The Legal Treatment of Smart Contracts under Croatian Law

Abstract

This paper analyzes smart contracts and the possibilities of applying legal regulation to them. Since smart contracts are not specifically regulated in the Republic of Croatia, the paper considers the possibility of applying European secondary law and Croatian civil law. In doing so, we consider the mode of operation of smart contracts, as well as the various systems by which they can function. Then we determine whether a smart contract is a contract at all and what are the legally relevant features of smart contracts that could help us classify smart contracts. Accordingly, we determine the differences between smart contracts based on the public (decentralized) blockchain and smart contracts based on the private (centralized) blockchain, as well as the differences between the so-called strong and weak smart contracts. From the legal aspect, we analyze the method of concluding smart contracts, their execution, terms of the contract and its interpretation, as well as the fulfillment of the contract itself. The mentioned aspects are considered and compared from the aspect of the applicable law, and special attention is paid to voidability of smart contracts and termination due to non-performance, as well as consumer protection.