Smart Contracts in India: Law and Challenges

Abstract

Smart contracts, self-executing agreements programmed on blockchain networks, represent a technological innovation with profound implications for contract law. India's existing legal framework, the Indian Contract Act of 1872 and the Information Technology Act of 2000, was not designed to accommodate such digital instruments. This chapter examines the legal recognition and enforceability of smart contracts within this dual framework, identifies significant challenges, and explores emerging prospects for regulatory adaptation. The analysis reveals that while India possesses foundational provisions recognizing electronic contracts and digital signatures, the explicit statutory recognition of smart contracts remains absent. Key challenges include the absence of legal personhood for autonomous smart contracts, liability attribution problems, evidentiary uncertainties and jurisdictional ambiguities. This chapter argues that targeted legislative amendments integrating blockchain technology provisions, coupled with judicial interpretation of existing provisions, could facilitate smart contract recognition while preserving consumer protection standards. This balanced approach offers India an opportunity to position itself as a global leader in fintech innovation, without compromising legal certainty.