Legal Nature of Smart Contracts: Contract or Program Code?

Objective: due to the rapid technological changes, digital economy and contractual relations determine law transformation and legislation development towards adaptation to prospective spreading and application of smart contracts in civil and commercial turnover. In this regard, the study focuses on determining the legal essence of smart contracts as a fundamental step towards the development of their timely and clear regulation.Methods: the research is based on the methodology of formal-legal and comparative legal analysis. It compares the current Bulgarian legislation with supranational legal sources and identifies the characteristic features of smart contracts as demanded instruments necessary for modern law and economy. The article also compares them with the classical understanding of contracts, making it possible to understand and define the nature of smart contracts more accurately.Results: it was determined that a smart contract is a software code in which the parties predetermine conditions under which the contractual relationship between them is created, modified and terminated. The research proved that the contract execution does not depend on the action or inaction of its parties, but rather on the occurrence of a predetermined condition (a certain fact relevant to the parties) under which the contract must self-execute. It was substantiated that the will of the parties cannot be changed or replaced because of the special way in which the smart contract is recorded in a distributed ledger. It is found that the fundamental problem of transferring the will from the legal language to the program code of the smart contract persists: if the will of the parties is incorrectly transferred to the program code, the smart contract may self-execute, but its execution will not be the result that the parties counted on.Scientific novelty: the analysis made it possible to compare the current national (Bulgarian) legislation and supranational (European) law. It revealed the vagueness of smart contracts regulation, both at the national and international level, and identified a number of issues in need of scientific and legal interpretation, which refer to the legal nature of smart contracts in view of the self-executing program code concept.Practical significance: the study can serve as a basis for further development of legislation towards its adaptation to the prospects of smart contracts spreading and application in civil and commercial turnover. It also allows an in-depth analysis of the smart contracts practice referring to such unsolved problems as accurate transference of the parties' will to the program code (translation of specific terms from the legal language into the smart contract program code), electronic identification of subjects - parties to the transaction and many other issues

Contracts Ex Machina

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

E Pluribus Unum – Out of Many, One Common European Sales Law?

In light of the fragmentation due to the nationalization of civil and commercial law and the growing intensity of cross-border trade in manufactured goods, arguments for the unification of private law surfaced already from the early 20th century. Such attempts resulted in, among others, the CISG, the UPICC or the PECL. In line with this pattern, as an attempt to make Out of Many, One Common European Sales Law, a Proposal for a Regulation on a Common European Sales Law (CESL) was published in 2011. The aim of the present contribution is to explore the background of the Proposal and to assess its significance for the future, with specific attention to the challenges of the digital age. Section I of the paper provides an overview of the process in the first decade of the 21st century leading to the publication of the Proposal, identifying the various stages of making an instrument. This is followed by the description of the Proposal and its evaluation in Section II. Although the immediate implementation and application of the instrument are not feasible, the text contains some promising elements to build on. According to the main findings of the paper, in the new millennium no longer merely international trade in manufactured goods is a chief factor triggering the implementation of international instruments of contract law. The innovations which pose new challenges and regulatory needs, also addressed in the CESL, are trade in digital content and e-commerce. Considering a digital key to the success of regulatory aspirations, the paper thus outlines ways European and international legislation might go in terms of regulating cross-border trade in the age of information technology. Accordingly, the areas to focus on for a start are transactions for the supply of digital content and e-commerce transactions

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

[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.

Understanding smart contracts as a new option in transaction cost economics

Among different concepts associated with the term blockchain, smart contracts have been a prominent one, especially popularized by the Ethereum platform. In this study, we unpack this concept within the framework of Transaction Cost Economics (TCE). This institutional economics theory emphasizes the role of distinctive (private and public) contract law regimes in shaping firm boundaries. We propose that widespread adoption of the smart contract concept creates a new option in public contracting, which may give rise to a smart-contract-augmented contract law regime. We discuss tradeoffs involved in the attractiveness of the smart contract concept for firms and the resulting potential for change in firm boundaries. Based on our new conceptualization, we discuss potential roles the three branches of government – judicial, executive, and legislative – in enabling and using this new contract law regime. We conclude the paper by pointing out limitations of the TCE perspective and suggesting future research directions

