Smart contracts are growing in popularity and widely believed to increase efficiency and certainty in business. However, the Commission says there are questions about the circumstances in which they become legally binding, how they are interpreted, what mistakes might occur and the remedies available.
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.
Professor Sarah Green, Law Commissioner for commercial and common law, said: ‘Smart contracts promise to revolutionise the way we do business.
‘However, there are lingering uncertainties about how English contract law applies to smart contracts. We believe there is a compelling case for reviewing the law in this area to ensure that the jurisdiction of England and Wales remains a competitive choice for businesses using this emerging technology.’
In particular, the Commission is seeking views on the definition of smart contracts, how they may be used, their potential benefits and associated costs, formation, interpretation, remedies, consumer protection and jurisdiction issues.
Views are invited up to 31 March 2021, and the Commission aims to publish its scoping study in late 2021. Find out more at: www.lawcom.gov.uk/project/smart-contracts.
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