“Smart contracts” are a complex technological phenomenon. Some regard them as the back-end of distributed applications or “persistent scripts,” others define them as the embedding of legal terms in software or hardware. It remains unclear whether smart contracts should be analysed from a purely technological or from a legal perspective. What is or could be their potential legal and commercial significance? Can they revolutionize private ordering by making contracts unbreakable? Can they be contracts in the first place? In 2021, the UK Law Commission added to the confusion by introducing the definition of a “smart legal contract.” The latter term denotes: “A legally binding contract in which some or all of the contractual terms are defined in and/or performed automatically by a computer program.” Allegedly, smart legal contracts can take the form of traditional contracts with automated performance, hybrid contracts combining legal prose with code, or “solely code” contracts. This seminar critically reviews the UK Law Commission’s position and tries to clarify the legal and terminological turmoil surrounding smart legal contracts. A closer analysis reveals that turning “contracts into code” is more complex than commonly believed and that the very purpose of such encoding is often unclear. Revisiting the fundamental principles of contract law, the seminar focuses on the frequently overlooked distinction between substance and expression, as well as on the seemingly simple difference between the formation and the performance of a contract. The following questions are discussed:
- Do smart legal contracts create new legal problems?
- Can such problems, if any, be addressed with existing legal principles or does contract law require a “doctrinal update”?
- Is it legally and technically possible to express an entire contract in code?
- Can the parties agree to be “bound by code”?
- What are the practical implications of combining traditional legal prose with code?
About the Speaker:
Dr Eliza Mik teaches Legal Technologies and Contract Law at CUHK LAW. Prior to joining CUHK, she was researching and teaching at the Singapore Management University, Bocconi University and at Melbourne Law School. Before joining academia, she worked in-house for a number of software and telecommunications companies in Australia, Poland, Malaysia and the United Arab Emirates. She advised on technology procurement and e-commerce regulation. Her PhD focused on the private law aspects of e-commerce and on the legal implications of transaction automation. Since 2014, she has been researching smart contracts and blockchains. Eliza has advised the World Bank and the Monetary Authority of Singapore. At present, she is a member of the UNCITRAL Expert Group for the Digital Economy, a member of the Inclusive Global Legal Innovation Platform on ODR (Hong Kong), a Research Associate at the Tilburg Institute for Law, Society and Technology and an Affiliate Researcher with the Centre for AI and Digital Ethics at the University of Melbourne.
The Law Society of Hong Kong has awarded this seminar 1.5 Continuing Professional Development (CPD) points.