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Regular version of the site

Working paper

CONTRACT LAW 2.0: «SMART» CONTRACTS AS THE BEGINNING OF THE END OF CLASSIC CONTRACT LAW

The paper analyzes legal issues associated with application of existing contract law provisions to  so-called Smart contracts, defined in the paper as “agreements existing in the form of software  code implemented on the Blockchain platform, which ensures autonomy and self-executive  nature of Smart contract terms based on predetermined set of factors”. The paper consists of  several sections. In the first section, the paper outlines peculiarities of Blockchain technology as  currently implemented in Bitcoin cryptocurrency and which forms the core of Smart contracts. In  the second section, the main characteristic features of Smart contracts are described. Finally, the  paper outlines key tensions between classic contract law and Smart contracts.. The conclusion  section sets the core question for analysis of the perspectives of implementation of this  technology by governments: “How to align the powers of the government with Blockchain if  there is no central authority but only distributed technologies”. The author suggests two  solutions, which are not optimal: 1) providing the state authorities with the status of a Superuser  with extra powers and 2) relying on traditional remedies and enforcement practices, by pursuing  specific individuals – parties to Smart contract - in offline mode. It is emphasized that those  jurisdictions, which have the most Blockchain-friendly regulations will have competitive  advantage in attraction of new innovative business models and companies willing to exploit  them in a legal way.