592 research outputs found

    Contracts Ex Machina

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    Smart contracts are self-executing digital transactions using decentralized cryptographic mechanisms for enforcement. They were theorized more than twenty years ago, but the recent development of Bitcoin and blockchain technologies has rekindled excitement about their potential among technologists and industry. Startup companies and major enterprises alike are now developing smart contract solutions for an array of markets, purporting to offer a digital bypass around traditional contract law. For legal scholars, smart contracts pose a significant question: Do smart contracts offer a superior solution to the problems that contract law addresses? In this article, we aim to understand both the potential and the limitations of smart contracts. We conclude that smart contracts offer novel possibilities, may significantly alter the commercial world, and will demand new legal responses. But smart contracts will not displace contract law. Understanding why not brings into focus the essential role of contract law as a remedial institution. In this way, smart contracts actually illuminate the role of contract law more than they obviate it

    How to Interpret a Vending Machine: Smart Contracts and Contract Law

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    A smart contract is software designed to do the job of a legal contract: ensuring the performance of parties who might not otherwise trust one another to do so. By running a smart contract on blockchain, users can lock themselves into future performances without relying on a third-party enforcer or platform host, thereby realizing a “fully trustless” exchange. This new technology has wide range of potential applications, and contracts are likely to become an increasingly common part of the economy. Some have argued that smart contracts represent a new type of legal contract, analogizing the software’s code to a contractual writing. Others have suggested that smart contracts might in some transactions replace legal contracts. But the relationship between smart contracts and legal contracts is more complex than either claim acknowledges. Although using a smart contract can figure into the formation of a legal contract, it is a mistake to analogize a smart contract’s code to a contractual writing. Unlike writings, code should rarely figure into to the interpretation of a legal contract; and when it does, its interpretation is different in kind. And though some have tried to use incorporation, integration or TINALEA clauses to substitute smart contracts for traditional contractual protections, it is not clear that courts would or should always enforce such provisions. And even if they do, governance by code rather than law comes at a significant cost to the parties. Smart contracts work better when they supplement, rather than supplant, legal contracts. This article analyzes the many ways a smart contract might interact with the law of contracts by taking seriously the comparison, common in the literature, of smart contracts to vending machines. A series of thought experiments is used to explore when and how the mechanisms inside a machine, analog or digital, can affect the terms of a legal contract between its users. The resulting detailed doctrinal analysis provides support for a broader thesis about the relationship between technology, law and society. Smart contracts, though useful tools, instantiate an anemic form of human sociability as compared to the complex, even trusting, relationships for which contract law is designed

    The Role of International Rules in Blockchain-Based Cross-Border Commercial Disputes

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    [excerpt] The concept of online dispute resolution (ODR) is not new. 1 But, with the advent of Web 3.0, the distributed web that facilitates pseudonymous and cross-border transactions via blockchain\u27s distributed ledger technology, 2 the idea of, and pressing need for, appropriate dispute resolution models for blockchain-based disputes to support this novel system of distributed consensus and trust of which blockchain proponents boast, is a primary concern in rapid development. 3 The common goal of each project is to utilize smart contracts to facilitate superior, quicker[,] and less expensive proceedings by eliminating so many of the tedious and protracted trappings of traditional arbitral proceedings, such as the sending and receiving of documents via courier. , Despite myriad approaches, all emerging blockchain-based dispute resolution services (BDR solutions) generally seek to bridge the divide between automated performance mechanisms, like smart contracts, and the human judgment traditionally required to settle legal disputes.5 How our existing legal frameworks must develop to ensure that smart contracts 6 facilitate, rather than frustrate, the parties\u27 intent is a critically important question to ask as the blockchain stack\u27s infrastructure and application layers are being built and, ultimately, scaled. Indeed, interest is high in the race to create alternative dispute resolution mechanisms to resolve disputes arising from blockchain-based commercial transactions that, due to the transnational, borderless, pseudonymous, and distributed nature of blockchain, clearly necessitate international solutions.

    Blockchain Vending Machine: A Smart Contract-Based Peer-to-Peer Marketplace for Physical Goods

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    In this paper, we propose an autonomous vending machine that is governed by a public Blockchain and smart contracts platform. Set up as a decentralized autonomous organization, it serves as an open marketplace for physical goods, where anyone can buy and/or sell objects. We propose a basic architecture for the machine, analyze pricing and fee mechanisms and examine potential pitfalls. Moreover, we discuss open issues, possible extensions and further areas for improvement. We conclude that the deployment of such machines could significantly improve our understanding of decentralized autonomous organizations and build a bridge between virtual and physical markets. Insights gained from such an experiment may raise important questions for further researc

    Questions related to Bitcoin and other Informational Money

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    A collection of questions about Bitcoin and its hypothetical relatives Bitguilder and Bitpenny is formulated. These questions concern technical issues about protocols, security issues, issues about the formalizations of informational monies in various contexts, and issues about forms of use and misuse. Some questions are formulated in the more general setting of informational monies and near-monies. We also formulate questions about legal, psychological, and ethical aspects of informational money. Finally we formulate a number of questions concerning the economical merits of and outlooks for Bitcoin.Comment: 31 pages. In v2 the section on patterns for use and misuse has been improved and expanded with so-called contaminations. Other small improvements were made and 13 additional references have been include

    Smart contracts

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