Smart legal contracts are making the news for being a new faster way to get contracts signed. They’re popular in real estate, finance and intellectual property matters.
The emergence of companies utilising blockchain platforms for their daily operations shows no sign of slowing down. A relatively new technology stored on a blockchain, smart legal contracts are fast becoming the prominent way of closing various business deal types.
As commercial lawyers, we can help you review the risks and benefits of employing this revolutionary technology for your company.
What is a blockchain?
A blockchain or blockchain platform is a database shared between computer network nodes. All data on a blockchain is stored digitally and utilised for its ability to save information and transactions securely.
What are smart legal contracts?
Smart legal contracts are computer protocols that facilitate a buyer and seller’s legally binding agreement terms. Located on a blockchain platform, these contracts are submitted via a user’s account but are not controlled by a user rather, they are run as a program based on predetermined parameters.
Why are so many companies shying away from standard legal contracts and employing smart legal contracts?
- Privacy – only approved participants can interact with contracts
- Autonomy – eliminates intermediaries and the threat of manipulation
- Safety – contracts are encrypted
- Speed and efficiency – contracts are automatically enforced and updated on the blockchain
- Back-Ups – multiple copies of the contracts are stored on the blockchain
- Accuracy – forms are not manually filled out, reducing the likelihood of error
As with most technology platforms, there is still a risk involved in their utilisation that warrants legal advice.
- Amendments are time-consuming and expensive
- Agreements are based on participants upholding their promise of refusing unethical benefits of the contract – this promise cannot be ensured
- Contracts cannot handle vague terms that typical contracts may allow
Why do you need a commercial lawyer?
Legal services are necessary for a smart legal contract even though interested participants are the only ones allowed to view the agreement.
While lawyers will not prepare contracts in this case, you will need someone to understand and explain the terms of the agreement to the code developers responsible for creating your smart legal contract.
Employing the services of a commercial lawyer will best ensure your smart legal contract is not only compliant with the law but with the correct law/s. They will also protect your business from potential legal complications following your contract’s completion.
Smart legal contracts are now being used in various business areas including real estate, finance and intellectual property.
As business continues in a digital era, so many exciting tech solutions are evolving daily. Our team of commercial lawyers are dedicated to helping clients take advantage of the new tech with less legal risk.
It’s about growing safely with minimised risk and maximum efficiency!
Need help? Book a free 15-minute legal chat today with a Clearpoint commercial lawyer.