Compatibility of Smart Contracts with the Legal System of the Republic of Azerbaijan: Comparative Approach and Future Perspectives

Abstract

This article examines the legal nature of smart contracts and their compatibility with the legal system of the Republic of Azerbaijan. Smart contracts are defined as a hybrid legal mechanism arising from the convergence of classical contract law and blockchain technology. The author argues that automated execution of contractual obligations significantly reshapes traditional legal concepts of consent and performance. The study provides a comparative analysis of international regulatory approaches to smart contracts, focusing on the United States, the European Union, and selected Asian countries. Key principles such as technological neutrality, functional equivalence, and human oversight are assessed. This comparative perspective highlights the growing role of smart contracts beyond purely commercial transactions. The article evaluates Azerbaijani legislation, including the Civil Code, the Law on Electronic Signature and Electronic Document, and the Digital Development Concept, as a normative foundation for smart contracts. It concludes that the existing legal framework offers sufficient grounds for recognizing smart contracts as legally valid electronic agreements. The author emphasizes the potential application of smart contracts in digital government, e-services, and public procurement as part of Azerbaijan’s broader digital transformation agenda