The Impact of Smart Contracts on Traditional Concepts of Contract Law

Author:Maren K. Woebbeking
Position:Doctoral candidate and research assistant of Prof. Dr. Gerald Spindler, Department of Corporate Law, Civil Law - Internet Law, Copyright and Telecommunications Law, Georg-August-University Goettingen, Germany.
Pages:105-112
SUMMARY

The concept of smart contracts entered the legal discourse only a few years ago, yet the subject has already given rise to remarkably different approaches. While some assume that smart contracts can be fully integrated into existing contract law, others predict that they will mark the beginning of the end of contract law. The aim of this article is to contribute to the assessment of smart... (see full summary)

 
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The Impact of Smart Contracts on Traditional Concepts of Contract Law
2019
105
1
The Impact of Smart Contracts on
Traditional Concepts of Contract Law
by Maren K. Woebbeking*
© 2019 Maren K. Woebbeking
Everybody may disseminate this ar ticle by electronic m eans and make it available for downloa d under the terms and
conditions of the Digital P eer Publishing Licence (DPPL). A copy of the license text may be obtain ed at http://nbn-resolving.
de/urn:nbn:de:0009-dppl-v3-en8.
Recommended citation: Maren K . Woebbeking, The Impac t of Smart Contracts o n Traditional Concepts of Contract L aw,
10 (2019) JIPITEC 105 para 1.
Keywords: Smart Contracts; self-execution of contracts; formalization of contracts; modifying smart contracts;
regulation of cyberspace; code is law; contractual ambiguity
increased significance of the contract drafting phase
compared to the execution phase. Among other as-
pects, smart contracts are considerably more dif-
ficult to modify than traditional contracts and they
are limited by the fact that the encoding of contracts
requires an increased formalization of the contrac-
tual terms. On the other hand, the technical archi-
tecture of smart contracts offers possibilities rang-
ing from automatic self-help to the enforcement of
legally unenforceable agreements. It is precisely this
autonomy of smart contracts from existing contract
law that finally raises the question of whether an ad-
aptation of contract law will become necessary and
what difficulties such an adaptation would face.
Abstract: The concept of smart contracts en-
tered the legal discourse only a few years ago, yet the
subject has already given rise to remarkably differ-
ent approaches. While some assume that smart con-
tracts can be fully integrated into existing contract
law, others predict that they will mark the begin-
ning of the end of contract law. The aim of this arti-
cle is to contribute to the assessment of smart con-
tracts by examining how they can be situated within
the traditional Western concept of contract law and
how they differ from traditional contracts in the in-
dividual phases of a contract’s life cycle. In particu-
lar, these findings show that the automated execu-
tion of the promises contained in a smart contract,
specifically their technical characteristics, lead to an
A. Introduction
1
Contracts play a central role for the ordering of
liberal market relations and therefore have an
irreplaceable importance for Western and other
societies.1 Accordingly, contract law is probably the
* Doctoral candidate and research assistant of Prof. Dr. Gerald
Spindler, Department of Corporate Law, Civil Law - Internet
Law, Copyright and Telecommunications Law, Georg-
August-University Goettingen, Germany.
1 E Allan Farnsworth, ‘Comparative Contract Law’ in
Mathias Reimann and Reinhard Zimmermann (eds), The
Oxford Handbook of Comparative Law (OUP 2016) 901; Arthur
von Mehren, ‘A General View on Contract’, International
Encyclopedia of Comparative Law: Contract in General, vol
VII/1 (Mohr Siebeck 2008) 19ff.; Caroline Bradley, ‘Private
most important private law institution of individual
self-determination and autonomy and it evolved
continuously to respond to the emergence of new
contract models.2 Today, like many other legal
institutions, it faces the challenges of digitization.
Next to Big Data analytics and Articial Intelligence
(AI), especially smart contracts pave the way for a
new era of contracting and pose a potential challenge
to the prevailing concepts of contract law.
International Law-Making for the Financial Markets’ (2005)
29 Fordham Int’l L.J. 127, 158f.
2 Regarding the history of the contractual concept in Europe
and Germany, see Andreas Thier in HKK, § 311 Abs. 1 Rn.
4; on the respective development of society and contract
law in the US, see Walter F Pratt, Jr., ‘American contract law
at the turn of the century’ (1988) 39 S. C. L. Rev. 415.

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