This chapter discusses the nature of the lag between contract law and the real world developments and looks as consumer contract law as an example. It then discusses the longstanding idea of the difference between law in the books (formal or blackletter law) and law in action (law as applied or operative rules). It also discusses the role of contract law in society and examines law as a “shadow” and the escaping from contract law. Examples of escaping are private legal systems and smart contracts. It further examines convergence of contract law across legal systems and the development of international sales law. The final topics explored include the role of contract scholarship, essence of contracts, and relational contracts.
This chapter examines the implications for law and regulation of the use of smart contract technology in insurance policies. It sets out the uses to which smart contract technology can be put and the potential benefits it brings to the insurer-customer relationship. These benefits include (i) the design of products that are more responsive to customer needs and (ii) prompter pay-outs upon the occurrence of a covered loss. The chapter demonstrates that a clear benefit of the technology is that it can respond to customer demand by ensuring clear outcomes upon the occurrence of a loss. However, the introduction of this technology can cause disruption to law and regulation in a number of ways, namely, disruption to legal doctrine, disruption to the regulatory environment, and disruption to specific regulatory objectives such as consumer protection. The chapter analyses disruptive tendencies and makes the following findings: (i) that both legal doctrine and the rules of conduct of business regulation may evolve in certain directions in response to the changes wrought by the introduction of the technology into insurance contracting; and (ii) that the regulatory environment will need to develop so as to simultaneously enable beneficial innovation and maintain proper safeguards for insurers’ customers. This chapter assumes the application of English law, but the principles of law considered are likely to have their equivalent in most jurisdictions with corresponding relevant implications for smart contracts.
Off-chain disputes regarding transactions executed on-chain are unavoidable. However, a prerequisite to effectively settling such disputes is the identification of the applicable law as well as of the competent jurisdiction. While some transactions merely operationalise off-chain relations between parties knowing each other, many result from interactions between pseudonymous individuals at unknown locations. The present contribution investigates the concrete consequences of pseudonymity on European Private International Law, especially principles to determine the applicable law. In this respect, it clarifies the numerous factors affecting the extent of pseudonymity, ranging from the type of distributed ledger on which the transaction occurred to the possible centralized intermediaries involved therein. The issue ought to be analysed having these factors in mind, as some effectively wither the veil of pseudonymity. Based on the preceding clarification, the contribution analyses the concrete extent to which pseudonymity renders some principles of European Private International Law ill-fit and as a result, difficult to apply in practice.
This chapter examines Japanese Private International Law (PIL) on crypto-assets. After making a general observation on the use of blockchain and PIL, this chapter examines the jurisdiction of Japanese courts in civil cases, the extraterritorial application of Japanese criminal and regulatory laws, and applicable law in contracts, torts, and property.
Switzerland figures among one of the first jurisdictions to include distributed ledger technologies (DLTs) in its legal framework through the recently adopted federal act commonly referred to as the DLT Act. In order to address the complex issue of determining the law applicable to tokens stored on a DLT, the DLT Act amended on 1 February 2021 the Swiss Private International Law Act (PILA), which now provides for conflict-of-laws rules that notably applies to tokens that embed a claim. This article aims to explain the context in which this amendment took place by providing an overview of the notion of tokens and presenting the main purposes of the DLT Act. It then presents and discusses the solutions chosen by the Swiss lawmaker, which follow the general principles that also generally prevail for other types of rights. As a result, the issuer of a token benefits from considerable freedom to determine the governing law of a tokenised claim. Absent a choice of law, the PILA sets forth subsidiary solutions based on the seat and the habitual residence of the issuer.
For international issues, Private International Law (PIL) experts traditionally apply the law of the country with the most significant connection. However, it is often claimed that DLT features, which are immersed in a digital world, cannot be localised or have any connection with a traditional legal order. Is it then possible to determine the law applicable to smart contracts? Before answering this question, this chapter characterises smart contracts in PIL. There are various types of smart contracts: they could be used either to perform a transaction between two parties or to serve as the backbone of a Decentralized Autonomous Organization (DAO). It is then a prerequisite to analyse the different types of smart contracts before characterising them. This chapter seeks the most relevant connecting factors to determine the law applicable to smart contracts.
