The Legal Design of the Smart Contract: The Legal Nature and Scope of Application

Within the framework of this article, the authors carry out the study of the design of the smart contract in the context of jurisprudence and technical sciences. The paper analyzes the legal nature of the smart contract and the issues concerning the scope of application (in relation to distributed ledger technology).

The authors conclude that the category of “smart contract” can be defined in technical and legal aspects. In foreign literature, there are two categories: a legal smart contract and a smart contract code (or smart contract). The smart contract as a technical phenomenon represents a computer code that allows automated fulfillment of obligations. From legal point of view, the approaches to the definition of the smart contract depend primarily on the fact that the authors rely on the possibility of using smart contracts only within the framework of distributed ledger technology or other information technologies. At the same time, the majority of authors share the view that the smart contract exists exclusively in relation to the technology of distributed ledgers, namely, the blockchain. The article proposes to define the smart contract as a standard (special) contractual design — a contract concluded by electronic or other technical means, under the terms of which performance of the obligation is carried out without directed explicit additional expression of will (under Part 2 of Article 309 of the Civil Code of the Russian Federation).

The article states that the smart contract cannot be qualified as an independent way of ensuring the performance of obligations. Such qualification is possible only if the functional approach to understanding security is applied. The paper examines the main fields of application of smart contracts and possible risks of their application (in terms of statement of terms of agreements in relation to a programming language; in respect of necessity of compliance with such fundamental principles of civil law as legality, fairness, protection of the weak; the need for communication with public authorities and notaries, as well as risks of using smart contracts in relations involving the participation of consumers). A separate set of questions concerns the protection of the rights infringed due to the use of smart contracts.

1. Bulgakov I. «Umnye» kontrakty i sovremennoe dogovornoe pravo [Smart contracts and modern contract law]. URL: https://zakon.ru/blog/2016/8/12/umnye_kontrakty_i_sovremennoe_dogovornoe_pravo. (In Russ.)

2. Volos A. A. Smart-kontrakty i printsipy grazhdanskogo prava [Smart contracts and principles of civil law]. Rossiskaya yustitsiya [Russian Justice].2018. No. 12. P. 5—7. (In Russ.)

3. Grin O. C. Osnovnye podkhody k ponimaniyu sposobov obespecheniya ispolneniya obyazatelstv [Basic approaches to understanding ways of ensuring performance of obligations]. Vestnik Universiteta imeni O.Е. Кутафafina (MGYUA) [Currier of the Kutafin University (MSAL)].2016. No. 10. P. 44—51. (In Russ.)

4. Dolgieva M. M. Kriptovalyuta v voprosakh sudebnoy praktiki [A cryptocurrency in matters of judicial practice]. Sovremennoe pravo [Modern Law].2018. No. 12. P. 85—88. (In Russ.)

5. Efimova L. G., Sizemova O. B. Pravovaya priroda smart-kontrakta [The legal nature of the smart contract]. Bankovskoe pravo [Banking Law].2019. No. 1. P. 23—30. (In Russ.)

6. Zakirov R. F. Ispolzovanie sovremennykh it-tekhnologiy kak sredstvo dostizheniya osnovnykh zadach sudoproizvodstva [The use of modern IT-technologies as a means of achieving the main tasks of judicial proceedings]. Vestnik grazhdanskogo protsessa [Civil Law Review].2018. No. 1. P. 211—219. (In Russ.)

7. Lukoyanov N. S. Pravovye aspekty zaklyucheniya, izmeneniya i prekrashcheniya smart-kontraktov [Legal aspects of conclusion, alteration and termination of smart contracts]. Yuridicheskie issledovaniya [Legal Studies].2018. No. 11. P. 28—35. (In Russ.)

8. Nagrodskaya V. B.Тovye tekhnologii (blokcheyn / iskusstvennyy intellekt) na sluzhbe prava : nauchnometodicheskoe posobie хNew technologies (blockchain/artificial intelligence) at the service of law: A scientific and methodical studyguide]. L. A. Novoselova (ed.). Moscow, Prospekt, 2019. 128 p. (In Russ.)

9. Novoselova L.«Tokenizatsiya» obektov grazhdanskogo prava [“Tokenization” of objects of civil law]. Khozyaystvo i pravo [Business and Law]. 2017. No. 12. P. 29—44. (In Russ.)

10. Pravovoe regulirovanie ekonomicheskikh otnosheniy v sovremennykh usloviyakh razvitiya tsifrovoy ekonomiki : monografiya [The legal regulation of economic relations in modern conditions of development of digital economy: a monograph]. A. C. Belitskaya, V. C. Belykh, O. A. Belyaeva [et al.]; V. A. Vaipan, M. A. Egorova (eds). Moscow, Yustitsinform Publ., 2019. 376 p. (In Russ.)

11. Saveliev A. I. Dogovornoe pravo 2.0: «umnye» kontrakty kak nachalo kontsa klassicheskogo dogovornogo prava [Contract Law 2.0: “smart” contracts as the beginning of the end of classical contract law]. Vestnik grazhdanskogo prava [Civil Law Review].2016. No. 3. P. 32—60. (In Russ.)

12. Saveliev A. I. Nekotorye pravovye aspekty ispolzovaniya smart-kontraktov i blokcheyn-tekhnologiy po rossiyskomu pravu [Some legal aspects of the use of smart contracts and blockchain technologies under Russian law]. Zakon [The Law].2017. No. 5. P. 94—117. (In Russ.)

13. Tymchuk Yu. A. Notarialnoe udostoverenie sdelok s nedvizhimostyu v usloviyakh informatizatsii notarialnoy deyatelnosti: sovremennye tendentsii [Notarization of real estate transactions in the context of informatization of notarial activity: modern trends]. Notarius [The Notary].2018. No. 8. P. 24—27. (In Russ.)

14. Shaydullina V. K. Smart-kontrakty na finansovom rynke: rezultaty issledovaniya [Smart contracts in the financial market: Results of research]. Sudya [The Judge].2019. No. 2. P. 21—23. (In Russ.)

15. Yurasov M. Yu., Pozdnyakov D. A.Smart-kontrakt i perspektivy ego pravovogo regulirovaniya v epokhu tekhnologii blokcheyn [Smart contract and prospects of its legal regulation in the era of blockchain technology]. URL: https://zakon.ru/blog/2017/10/09/smart-kontrakt_i_perspektivy_ego_pravovogo_regulirovaniya_v_epohu_tehnologii_blokchejn. (In Russ.)

16. Yarkov V. C. Blokcheyn i notariat: opyt pervoy otsenki [Blockchain and Notaryship: Experience of the first evaluation]. Notarialnyi vestnik [Notary Bulletin].2017. No. 8. P. 36—41. (In Russ.)

17. Gaёtan Guerlin. Considerations sur les smart contracts. Dalloz IP/IT. Droit de la propriete intellectuelle et du numerique. 2017. No. 10. P. 512—513.

18. Smart Contracts and Distributed Ledger — A Legal Perspective. ISDA Linklaters. August 2017. URL: https://www.isda.org/a/6EKDE/.

19. Smart-Contract: is the Law ready? URL: https://digitalchamber.org/smart-contracts-whitepaper/.