âSmart contractsâ are a way of using computers to make contracts unbreakable. Contracting parties do not need to trust one another to perform or rely upon intermediaries to enforce performance. Performance is guaranteed. This is supposed to be a victory for the ordinary person â a clever socioâeconomic application of cryptography that strips power from companies and governments and gives it to consumers. But it turns out that less trust does not mean more freedom, or better bargains. The law of contract supports valuable relationships both by enforcing duties and by allowing parties to escape the consequences of illâformed contracts and oppressive terms. Smart contracts remove these safeguards. Consumers may be bound, inexorably and without recourse, to contracts that are wholly devoid of virtue. The lesson of smart contracting is clear and urgent: when we design the future of commerce, we should direct our resources towards building, not emaciating, relationships of trust.
Abstract This article explores âsmart contractsâ from first principles: What they are, whether they are properly called âcontractsâ, and what issues they raise for national contract law. A âsmartâ contract purports to record contractual promises in language which is both intelligible to human beings and (ultimately) executable by machines. The formalisation of contracting language that this entails is, I argue, the most important aspect for lawyersâjust as important as the automation of contractual performance. Rather than taking a doctrinal approach focused on the presence of traditional indicia of contract formation, I examine the nature of contracts as legal entities created by words and documents. In most cases, smart contracts will be âwrapped in paperâ and nested in a national legal system. Borrowing from the idiom of computer science, I introduce the term âcontract stackâ to highlight the complex nature of contracts as legal entities incorporating different âlayersâ, including speech acts by the parties in both natural and formal languages as well as mandatory legal rules. It is the interactions within this contract stack that will be most important to the development of contract law doctrines appropriate to smart contracts. To illustrate my points, I explore a few issues that smart contracts might raise for English contract law. I touch on the questions of illegality, jurisdiction, and evidence, but my focus in this paper is on exploring issues in contract law proper. This contribution should be helpful not only to lawyers attempting to understand smart contracts, but to those involved in coding smart contractsâand writing the languages used to code them.
Mining typically may cause soil subsidence problems. In the Netherlands, that has been the case in the old coal mining district of Limburg (southern Netherlands) and also, more recently, in the new gas and salt mining areas in the north of the country. In the Province of Groningen, three decades of gas mining have caused a soil subsidence of over 35 centimetres. Furthermore, since earthquakes increasingly occur and have even passed 3.3 on the Richter scale, which is the threshold of danger to property, in the late 1990s, their relation to mining activities is no longer denied by the industry after some decades of stubborn negation. In this article, a number of reasons are presented, including arguments derived from liability under tort law (strict liability, combined with reversal of proof, as applied in Limburg since the 1920s), for why the 2003 Dutch Mining Law (as amended in 2017) does not appear to be successful in reflecting the state of the art. One would have expected more in a field with so much at stake, not just for the mining industry but also for citizens and the environment at large. Therefore, it is observed that the liability of mine operators is treated better by the legislation in adjacent European countries. The analysis of the current Dutch Mining Law, concentrating on the issue of liability for damage caused by soil subsidence and earthquakes to private property and the environment, is made from a comparative perspective, with special attention to French, German, and British mining law.
Blockchain-based smart contracts represent a shift towards an automated world. While their immutable and self-executing nature present numerous economic benefits, these characteristics give rise to issues. One of these issues is that the burden of issuing proceedings changes from a party looking to enforce the agreement to a party who wishes to relieve themselves of an automatic enforcement mechanism. The âpractical burdenâ, as the paper terms it, could potentially be most problematic in a consumer context, which is characterised by a significant imbalance between contracting parties. The paper assesses consumer law in New Zealand to determine whether this issue will arise under the current law. The paper concludes that New Zealandâs current consumer law is practically robust, however it recommends some practical measures that can be taken by the Commerce Commission in order to prepare for smart contracts as a dominant method of transferring property.
âSmart contractsâ are a hot topic. Presently, smart contracts are mostly evidence of property, like cryptocurrencies or mortgages, created and/or transferred using blockchain technology. This is an exploration of the theoretical possibilities of artificial intelligence in a far broader range of complex and heretofore negotiated transactions that occur over time. My goal is to understand what it means to make a contract smarter, i.e. to delegate more and more of the creation, performance, and disposition of legally binding transactions to machine thinking. Moreover, I want to do so from the perspective of one who is neither a true believer in the purported technological singularity to come nor a digital Luddite.
