Expanding the Platform: Smart Contracts as Boundary Resources

Kristian Lauslahti,Timo Seppälä,Juri Mattila,Taneli Hukkinen

doi:10.1007/978-981-10-8956-5_4

Kristian Lauslahti, Timo Seppälä + Show 2 more

Open Access

https://doi.org/10.1007/978-981-10-8956-5_4

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Abstract

Platform businesses are born global, with instant access to global markets. Thanks to the algorithmic, self-executing and self-enforcing computer programmes known as smart contracts, platform businesses now also have instant access to global capital markets from birth. However, the legal status of these smart-contract-enabled funding mechanisms and smart contracts in general is not well defined. In this article, we analyse how well the formation mechanisms of the general principles of Finnish contract law can be applied to the technological framework of smart contracts. We find that depending on the case, smart contracts can create legally binding rights and obligations to their parties. We also observe that contracts have not been formerly perceived as technical boundary resources in the sense that platform ecosystems could foster broader network effects by opening their application contracting interfaces to third parties.

Highlights

Platform businesses are born global, with instant access to global markets
Self-executing and self-enforcing computer programmes known as smart contracts, platform businesses have instant access to global capital markets from birth
We examine the relationship between blockchain-based smart contracts and Finnish contract law.[15]

Summary

Lauslahti The Research Institute of the Finnish Economy (ETLA), Helsinki, Finland

Based on all the characterisations above, we define smart contracts for this chapter as digital programmes that (a) Are written in computer code and formulated using programming languages (b) Are stored, executed and enforced by a distributed blockchain network (c) Can receive, store and transfer digital assets of value (d) Can execute with varying outcomes according to their specified internal logic From this definition, it is easy to see that the established term for describing such cryptographic boxes of value, namely, “smart contracts”, can be quite misleading, as their smartness as well as their contractual nature can both be called into question. The term refers to the conclusion of a contract through a situation in which no explicit declaration of intent can be detected, the parties collaborate in a way that indicates the existence of a contractual relationship.[53] It has been stated in legal literature that it is mostly a matter of taste which term to use.[54,55]. The conclusion of a contract can be attributed to external characteristics presented in the parties’ actions.[61]

Conclusion of a Smart Contract

Conclusions and Discussion