Agreement Smart Contract

Apart from that, there are many other places where the use of smart contracts can make the system more efficient and trustworthy. For example, in the case of traditional text contracts, a party can easily excuse an infringement by not simply applying the available sanctions. If an esteemed customer arrives with his payment one month late, the seller can decide in real time that preserving the long-term business relationship is more important than any available termination fee or late fee. However, if this relationship had been reduced to an intelligent contract, it is unlikely that it would be possible not to apply the agreement ad hoc. Late payment results in the automatic extraction of a late commission from the customer account or the suspension of a customer`s access to a software program or Internet-connected device, if the Intelligent Contract has been programmed in this way. Therefore, automated execution by smart contracts may not correspond to the number of companies active in the real world. And because they are able to remove administrative overheads, smart contracts are one of the most attractive features related to blockchain technology. While Blockchain acts as a kind of database and confirms that the transactions have taken place, intelligent contracts meet predetermined conditions; think of an intelligent contract as a computer that is run on “if/then” or on conditional programming. With respect to smart contracts, a court would probably consider the text and code to be a single agreement. The problem becomes complicated if the traditional text agreement and code do not coincide. In the sample crop insurance described above, the text of an agreement provides that an insurance payment is made when the temperature drops below 32 degrees, while the smart contract code triggers payment when the temperature is 32 degrees or less. Assuming that the text agreement does not specify whether the text or code is controlled in case of inconsistency, the courts must decide – perhaps on a case-by-case basis – whether the code should be treated as an amendment to the jointly agreed written agreement or whether the text of the agreement should take precedence.

In some respects, the analysis should be no different from a case where the provisions of a main agreement differ from what is reflected in a attached schedule or exhibition. The fact that there is a conflict between the text and the computer code, not two textual documents, should not be decisive, but the courts may have a different opinion. “UPS can execute contracts that say, “If I`m getting a return to a developing emerging market, then that other [product] is going to trigger a lot, a lot of links in the supply chain, a supplier that creates a new item, since the existing item has just been delivered to this evolving market.” Too often, supply chains are hampered by paper-based systems, where forms are subject to many authorization channels, increasing the burden of loss and fraud.

Comments are closed.

Back to top