Bitcoin was launched in 2008 and appears as the first application of the blockchain technology. It remains, to date, the best known and the most used cryptocurrency. Like other cryptocurrencies, Bitcoin aims to become an alternative to State and multistate currencies, such as the Euro. The importance it has gained in practice over the past few years has grasped the attention of legal scholars, who tend to perceive Bitcoin as a challenge to traditional legal rules and therefore reflect upon the ways the latter can be applied to this technological new deal. Although these reflections concern, first and foremost, rules of substantive law, such as contract law, they also extend to Private International Law (PIL). From the latter perspective, Bitcoin raises two types of issues. The first one relates to the ability of PIL to tackle legal relationships involving the use of bitcoins, while the second one concerns the ways in which PIL rules can be implemented to these relationships. This article seeks to demonstrate that all the objections raised against the applicability of PIL to Bitcoin, whether they are based on the existence of an alleged non-State, self-regulated, legal order of the lex cryptographica, on the impossibility to situate legal relationships implying the use of bitcoins in the physical space, or on the pseudonymity of participants in the blockchain, can be overcome without having to introduce sweeping changes to PIL rules. Indeed, the latter rules can rather easily adapt to Bitcoin and grasp its hybrid nature of asset and of currency.
Technological features of cryptocurrencies have been raising a number of challenges for lawyers, in particular those practicing Private International Law (PIL), in that (i), cryptocurrencies are intangible, (ii) they exhibit a wide range of different features that, to add further complexity, evolve in parallel with technological developments, (iii) the identity of cryptocurrency users – i.e., everyone who is involved in the process of creation and transfer of cryptocurrencies – is, at minimum, not easy to trace, since it is protected through pseudonyms or, even, full anonymity, (iv) cryptocurrencies are set for more than one usage, i.e., both as a payment instrument and a form of investment (albeit a very risky one!). Even more relevant, (v) cryptocurrencies have an intrinsically cross-border reach, since they are based on decentralised distributed ledgers, potentially spanned all over the world, with no connections to any particular state, allowing value to be transferred between users across borders at a very high speed, not conditional on the location of the transferor and the transferee. Finally, (vi) it is extremely difficult to impose legal restrictions on their circulation, including territorial restrictions, not only because of the decentralised nature of said ledgers, but also because of their inherent autonomy vis-à-vis the law. The aforementioned characteristics of cryptocurrencies and, in particular, their intrinsic cross-border reach prompt the question of their PIL regime and, namely, (i) the need to identify, among the existing PIL rules, those which are applicable to transactions involving cryptocurrencies, both as payment instruments and as (possible) store of value, and to investigate whether those rules are suitable for framing them, either in terms of legal characterisation (“pure” cryptocurrencies neither represent nor give a claim against an issuer) or of connecting factors and other techniques to establish the applicable law. Following the partly negative answer to the first question, the chapter explores the many legislative options for differentiated PIL rules on cryptocurrencies, in comparison not only to traditional assets, but also to other crypto assets. Finally, the paper calls for a comprehensive conflict-of-laws regime for proprietary effects of transactions over cryptocurrencies, based on the elective situs and some requirements in terms of objective connection of the selected law, coupled with a fall-back rule, which should provide different sub-rules for permissioned and permissionless systems
Abstract Smart contracts are designed to be self-executing and self-enforcing. They are written as computer code that can automatically monitor, execute and enforce the performance of the agreed terms. The code of smart contracts exists across a distributed, decentralised blockchain network, controlling the execution and making transactions trackable and irreversible. This article examines the extent to which the Australian Consumer Law unfair contract term provisions can respond to the use of smart contracts. The article finds that the Australian Consumer Law unfair contract term provisions work relatively well to protect smart contract consumers. While some challenges exist and should be properly considered, there seems to be no need to either create entirely new law, modify the existing regime or totally ban smart contracts to protect consumers against unfair contract terms in smart consumer contracts.
A smart contract is computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of contract. Smart contract allows the performance of credible transaction without any third party. Smart contracts are designed to provide safeguards against traditional contract law and reduce the transaction costs associated with the performance of contracts. From the perspective of private law, considering the reliance relationship between the members of smart contracts, the nature of smart contracts is similar to the relational contracts. Smart contracts have become a new transaction type which is a combination of contract conclusions and contract performances. That is why smart contracts caused the huge impact on the traditional contract law theories, but this is still not enough to deny the legitimacy of private law remedies for smart contracts. By constructing the framework of private law remedies which is focused on the reliance interest protection, the synchronous development of law and technology will be promoted.
Due to the modern relevance of blockchain technology, smart contracts present both substantial risks and benefits. Vulnerabilities within them can trigger a cascade of consequences, resulting in significant losses. Many current papers primarily focus on classifying smart contracts for malicious intent, often relying on limited contract characteristics, such as bytecode or opcode. This paper proposes a novel, two-layered framework: 1) classifying and 2) directly repairing malicious contracts. Slither’s vulnerability report is combined with source code and passed through a pre-trained RandomForestClassifier (RFC) and Large Language Models (LLMs), classifying and repairing each suggested vulnerability. Experiments demonstrate the effectiveness of fine-tuned and prompt-engineered LLMs. The smart contract repair models, built from pre-trained GPT-3.5-Turbo and fine-tuned Llama-2-7B models, reduced the overall vulnerability count by 97.5% and 96.7% respectively. A manual inspection of repaired contracts shows that all retain functionality, indicating that the proposed method is appropriate for automatic batch classification and repair of vulnerabilities in smart contracts.
