BLOCK-CHAIN CONTRACTS: CHAINING LAWYERS OR REIGNING THEM?
BLOCK-CHAIN CONTRACTS: CHAINING LAWYERS OR REIGNING THEM?
ROHITH KAMATH,
ADVOCATE & CS, REX LAW CHAMBERS, BENGALURU
Smart-Contracts are the future of businesses, unlike the traditional contractual process, under the blockchain mechanism possess the trait of being immutable, unlike written forms of contracts the origin of which may be tampered with. Blockchains can create a trail-path of the entire documentation process. Thereby in transactions such as Real-Estate Deals facilitating greater and faster identification of the movement of title and possession of the incumbent property. Further the existent Peer to Peer(P2P) Network and its inherent Distributed Ledger Technology allows for cached copies of the transaction to be stored and accessible across the connected P2P Networks.
SMART CONTRACTING v. ART OF DRAFTING
A typical feature of a Smart-Contract is that they are self-executory, based on certain defined set of predetermined events pursuant to which the performance of the contract are controlled. At, the occurrence of a particular event, the contracted consideration is released and on non-occurrence, the same is stalled. (Well, this is a feature that will avoid the need for Escrows!Doesn’t it?)
Far from the traditional contracts, a Block-chain Contract allows for contracting with anonymous parties (well for a reason, i strongly believe that businesses run and prefer certainty, than anonymity) through internet as a medium. (The lawyer fee is far eliminated, KUDOS!! however, isn’t there a transaction-fee that a user pays?)
The Art of Drafting, is a key that the Lawyers, use to provide custom, effective solutions to the businesses, not being “smart”, on account of mere use of a computer algorithm, but because the Contract, is the fodder, that is required to nurture the Brain-Child of the Business.
REPLACING v. REIGNING LAWYERS
Can Smart-Contracts replace a Lawyer?? Well, i wouldn’t agree. Smart-Contracts would fly provided the business is a straight-jacket transaction like buy-sell or pay-use transactions, more or less in the form a recurring repetitive action.Smart-Contracts are based on a If-Then Probability, whereas businesses are known to have a lot of “but, maybe, and lets do it whatsoever”
In India, at the most, smart contracts may pave their way into the Financial Markets, for trading of securities, purchase of groceries and other day to day commodities or goods that are not so complex a transaction.
The primal conflict in Smart Contracts comes amid the point where there is a breach, but the system has, based on the probabilities (If-Then of the code) has released the payment.
The anonymous identity of the parties, and the fact that there may be an inter-operability of two or more contemporary-jurisdictions, the enforcement or rescind ability of such contracts, in other terms Real-time settlement or performance of these Contracts are a matter of concern, which of course cannot be technology-driven.
Smart-Contracts, however simulating or accurate, cannot be a solution for a complex transaction that is neither repetitive nor in the nature of straight-jacket transactions. However critical as it may sound adaptation to technology is the key to progress, but regardless of the same, a Lawyer will always be a requirement.