Contract Interpretation

Abstract

It is quite likely that smart contracts, which represent a further step in formalizing contracts, will diminish the courts’ ability to intervene through interpretation. In a smart contract context, it is not obvious that the smart contract can go beyond the borders of the program to find relevant rules (off-chain elements and occurrences), limiting therefore the capacity to use blockchain technology in highly contextualized types of contracting. Courts generally come into play when complexity, doubts, and litigation around them arise. In order to assure the smooth development of automated contracts, the courts must develop the expertise to interpret them and smart contracts need to provide for parties to control real world consequences and be able to terminate the contracts if necessary during and after performance.