Abstract This article adds to the debate on what, legally speaking, smart contracts are and what they should be. Currently, much of this debate focuses on the relationship between smart contracts and legal contracts, overlooking that other legal categories may also be appropriate. This article suggests that the concept of abandonment can be fruitfully applied to smart contracts. Using the concept of abandonment has the advantage of allowing smart contracts, as close as legally possible, to be utilized as machines (or using the terminology suggested by Vitalik Buterin, founder of Etherium, as a ‘persistent script’). It would also make other issues, like the interpretation of smart contracts, easier to deal with. The argument is not that smart contracts can never be legal contracts; rather, it is suggested that, prima facie, users should have the choice of utilizing smart contracts as legal contracts or as machines.
Based on the concept of contract separation proposed by OpenZeppelin platform, this thesis realizes on-chain upgrading by splitting the complete smart contract into main contract and agent contract. Taking the digital certificate smart contract as an example, this paper proposes the design and implementation of an upgradable digital certificate smart contract based on Ethereum. This method can be used to upgrade on-chain at a lower cost and improve the security and maintainability of the smart contract when there are code vulnerabilities or the need to expand the service. Experimental results show that the digital certificate smart contract designed based on this paper can realize the full life cycle of on-chain upgrade, while not affecting the normal invocation of users.
Angus S. McDonald, Kirsty Paynter, Ernie Van der Vyver
Emerging technologies are facilitating partnerships between insurers and non-insurance brands to create value and opportunity. Embedded insurance, where insurance is offered within or in conjunction with the purchase of a non-insurance product or service from a third party, displaces the current paradigm where insurance is taken as a “second step” after the underlying asset or event is confirmed. It is a term many are familiar with, but with technologies such as big data, artificial intelligence (AI) and distributed ledger technology, embedded insurance is rapidly evolving and presents significant opportunities. This evolution must be cautiously navigated over the next decade to balance consumer protection dynamics with the growth of, and innovation within, the insurance industry. Embedded insurance options can help reduce the insurance gap but need to be relevant to customers and provide real value to reduce financial uncertainty and make accidental loss manageable. Globally, many jurisdictions are approaching embedded insurance with caution as regulators and industries seek to better understand and appreciate the opportunities and assess the corresponding risks it brings to consumers and the economy. This chapter will describe the ways in which technology is supporting embedded insurance and will discuss the evolution of embedded insurance and the legal frameworks in which it operates. Two case studies from Cover Genius, “the insurtech for embedded protection,” are included to provide insights into the end-to-end journey of embedded insurance from policy creation to claims management in an online world.
The present study analyzes Smart Contracts and Blockchain technologies from the perspective of Contracts Right. Thus, seeks to investigate the general theory of contracts to identify whether smart contracts inserted in a blockchain meet the requirements of validity, existence, and efficiency. In addition, it seeks to use the figure of the Judge as a Service in arbitration and Ricardian Contracts to work the dynamics between traditional law and new technologies. The deductive method and scientific research were used, having as theoretical references the Brazilian Civil Code and the article, “Blockchain smart contracts and Judge as a service in Brazilian legislation.”
Este trabajo busca mostrar el aspecto jurídico de las criptomonedas. A tal efecto se inicia con el planteamiento de una serie de conceptos generales básicos así como la historia de estas monedas y su clasificación. Una vez resueltas esas tres cuestiones básicas se describirá la regulación que existe en derecho comparado y en derecho español para ver una imagen general de cómo los Estados afrontan la ordenación de esta delicada materia. Tras este primer acercamiento, el trabajo se centra en aquellos aspectos más relacionados con el ámbito mercantil. Así, se analizará su admisibilidad como contraprestación en el contrato de compraventa o si podrían funcionar como aportación para la conformación del capital social de las sociedades de capital e incluso se planteará el tema de si las personas tanto físicas como jurídicas que operan con estas son o no consumidores. Se realizará una referencia, además, a la minería de criptomonedas y las exchanges. Finalmente intentaremos dar respuesta a dos de las cuestiones que por excelencia siempre surgen cuando se piensa en estos activos: si pueden constituir una estafa y si es conveniente articular una regulación al respecto
In recent years, we have observed an amazing development of new technologies; many contracts come into effect without paper documents being signed. New possibilities have appeared, for example, the smart contract (also known as the digital contract or blockchain). In some cases, there is a dispute between the participants in the smart contract, e.g., as to the manner of its implementation. A court case might be necessary to resolve the dispute. As in any dispute, evidence proceedings will have to be conducted. The smart contract should appear as a proof. However, due to its unusual nature and complicated status under substantive law, as well as the fact that it is produced by new technological solutions, it is essential to determine its admissibility as evidence. The procedural law regulates in detail only traditional evidence. The smart contract has not been regulated in procedural regulations, therefore, its status needs to be established in the context of the existing documentary evidence. This article aims to contribute to the discussion on the status of smart contracts in civil court proceedings. Primarily, it should be determined whether the smart contract can be considered a document within the meaning of procedural law. In the Polish legal system, the document is defined as an information carrier whose content can be read. Accordingly, the smart contract meets the definition criteria. However, in the absence of provisions governing the manner of taking documentary evidence, it may be difficult to actually take such evidence and establish its value. The article also draws attention to Regulation (EU) No 910/2014 of the European Parliament and of the Council on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93 / EC. Its art. 46 refers to the legal effectiveness of electronic documents and prohibits discrimination against evidence from such documents, which should undoubtedly contribute to the acceptance of a smart contract as evidence in civil proceedings.
