Experienced Consultants and Attorneys for Smart Contracts
To get answers and assistance on smart-contract-related questions, look no further. If you wish to get legal help with smart contracts, assistance with smart contract enforcement, understand the differences between smart contracts and traditional contracts, learn how to get out of smart contracts, and more, talk to our team of experienced, smart contract lawyers and consultants.
Smart contracts save people and entities money, time, and effort. They are supported by the Ethereum blockchain that allows many other specialized programs. The attractiveness of Ethereum blockchain for multiple apps running simultaneously has attracted federal agency attention. Smart contracts enjoy SEC attention, with issuers open to higher federal investigation risks.
One Legal Square’s smart contracts lawyers and consultants have the latest on smart contracts. We advise on all smart contract issues, from the formation of smart contracts to interpreting and enforcing them. We also defend clients who are under federal investigations or charges due to smart contracts.
Take a proactive approach. Don’t wait for a federal investigation or for your reputation to be damaged. Contact our smart contract lawyers and consultants now.
Definition: Smart Contracts
What’s a smart contract?
Smart contracts are self-executing agreements written in code and maintained on the blockchain (a decentralized and distributed ledger). Blockchain transactions can’t be deleted or modified, offering a unique level of security.
Parties to a smart contract must define the subject of their agreement to offer the smart contract permission for alteration. Before the contract is finalized, contractual terms must be developed and agreed upon. This is done via programming. Smart contracts eliminate any uncertainty regarding the terms or outcome of an agreement from the outset.
Smart contract agreements are simply predefined rules automatically executed by the occurrence/non-occurrence of a certain event. In simple terms, parties to the smart contract don’t do anything once the contract is made. The contract is “smart" and can execute itself based on predefined rules. This “smart" element reduces financial transactions cost, time, and effort significantly. In fact, there’s little to no need for human interaction.
Background: Smart Contracts
Smart contracts date back to 1996. They were invented by Nick Szabo – a computer scientist and cryptographer. Szabo’s goal was facilitating an e-commerce and trading system between people anywhere globally without the need to connect to each other.
His aim was to eliminate third parties as each smart contract was designed to execute itself based on predefined events occurring or failing to occur.
Smart Contracts Today
Smart contracts work on the Ethereum blockchain. Every contract on the blockchain can send transactions through its network guided by predefined rules. Smart contract code allows precise terms to be automatically executed. Since smart contract transactions are powered by blockchain technology, they can’t be reversed once a transaction is done.
Smart Contracts vs. Traditional Contracts
Traditional contracting differs from smart contracts in three major ways:
Contract Interpretation
Traditional contracting has always had interpretation issues that may need legal assistance (a court) to interpret ambiguous terms. Smart contracts don’t have this problem. Since commands and circumstances are set in code on the blockchain, smart contracts offer no room for misinterpretation. Everything is predefined and confirmed when the contract is being moved to the blockchain.
Modification
Traditional paper contracts can be modified easily, depending on the type (sale of goods or common law contracts). Modifications are done in writing and may require drafting a new contract. Smart contracts can’t be modified once the computer code code is moved to the blockchain.
Contract Execution
If all parties to a traditional contract abide by its terms, the agreement is fully executed. However, if only one party abides, the contract can be partially executed. If one party refuses to abide, the contract can also be breached and rendered void.
Smart contracts don’t have this problem. It’s impossible to breach a contract once it is in play. The conditions of smart contracts are automatically executed based on if the predefined condition occurs or fails to occur.
Our seasoned smart contracts lawyers can advise on all smart contract-related issues. Contact our law firm today.
How Are Smart Contracts Created?
Smart contracts are popular today in many industries and the legal profession. They are common when transferring real estate, purchasing goods, and transferring funds without third-party approval. Creating smart contracts is easy using the following steps:
Step 1
The process begins with establishing rules or commands for the contract and all parties agreeing to the rules.
Step 2
Once the rules are in place and all parties agree, they are inputted into the code and moved to the blockchain, where they can’t be changed or deleted. Since the template contract is in a public ledger viewable to anyone, the parties to the contract remain unknown.
Step 3
If the set conditions for executing the contract occur or fail to occur, a predetermined command is automatically enforced.
Advantages of Smart Contracts
Smart contracts have notable benefits to the entities and individuals that use them. The most notable smart contract benefits include:
- They can’t be modified after being moved to the blockchain, which adds unmatched security.
- They get rid of third parties in typical contracts – eliminating fees, increased execution time, and many other third-party problems.
- Few regulations eliminate compliance issues common in traditional contracts.
Disadvantages of Smart Contracts
- Many people aren’t knowledgeable about smart contracts, which hinders adoption.
- Decentralized systems required to run smart contracts are more expensive since they require more computing power than centralized systems.
- Few regulations expose parties to smart contract risks
Legal Help on Smart Contracts
Smart contracts have many benefits for businesses and individuals today. They make contracts more binding and safer since they can’t be changed once the rules are set and recorded on the blockchain.
When the triggering event occurs, the contract is automatically executed, eliminating third parties who increase contract cost and execution time, and introduce other problems. However, smart contracts can be challenging to create.
You require experienced smart contracts lawyers like us to help you handle your smart contract issues and legal aspects. We advise on the ever-changing legal and regulatory environment surrounding smart contracts. Don’t wait for smart contract issues to find you. Contact us today to claim a free confidential consultation.