Abstract This chapter focuses on the characterisation and treatment of cryptocurrencies in the common law of property, using Bitcoin as the main example. It first examines how a crypto-coin might be viewed as an object of property, and more specifically whether it could make a suitable object for any regime of property rights at all, before discussing the fungibility, specificity, scarcity and exclusivity of cryptocurrencies in the context of property law. It then considers whether crypto-coins fall into either of the two conventionally recognised categories of personal property: choses in possession or choses in action. It also explores the applicability of rules of derivative transfer of title to crypto-coin transactions, and how the standard rules of following and tracing may be used for the identification and tracing of cryptocurrencies through mixtures. Finally, it looks at remedies available at common law and in equity for enforcing titles to cryptocurrencies.
Abstract: A classic legal problem is whether breach of contract may give rise to a remedy. Under common law this is discussed under the doctrine of excuses. Its civil lawequivalent is the attributability of causes of non-performance of an obligation, and its converse, force majeure. Despite the variety of approaches in various jurisdictions, the general outlines are roughly equivalent as far as translation into smart contracts is concerned: the main issue is what is the cause of non-performance and whether this cause can be attributed. Smart contracts can deal with the general outline of this structure, but may in practice only approximate the refinement that contract law offers. Themain problems are: determining the actual cause of the non-performance by means of automated oracles or the smart contract on its own (without relying on human judgment), dealing with multiple causality and impediments due to the creditor, determining attributability of the cause of non-performance. Smart contracts may offer no more than an approximation of the detailed rules of contract law, by hard-and-fast rules. This may suffice for certain categories of contracts, but may need additional effort to obtain a closer approximation of contract law rules where larger interests are concerned. The related doctrine of withholding performance is similarly difficult to realize appropriately in smart contracts. As regards hardship or unforeseen circumstances, it is best to disallow this in smart contracts,which leaves open the questionwhether partiesmight go to court for relief. The reliance on oracles furthermore opens a weakness to the automatic performance of smart contracts, due to possible liability of oracles for perceived incorrect assessment.
This article examines contract as a focal point of modern society both in terms of the way that it is used to classify relationships and the way in which it is used to order relationships. I look at how contractual structures and relationships across a variety of speciman scenarios (private sector supply contracts and public service delivery contracts) can be explained using the work of Ian Macneil. He gives us an account of how the socialising contexts of contract relationships evolve and change. Smart contracts offer a new way of constructing relationships. Their advocates suggest that they have the potential to revolutionise the practice of exchange. I consider smart contracts from Macneilâs perspective and work through whether his account of relationality will be able to encompass this new practise.
Abstract There are important synergies between the trust of blockchain and that of trusts law. This article critically examines the intersection between law and blockchain technology through an exploration of the notional impacts upon orthodox practices and principles of trusts law made by blockchain and other âdisruptiveâ technologies, including smart property and the Internet of Things.
The hype over bitcoins has been compared to the tulip mania in 17th century Netherlands and it has spawned a host of similar cryptocurrencies. As it has gained in popularity, the law has approached the subject warily, mostly from a regulatory perspective. However, no comprehensive consideration of the fundamental nature of a bitcoin ownerâs private law relation to his/her/its bitcoins has been properly conducted. Whether or not bitcoins or other cryptocurrencies achieve mainstream adoption or remain of interest to only a niche audience, this question will inevitably have to be properly addressed. This paper proposes to consider if bitcoins might be recognised as the subject of property rights by Commonwealth courts and if so, what such rights ought to entail. It will begin with a careful consideration of the controversial question of the scope of the law of property before considering bitcoinâs place within the law of property (if any). What is the meaning of property in the common law? What fundamental differences exist between tangible and intangible property? If ownership of bitcoins is worthy of protection, what shape should it take? It suggests that the common law adopts a more expansive view of property than civilian systems and that it is thus able to accommodate bitcoins and other cryptocurrencies within its law of property. However, owing to their unusual nature, legal rights to them must take on a unique and unorthodox form. The code underlying Bitcoin also poses particular challenges to the law which this paper also addresses.
This chapter looks beyond the novelty of self-executing âsmart contractsâ in blockchain networks and explores developments against the background fact that commercial parties have, for centuries, used documentary credit to simulate autonomous performance. Blockchain-based smart contracts and documentary credit share three core functionalities which are essential to any effective autonomous performance, analogue or digitalâthey both (i) act through internalized media of exchange; (ii) operate as closed systems; and (iii) provide means of securing sufficient resources to guarantee contractual performance. Using these three functionalities as a framework, this chapter conducts a comparative analysis of mechanisms for effecting autonomous contractual performance in a commercial setting. From this comparison, a few hypotheses are drawn regarding the potential areas where smart contract technology is more likely to find fruitful application. In particular, the chapter considers potential limitations to applying smart contracts to scenarios beyond digital asset transfers, how dispute resolution mechanisms should be designed to complement (rather impair) the autonomous nature of contractual performance under smart contracts, and potential capital cost implications which might arise in some cases when parties seek to replace human intermediaries with smart contracts.
