"Smart Contracts": Where Law Meets Technology

The second article in our Blockchain and the Law series

While the idea of "smart contracts" as a means of executing peer-to-peer transactions is not new, the advancement of blockchain technology as a public platform for recording and executing transactions may finally provide the basis for bringing smart contracts into commercial use.

The commercial utility of smart contracts stems from the ability to automatically self-execute transactions in accordance with pre-coded instructions. While this has the potential to reduce the contracting, enforcement and compliance costs associated with related transactions, it also comes with a multitude of risks and challenges, which have yet to be adequately addressed. The very term "smart contract" is of questionable utility when used in isolation.