4 - Formation of Smart Contracts under Contract Law

Summary

This chapter examines in the first place the formation of (blockchain-based) smart contracts. The term “smart contract” is used to refer to software programs that are often (but not necessarily) built on blockchain technology as a set of promises, specified in digital form, including protocols within which the parties perform on these promises. It is regularly said that smart contracts are neither legal contracts in the traditional sense nor are they smart and that the term therefore is a misnomer. The crucial question this chapter is trying to answer is whether the traditional (Common Law) concept of contract formation is seriously challenged by the rise of smart contracts. So are smart contracts the end of contract formation as we know it, or is it at the end just much ado about nothing? And if contract law is in principle fit for the formation of smart contracts, do they have features which do challenge the traditional contract law, and if yes what are those features? These are some of the questions this contribution is trying to answer.