The Disruptive Force of Smart Contracts

Abstract

The fourth industrial revolution hints at technological advances that could disrupt entire industries. Already glimpses of the disruptive force can be seen with the advent of technologies such as cryptocurrencies, blockchain, adaptive and predictive algorithms and the use of big data. The smart contract has emerged from these technological advances as a sophisticated self-executing computer program with the capability of automatically adapting itself throughout the contract life cycle to achieve the contractual objectives of the parties. Smart contracts are fully autonomous, self-evolving and dynamic processes in the formation, interpretation and management of contracts. Smart contracts could also remove the need for trusted third party intermediaries in commercial transactions, and thereby fundamentally alter the traditional approach to contract theory, practices and dispute resolution processes. Smart contracts will likely be incorporated into commercial transactions in some way, shape or form but the extent of such integration remains uncertain. This new paradigm of contractual theory and practice certainty will bring about different challenges and opportunities as the legal and commercial world grapples with the ethical and philosophical issues of controlling a contracting system that, at its core, is intended to liberate transactions from central control.