Smart contracts: Revolution or hurdle?

Abstract

The synergy between computer programs and contract law has generated considerable attention among legal scholars. Smart contracts were first theoretically described in 1996 but they came to life in 2009, with the development of cryptocurrencies. Relying on the papers published in the European Journal of Private Law, the author presents the problems and dilemmas arising from contract digitalization. Irrespective of whether smart contracts are perceived as a revolutionary change in contract law or just as a new mode of concluding and executing a contract, the automatic performance of a contractual obligation and the immutability of smart contracts profoundly affect the existing contractual practices. Traditional concepts such as contract formation, interpretation and inability to perform have acquired new meanings and functions. Online protection of contracting parties, consumers and the public order requires a regulatory reform but it is also essential to adapt technology to the intrinsic nature of legal transactions in order to meet juristic requirements. A smart contract is comparable to a vending machine: it is immutable and blockchain-based. The paper focuses on the most important types of smart contracts, their characteristics and application. Smart contracts lack artificial intelligence and their legal effects have been challenged. However, smart contracts have a great potential in terms of facilitating legal transactions and reducing the risk of contractual breach.

Keywords

• smart contracts
• blockchain
• form
• consumers
• internet
• coding
• civil law