issues arising from the operation of computer code and the resolution of disputes of smart legal contracts.