A Study on the Interpretation of Smart Contracts in Iranian law in Accordance with Textual and Contextual Approaches

Abstract

With the advancement of various technologies, the latest generation of contracts called smart contracts has emerged. The language of these contracts is computer code, and since they are concluded on the blockchain, their contractual provisions are self-executing and irreversible. In these contracts, as in traditional contracts, there is a possibility that due to reasons such as defects, ambiguity, brevity or silence in the provisions of the contract or the inconsistency of the effects of the contract with the intention of the parties, the contract may need interpretation to resolve the disputes that have arisen. Smart contracts can be interpreted based on the way they are concluded with two approaches: textualism or contextualism. To interpret the “wet smart contract” with textualism approach, first, the pre-contract concluded in human language must be referred to within its framework, and not beyond, and it must be examined in accordance with the general rules of contract interpretation, and then the conformity or inconsistency of the effects of the smart contract codes with the intention of the parties should be analyzed. If "smart contract is dry," the contract codes can only be translated with the help of blockchain programmers and interpreted by an interpreter. By examining these codes and analyzing the specified instructions, it can be determined what instructions the parties intended to give to the computer, and the reason for the discrepancy between the effect of the contract and the intention of the parties can be identified and the resulting disputes can be resolved.