Law Commission has launched a call for evidence on smart contracts as “Smart contracts promise to revolutionise the way we do business, but parties might not yet be certain how the law will apply to them. We believe there is a compelling case for reviewing the law in this area”
The Law Commission has launched a call for evidence with the aim of ensuring that the technology of smart contracts can thrive in England and Wales. The call for evidence forms part of its projects on smart contracts and cryptoassets.
In summary, a smart contract is a legally binding contract in which some or all of the contractual obligations are recorded in or performed automatically by a computer program deployed on a distributed ledger. The growing use of smart contract technology is expected to increase efficiency and certainty in business, and reduce the need for contracting parties to have to trust each other; instead the trust resides in the code.
However, there are questions about the circumstances in which a smart contract will be legally binding, how smart contracts are to be interpreted, how vitiating factors such as mistake can apply to smart contracts, and the remedies available where the smart contract does not perform as intended.
The responses to the call for evidence will inform the Law Commission’s scoping study on smart contracts, which will provide an accessible account of the current law and set out how it will, or may, apply to smart contracts. The project is intended to inform public debate and seek a consensus about where reform may be needed to create an environment that encourages the use of the technology.
To inform the scoping study, the Law Commission is asking for evidence and views on a range of issues relating to smart contracts, including:
In the call for evidence the Law Commission sets out its current understanding of these issues and ask for stakeholders’ views and experiences. The call for evidence is open until 31 March 2021. The Law Commission aims to publish the scoping study in late 2021.