A number of US states are passing specific blockchain and smart contract enabling legislation, including a law making blockchain records admissible in Vermont, and in Arizona in April 2018 which made clear that “writing” included blockchain records and both Arizona and Tennessee have passed laws which defined smart contracts as:
An event-driven program, that runs on a distributed, decentralised, shared and replicated ledger and that can take custody over and instruct transfer of assets on that ledger.
Further, the bills state:
No contract relating to a transaction shall be denied legal effect, validity, or enforceability solely because that contract contains a smart contract term.
Wyoming and Delaware passed laws in 2017 specifically recognising the validity of blockchain transactions for specific securities purposes and other US states are moving to adopt their own enabling legislation including New York and Florida.
However, a recent report from the Digital Chamber of Commerce based in Washington, DC pushed back against specific enabling legislation, arguing that the Uniform Electronic Signatures Act and the Electronic Signatures in Global and National Commerce Act alreadyalready ‘recognize, enable and validate the use of electronic signatures and electronic records when using a blockchain’.
One commentator has gone so far as to allege that ‘states that pass smart contract laws have no idea what they are doing’.
In Australia sections 8 and 15C of the Electronic Transactions Act provide that, a transaction is not invalid solely for the reason that it takes place solely in electronic form or as a result of automated electronic messages.
It seems that from the perspective of recognizing that transactions cryptographically signed in relation to a smart contract are binding, or that follow-on contracts potentially created by a smart contract, the legislation in place appears capable of recognizing smart contract code as embodying a contract.
However, the question will always be one of fact, as at the most basic point, a contract must embody an agreement between parties, intended to create legal relations, with identifiable terms of the agreement of which the parties have been put on notice to read and understand prior to entering into the agreement.
Not all smart contracts will be capable of becoming contracts at law, and the term “smart legal contract” is emerging as a category of smart contracts which intend to be treated as legally enforceable contracts, as distinct from other smart contract.
Outside of regulatory enforcement, there are no current reported judicial decisions which address the interpretation or validity of a smart contract, but it appears that the popularity of smart contracts will lead to them being recognized in certain transactions where the formal requirements for a contract exist.
More detail: https://www.linkedin.com/pulse/smart-contracts-contract-disputes-michael-bacina/