The Whitbread Investment Company (WIC), commonly referred to as the Whitbread Umbrella, was an investment trust comprising minority shareholdings in a large array of regional and family brewers that was established in 1956. It was a listed company quoted on the UK stock exchange but was majority owned by the Whitbread group and members of the Whitbread family; the chairman of Whitbread was also a director of WIC. The structure survived in this form as a quasi-independent entity until 1994, when, under increasing pressure from institutional shareholders, the Whitbread group was forced to end its own two-tier voting structure as well as acquire, then subsequently divest, the minority shareholdings of WIC. As an essentially bid-proof trust WIC served to maintain the independence of not just the many regional brewers it had invested in - at least for a time - but also the wider Whitbread business. As explained in the 1989 anti-trust inquiry into the UK brewing industry, the backdrop to the establishing of WIC was the post-World War II fledgling market for corporate control emanating from the changes in legislation brought about by the Companies Acts of 1947 and 1948. Fearing that their independence was at risk from hostile approaches from early financial entrepreneurs, a group of family-managed and property-rich regional brewer-retailers sought the help of the larger patriarchal Whitbread, under the auspices of the influential Colonel W.H. Whitbread. Whitbread obliged with equity investment in return for formalised trading agreements and in some cases an invitation for a Whitbread director to join the board of the regional brewer. As the 1950s progressed, Whitbread expanded the number of such relationships and ring-fenced them in the WIC structure. In addition, the relationship between WIC, Whitbread and the Whitbread family was strengthened by WIC accepting Whitbread âAâ (ordinary) shares in lieu of payment for Whitbreadâs acquisition of control of some of WICâs investments and the purchase of high voting âBâ shares (twenty times the vote of an âAâ share) from Whitbread family members when they became available. By the time of the âmerger waveâ of 1968-72 that saw the entry of influential property finance entrepreneur Maxwell Joseph into the Beerage through the hostile bid for southern neighbour Watney Mann, Whitbread, via the agency of WIC, had brought under full ownership and control the majority of the original 20 or so regional brewery investments. It had become one of the largest national brewer-retailers through sequential acquisition without recourse to the capital markets. While the umbrella structure did not of itself prevent third party approaches to one of the regional firms (WIC considered offers on longer term merits alone, and in the case of the 1992 hostile bid for Morland from rival Greene King, it sold its 28.5 per cent stake to the predator) the complexity of the arrangement and the involvement of the larger Whitbread were seen as an effective defence to a hostile bid. WIC was a firm-sponsored solution to a perceived issue arising in the post-world war II period, specifically changes in company law that created a market for corporate control. That this might not have acted in the best interests of the wider brewing industry was summed up in a Campaign for Real Ale poster: âa fine idea in principle, but as the murdered diplomat Gregory Markov discovered, an Umbrella can be a pretty nasty weapon in the wrong handsâ (CAMRA poster, 1988). References: Bower, J. and Cox, H. (2012) âRegulatory capture and special interest pleading: how Scottish & Newcastle became the UKâs largest brewerâ, Business History Review, 86 (Spring): 43-68. Franks, J. and Mayer, C. (1996) âHostile takeovers in the UK and the correction of managerial failureâ, Journal of Financial Economics, 40 (1): 163-181. Gourvish, T.R. and Wilson, R.G. (1994) âThe British Brewing Industry 1830-1980â, Cambridge, UK Hannah, L. (1974) âTakeover bids in Britain before 1950: an exercise in business âpre-historyâ, Business History, 16 (1): 65-77.