Technologie RFID a Blochkchain v dodavatelském řetězci

The paper discusses the possibility of combining RFID and Blockchain technology to more effectively prevent counterfeiting of products or raw materials, and to solve problems related to production, logistics and storage. Linking these technologies can lead to better planning by increasing the transparency and traceability of industrial or logistical processes or such as efficient detection of critical chain sites.Příspěvek se zabývá možností kombinace technologií RFID a Blockchain pro účinnější zabránění padělání výrobků či surovin a řešení problémů spojených s výrobou, logistikou a skladováním. Spojení těchto technologií může vést k lepšímu plánování díky vyšší transparentnosti a sledovatelnosti průmyslových nebo logistických procesů, nebo například k efektivnímu zjišťování kritických míst řetězce

A blockchain-based Decentralized System for proper handling of temporary Employment contracts

Temporary work is an employment situation useful and suitable in all occasions in which business needs to adjust more easily and quickly to workload fluctuations or maintain staffing flexibility. Temporary workers play therefore an important role in many companies, but this kind of activity is subject to a special form of legal protections and many aspects and risks must be taken into account both employers and employees. In this work we propose a blockchain-based system that aims to ensure respect for the rights for all actors involved in a temporary employment, in order to provide employees with the fair and legal remuneration (including taxes) of work performances and a protection in the case employer becomes insolvent. At the same time, our system wants to assist the employer in processing contracts with a fully automated and fast procedure. To resolve these problems we propose the D-ES (Decentralized Employment System). We first model the employment relationship as a state system. Then we describe the enabling technology that makes us able to realize the D-ES. In facts, we propose the implementation of a DLT (Decentralized Ledger Technology) based system, consisting in a blockchain system and of a web-based environment. Thanks the decentralized application platforms that makes us able to develop smart contracts, we define a discrete event control system that works inside the blockchain. In addition, we discuss the temporary work in agriculture as a interesting case of study.Comment: Accepted for publication in the proceedings of the "Computing Conference 2018" - 10-12 July 2018 - London, United Kingdo

Beyond Bitcoin: Issues in Regulating Blockchain Transactions

The buzz surrounding Bitcoin has reached a fever pitch. Yet in academic legal discussions, disproportionate emphasis is placed on bitcoins (that is, virtual currency), and little mention is made of blockchain technology—the true innovation behind the Bitcoin protocol. Simply, blockchain technology solves an elusive networking problem by enabling “trustless” transactions: value exchanges over computer networks that can be verified, monitored, and enforced without central institutions (for example, banks). This has broad implications for how we transact over electronic networks. This Note integrates current research from leading computer scientists and cryptographers to elevate the legal community’s understanding of blockchain technology and, ultimately, to inform policymakers and practitioners as they consider different regulatory schemes. An examination of the economic properties of a blockchain-based currency suggests the technology’s true value lies in its potential to facilitate more efficient digital-asset transfers. For example, applications of special interest to the legal community include more efficient document and authorship verification, title transfers, and contract enforcement. Though a regulatory patchwork around virtual currencies has begun to form, its careful analysis reveals much uncertainty with respect to these alternative applications

Alignment model for trunk road network maintenance outsourcing

Road maintenance outsourcing is now the foremost strategy by which road authorities procure maintenance works. Despite growing application of road maintenance outsourcing, there are conflicting estimates on the effective­ness of road maintenance outsourcing and shortage of appropriate models to align over optimistic expectations of road authorities from road maintenance outsourcing with substantiated benefits. This paper investigates the efficacy of road maintenance outsourcing. In this paper, the different variants of road maintenance outsourcing and road maintenance works are evaluated with a SWOT analysis and a comprehensive literature review respectively. In addition, a road main­tenance outsourcing alignment model based on a decision tree and Balance Score Card is proposed and illustrated with a Nigerian trunk road network authority as a case study. The result of the SWOT analysis and comprehensive literature review establishes fresh insight into road maintenance outsourcing dynamics. The presented road maintenance outsourc­ing alignment model provides adequate pathways that could assist road authorities identify the most appropriate road maintenance outsourcing variant for road maintenance procurement. In addition it aligns actual benefits and expectations of road maintenance outsourcing and facilitates development of SMART metrics for effective assessment of road main­tenance outsourcing. The proposed model is applicable across other infrastructures. First published online: 01 Sep 201