What are smart contracts?

Abstract

The fundamental question that this chapter aims to answer is whether traditional contract law has been challenged by the rise of smart contracts and, if so, in what manner. This chapter demonstrates that smart contracts are neither smart nor contracts in the legal sense. Smart contracts are rather a form of new technology that is used to secure the execution of promises established through a legal contract that contractual parties are using in line with the principle of freedom of contract. The discussion on smart contracts ask many more questions than it answers. This is still a new form of technology that is increasingly being used by businesses, but it remains to be seen how it fits in traditional contract laws. Smart contracts are not yet sufficiently tested and assessed, especially before the courts, and it is interesting to see what kind of answers case law will provide in the future. When it comes to the enforceability of smart contracts, that does not yet seem to be problematic as they are to be understood in line with the principle of freedom of contract.