Models of Legal Regulation of Smart Contract: Generalities and Specifics

Abstract

The smart contract' term and its peculiarities are already regulated by different legal systems. Author distinguishes and analyzes the following models of legal regulation of a smart contract: technically oriented (smart contract as a computer program); deal-oriented (smart contract as a legally binding contract or provision of a contract); combined model (smart contract simultaneously as a computer program and as a contract). Acts on smart contracts are enacted on national or subnational level in the form of amendments to existing laws on contracts, e-commerce, information technologies or in a separate legal bill (act) regulating also such issues as application of blockchain (distributed ledger) technology, issue and turnover of tokens and cryptocurrency. In case of use of technically oriented model such legal issues as conclusion and interpretation of a smart contract, its invalidation, amendment and termination, application of means of defence and responsibility, choice of applicable law to a smart contract and competent authority that is to settle a dispute arising out of a smart contract, remain unresolved. Deal-oriented and combined models (even with pitfalls of combined model due to confusion between smart contract as a computer program and as a contract) are more preferred since these models define peculiarities of conclusions and performance of smart contracts in contract law for its practical use. Besides this, definition of automated performance of obligations that is inherent to a smart contract as a contract (contract type) in the form of a program code concluded and performed in special information system (decentralised distributed ledger) is to be reflected. Overall trends of legal regulation of a smart contract are the use of special technical terms (such as blockchain, token, cryptocurrency) that are firmly established in practice, statements on smart contract conclusion and performance (even if a smart contract is defined as a computer program), and creating non-discriminatory legal basis for the use of smart contracts along with contracts in written form and other means of proof.