Bankruptcy proceedings tend to involve civil disputes where nothing more than money is at stake. In such instances, the application of the preponderance-of-the-evidence standard of proof offers the greatest utility and is aligned with the comparatively minimal importance society places on purely monetary disputes. However, bankruptcy courts are not viewed as typical civil courts. Rather, many view these courts as âcourts of equityâ and this perception serves as a crutch which many bankruptcy judges use in advocating the application of the clear-and-convincing standard of proof to customary civil disputes. These actions distort the accepted risk allocation schemes implicit in standards of proof; the consequence of which often is inequitable results. A lack of direction by the Supreme Court is a key factor in this process failure. The Court has addressed the application of standards of proof infrequently and, when it has, the holding has been narrowly tailored. In 1990, the Court issued a ruling in Grogan v. Garner, 498 U.S. 279 (1991), that appeared to provide guidance. Unfortunately, as of late, the ruling has been misinterpreted by a number of courts and has led to additional confusion on an issue that was already elusive. In my article, I propose a new, comprehensive normative approach to determine which standard of proof is applicable in disputes involving debtors in possession under the Bankruptcy Code. My approach is based on a coextensive reading of applicable Supreme Court precedent that honors the narrow basis on which many of these rulings are made. I urge use of an approach that will engender greater uniformity on this fundamental issue. Further, I analyze some key forms of relief available under the Bankruptcy Code in which courts have advocated the application of the clear-and-convincing standard of proof but failed to provide any explanation for this action. By applying my approach, I evaluate bankruptcy case law and isolate instances where bankruptcy courts impermissibly distort accepted risk allocation schemes. Finally, I attempt to show that some unexplained applications of the clear-and-convincing standard of proof are justified.
Complex business contracts are notoriously difficult to write and read. Certainly, when litigation arises, courts scarcely have an easy time interpreting them. Indeed, contracts don't look at all as though they are written to tell a court what the parties want. Why can't smart, well-motivated lawyers do a better job? My article argues that they rationally don't try. I argue for a view of contracting in which parties aren't principally trying to set forth an agreement for a court to enforce. Rather, by leaving inartful language and ambiguity in the agreement, parties are bonding themselves not to seek precipitous recourse to litigation. The agreement entered into provides each party with grounds to bring a lawsuit if it so desires. Thus, if one party sues, the other party will virtually always have grounds to countersue. The complex transacting community has a norm against litigation in any event; bonding encourages and bolsters this norm, as well as norms of appropriate conduct throughout the contracting relationship. The contracting process, and the contract that results, thus serves importantly to create the parties' relationship and to set the stage for dispute-resolution consistent with preserving the relationship, as well as to keep available the backstop of enforcement if needed.
Abstract Dissatisfaction with the law of libel has been prevalent for some time. Critics have pointed to three areas in particular as requiring reform. First, they have said that rules of pleading in libel actions are unnecessarily arcane and that the interlocutory process is unduly complex. Secondly, it is said that awards of damages are out of proportion to the loss suffered. One consequence is that defendants have in general thrown more legal resources into litigation, which in turn has increased the costs penalty for the unsuccessful litigant. A third criticism is that the balance between plaintiff and defendant, both procedurally and in relation to the burden of proof, may be tilted too far in the plaintiffâs favour. (The suggestion that, perhaps, the burden of proof ought to be reversed and placed on the plaintiff has gained increased respectability, though it has not convinced everyone.) An important incidental effect of these deficiencies in the law, say critics, is that recourse to law is too complex and expensive. The result is that, at one extreme, the impecunious plaintiff may be deprived of a remedy and, on the other hand, with so much at stake financially for the unsuccessful defendant, the law may fetter freedom of speech.
The essence of federalism is the division of sovereignty between two levels of government. In any system of government, there are sovereign and delegated authorities. In a unitary government all sovereign powers are concentrated in the central government, although decentralization for the purpose of administrative efficiency may result in the delegation of certain powers from the central and supreme government to the regional and local subordinate authorities. In a federal state, on the other hand, regional governments, as well as the central authority, are invested with sovereign powers. In no actual case, however, do both levels of government enjoy sovereignty in all domains, since complete concurrence of jurisdictions would lead to incessant conflicts of coordinate authorities. For this reason, federal constitutions indicate, in a more or less precise way, the special fields of absolute competence of the central and the regional authorities. Partial concurrence of jurisdictions may not be excluded, in which case the problem of bringing about agreements between the sovereign powers arises. Administrative efficiency in a federal state requires both centralization and decentralization of executive functions, in much the same way as in a unitary state. If subordinate functions are delegated to the regional governments, these governments become subordinate to the central authority in these fields. On the other hand, administrative efficiency may require the centralized administration of certain matters in the realm of provincial supremacy, for example, the collection of provincial taxes. In this case, the central government would act as an agent of the provincial governments, and be subordinate to them. The two types of powersâsovereign and delegatedâmust be clearly distinguished in order to prevent unnecessary conflicts of authority.