Theoretically, entire organizations and IT systems can work entirely with smart contracts. In fact, several cryptocurrency networks already do this. Because all rules are predefined before deployment, the system itself can operate independently and autonomously. When analyzing traditional text-based contracts, courts look at the final written document that the parties have agreed to to determine whether the parties are complying with or violating the rules. The courts have long emphasized that it is this final agreement that represents the mutual intention of the parties – the “meeting of spirits.” In theory, the innovations offered by smart contracts are indeed remarkable and far-reaching. However, there will likely continue to be problems, especially those that express collective sentiment against the remote possibility of high-level algorithms controlling human existence, as advances in AI often produce. Looking for a more humane way to automate your contracts? Juro is an all-in-one contract automation platform that helps visionary legal counsel and teams that enable them to agree and manage contracts in a unified workspace without the need for programming skills. Another issue is the extent to which smart contracts are made contractually enforceable and valid (BAL Lawyers, 2018). This problem is likely to persist for the time being, as the courts have not yet paid attention to it and have not yet addressed it. To validate, verify, capture and implement agreements between parties, smart contracts combine with distributed ledger technology and the Industrial Internet of Things.
After collecting real-world legal events, a smart contract collects IoT data – business processes, counters, sensors – to enable performance evaluation. After that, this information communicates the automated rules of a contract by displaying the results and additional evidence on the blocks (Schmitt et al., 2019). Other states in the country are doing the same. Arizona and Nevada have each modified their state`s version of UETA to include blockchain smart contracts as electronic records. A discussion on the applicability of smart contracts must begin with the fundamental distinction between an agreement and a “contract”. States generally recognize that, although two parties may enter into various “agreements”, a treaty means that the agreement is legally binding and enforceable in court. [5] In assessing enforceability, state courts traditionally consider whether the common law requirements of offer, acceptance and consideration are met. These basic requirements can certainly be met through complementary smart contracts. For example, an insurer may develop a theft insurance product that automatically offers payment to the insured if a flight is delayed by more than two hours. [6] The most important terms, such as The delimitation of the calculation of the delay can be defined in a textual contract, in which the actual conclusion of the contract (payment of the premium) and the performance (automatic payment in case of demonstrable delay) are managed via an additional smart contract. In this case, the insurer has submitted a concrete offer for a theft insurance product, which is accepted by the insured against payment of the premium in return.
Smart legal contracts, for example, have also been recommended by governments and various groups for use in electoral systems. Indeed, they are tamper-proof and eliminate the risk of falsification, making voting systems less susceptible to manipulation and errors. The use of smart contracts is being studied and tested by insurance companies to quickly process claims payments. Transfers could be done automatically rather than manually, escrow accounts might no longer be needed, there could be cost savings, and a virtual signature could eliminate the need for a physical presence. Peer-to-peer networks could be set up via smart contracts to insure without the need for an intermediary or administrator. Smart contracts use code to enforce agreements between their parties. Since code can only work as it was programmed, smart contracts eliminate any uncertainty about the terms or outcome of an agreement from the start. Bitwage is a good example of a blockchain application that companies are currently using.
Another is engraving, where tokens can be used by employees to facilitate payroll and operate according to the rules of smart contracts. This innovative solution also provides a payroll card that allows employees to purchase goods online. When buyers and sellers use smart contracts to close their deal, both parties tend to win: in a smart contract, the terms of a legal document are written directly into lines of code and stored on a distributed, decentralized blockchain network. However, the code can also be stored as part of another distributed ledger technology. Companies are now using blockchain “smart contracts” to process the buying and selling of their goods and services to ensure faster payments and transparent transactions. The Covid-19 pandemic has required more digitized transactions, including those executed autonomously, unhindered by lockdowns and delays in supply chain systems. Various platforms (IBM, Microsoft, H.P.) offer parties the ability to use smart contracts for their transactions, making their use more accessible and widespread than before. A smart contract leverages the power of decentralized blockchain to eliminate third-party execution of legal contracts.
Once both parties agree to the terms of the smart contract, the smart contract executes itself. Instantly, the terms of the contract are programmed and placed on the blockchain, making the contract immutable so that even the creator of a smart contract cannot change it once it has been agreed. If a party does not comply with its obligations, the agreed contractual penalties will be charged. Smart contracts also reap the other benefits of blockchain technology, such as improved security and sustainability. Smart contracts were first proposed in the early 1990s by Nick Szabo, who coined the term, referring to “a set of promises specified in digital form, including protocols in which parties deliver on those promises.” [11] [12] In 1998, the term was used to describe objects in the rights management service layer of the Stanford Infobus system, which was part of the Stanford Digital Library Project. [1] As the legal industry has evolved and become increasingly collaborative, there seem to be better alternatives for in-house legal experts, such as contract automation software. Contract automation software streamlines the contracting process rather than complicates it, allowing legal and sales teams to collaborate securely in a unified workspace. One advantage often touted by smart contracts is that they can automate payment without the need for reminders or other collection fees, and without you having to go to court to get a decision ordering payment.