Remember internet boom of 1990s and how its usage changed the way we look at world? Blockchain technology (BT) is the Internet of present time. Studies highlighting ways to leverage the benefits of BT are being carried out aggressively and it's of keen interest for major industries and industrialists. Every new research in the area indicate various benefits of BT related to performance improvements. Therefore, to evaluate the enablers of blockchain adoption in smart contracts becomes essential and of great importance. For consumer driven economy like India, where implementation and adoption of BT has been sluggish, BT implementation can give strategic advantage to any industry, making it relevant to evaluate the feasibility and the importance of blockchain smart contracts in the electronic industry, which occupy a large share of the market. There are different enablers for BT adoption in different industries, and this study focuses on identifying and establishing the relationships between the enabler in the electronic supply chain. Eight enablers were considered after conducting a survey of the literature before applying the Interpretive Structural Modelling (ISM) technique to understand the complex relationships between the identified enablers. The result of the detailed analysis, highlighted traceability as the most significant enabler among others for BT-related smart contract adoption for the electronic industry. This result is of immense importance for managers in identifying and developing policies and strategies related to BT implementation for the firm.
Smart contracts, as a newly developed technology, may radically re‐shape traditional contractual relationships, transferring the power to perform and enforce from contractors to robots. This paper provides a framework which seeks to ensure that this transfer of power does not undermine vital consumer law values. The starting point is the well‐accepted idea of consumer law being based on values aiming to protect consumers as weaker parties in their relationships with traders and this will be built on using various new arguments. First it will be argued that any brave new world of smart contracts will still need the law to provide the sorts of rights it already does: smart contracts may enhance data preferences and improve choice up to a point, but they cannot produce market choices replacing the need for such legally mandated rights. Next it will be shown that to reflect underpinning protection values, some such rights must operate in particular ways. This includes rights concerning information and contract cancellation, conformity standards, remedies, and unfair terms: ‘time sensitive’ rights that must be available at certain stages of the relationship.
This chapter provides an overview of the developments, trends and perspectives of financial market infrastructures. In particular, it aims to examine the application of technologies for securities custody and settlement. It offers the legal background understanding in respect of securities which are held through banks and other intermediaries necessary to access the highly complex area of cross-border securities law. In doing so, it displays and discusses the relevant legal developments concerning the main initiatives at international and European level that are projected at enhancing the efficiency of post-trade processes related to traditional securities, such as by using distributed ledger technology (DLT). The chapter mainly focuses on international standards, EU legislation and recent legislative proposals as well as on German law as an example of a national legal framework.
Aim . To review the legal neologisms of corporate documents, in particular, smart contracts, recorded in fiction and industry literature, in order to compare the ways of word formation of neologisms from articles of the Civil Code (Code Civil) of the French and court decisions. Methodology . In the course of the study, a continuous sampling of legal neologisms from authentic French texts published between 2008 and 2019 was carried out, on the basis of which the most typical legal neologisms were identified. To determine the extent of their distribution in jurisprudence, corpus analysis was used (French-language corpus and English-language Google Ngram Viewer corpus for 2019). In order to determine the methods of word formation and compare these neologisms with the terms recorded in the dictionary, semantic analysis was used to identify the meanings of neologism terms, as well as descriptive and comparative general linguistic methods. Results . As a result of the conducted research, trends have been established and the main ways of word formation of legal neologisms associated with the use of smart contracts of the modern French special language in the period 2008–2019 have been identified. Research implications . The results of the study can be used for further application in the field of modern contract law, contracts based on blockchain and agreements in the electronic form, analysis and prediction.