Lawyers for Smart Contracts
Experienced Smart Contracts Team
Do you need legal advice on smart contracts? How is a smart contract enforced? Can you ever get out of a smart contract? How are they different from traditional contracts?
If you have any of these or other questions about smart contracts, now is the time to get in contact with our team of smart contracts attorneys and consultants.
Smart contracts are an innovative revolution saving companies and individuals time, costs, and effort. Smart contracts are built upon the Ethereum blockchain and allow for multiple, specialized programs to run simultaneously.
That said, smart contracts have received an increased focus from federal agencies because of their novelty and lack of consistent regulation. This places companies that regularly use smart contracts at risk of a federal investigation.
At Oberheiden, P.C., our team of attorneys and consultants stay up-to-date on recent developments on smart contacts.
We can advise you on smart contract issues including formation, interpretation, and enforceability. We can also defend you and your company against a federal investigation into your use of smart contracts.
We understand the basic and subtle differences between traditional contracts and smart contracts and are prepared to advise you and fully defend you.
Do not wait. Put Oberheiden, P.C. on your side today to grow your business, protect your reputation, and stay ahead of federal regulations.
What are Smart Contracts?
A smart contract is a self-executing, written agreement drafted in computer code and maintained on blockchain technology. The blockchain is the decentralized, distributed ledger where all blockchain-related transactions are stored.
The transactions on the blockchain cannot be modified or deleted—the blockchain is immutable and protection against interference.
Before finalizing a smart contract, the parties to the contract need to define the subject matter of the agreement in a way that gives the smart contract permission to make changes to that subject matter.
Also, before the parties finalize the smart contract, they must develop and agree upon the terms of the contract—”the rules.” These rules are made in programming language.
The agreement contains a set of pre-defined rules that will automatically execute upon the occurrence or non-occurrence of a triggering event. In other words, the parties to the contract do not need to do anything after the agreement is made. The smart contract automatically carries out the terms of the agreement.
Thus, the transaction time, costs, effort, and human interaction is either significantly addressed or eliminated altogether.
Smart Contracts and Ethereum
The concept of a smart contract was invented by cryptographer and computer scientist, Nick Szabo, in 1996. His idea was to facilitate a system of e-commerce and trading between individuals with no connection to one another and in any location.
These transactions aimed to be conducted without the use of third-party intermediaries. Each smart contract would execute itself after a pre-defined event occurs.
Today, the majority of smart contracts run on the Ethereum blockchain. Each smart contract on the Ethereum blockchain can send transactions over their network based on agreed-upon rules.
The code of the smart contracts allows the precise terms to be automatically enforced. Because these transactions are transferred to the blockchain, once a smart contract is made, it is irreversible.
As a result, issues such as interpretation, modification, and execution are substantially different with smart contracts compared to traditional contracting.
Traditional contract interpretation issues often arise and may need the assistance of a court to find the proper interpretation of the ambiguous term. With smart contracts, there are no ambiguous issues because every command and set of circumstances is coded onto the blockchain. Because everything is confirmed at the time the smart contract is transferred to the blockchain, there can be no interpretation issues.
Parties to traditional contract making constantly modify their contracts. Depending on the nature of the contract—sale of goods versus common law contracts—the modification may have to be in writing or may necessitate a new contract. On the other hand, modification is not allowed nor is it even possible with smart contracts. Once the code is transferred to the blockchain, it cannot be modified.
If both parties fully perform their contract duties under the traditional contract theory, the contract is fully executed. If only one side completed their side, it is partially executed. If one side refuses to perform their obligation, there is a breach in contract execution. However, with smart contracts, contract breaches are not possible. The condition will either occur or not and the contract may or may not be automatically executed.
All these issues require the skilled advice from an attorney experienced in smart contract issues. Give our team of smart contracts and blockchain attorneys and consultants a call today.
The Smart Contract Process
Smart contacts are already being used to transfer real estate without the need for real estate agents; purchase goods without the need for third-party middleman; transfer funds without the need for bank approval; and so on.
Creating a smart contract is straightforward. The parties must agree to a set of rules, or commands, for the contract and can include as many rules as they desire.
These rules are inputted in code and transferred to the blockchain. Once the codes are on the blockchain, they cannot be altered. The names of the individuals are not known but the smart contract itself is located on the public ledger and transparent to all.
The rules are drafted in “if…then” or “when… then” statements. Each rule is not activated unless that particular condition or set of conditions occur. If the condition does occur, the command is automatically executed.
Benefits of Smart Contracts
Smart contracts offer many benefits both to individuals and entities using blockchain technology. Here are some of the key benefits of smart contracts:
Smart Contracts Limits
Smart contracts also contain limitations, especially when compared to traditional contracting negotiation and performance. We outline these limits below:
- Cannot modify the terms of a smart contract after it is transferred to the blockchain;
- No ability to evaluate whether performance was substantially met or to make judgment calls;
- Many businesses and individuals are uneducated in smart contracts, so mass adoption between businesses and individuals is hindered;
- Decentralized systems are more costly than centralized networks because decentralized systems require far more computing power; and
- Few if not no applicable regulations for smart contracts exist.
Need Legal Advice on Smart Contracts?
Individuals and businesses in virtually every industry are using smart contracts. Smart contracts allow the parties to negotiate and agree upon a set of rules that are then transferred to the blockchain in coded language.
If the triggering event occurs, the code on the blockchain automatically executives its terms—eliminating the need for third-party intermediaries.
That said, finding a law firm experienced in smart contracts can be difficult. At Oberheiden, P.C., our team can help you develop and plan smart contracting for your business.
We can also advise you about the constantly-evolving legal and regulatory landscape surrounding smart contracts.
Get the advice you need ahead of time. Call or contact us today for a free consultation.