As the Law Commission put it, smart legal contracts are expected to revolutionise the way business is conducted. In light of this potential paradigm shift, the Law Commission was asked to consider whether the existing legal framework in England and Wales can support the use of smart legal contracts and whether there are any significant uncertainties or gaps in the law.
Following a consultation between December 2020 and March 2021, the Law Commission published its advice to the UK Government on smart legal contracts on 25 November 2021. A cross-practice team of our lawyers provided responses to sections of the Law Commission's Call for Evidence earlier this year, and their analysis is cited in several places in the advice paper.
The advice concluded that the current legal framework in England and Wales is able to facilitate and support the use of smart legal contracts and that statutory reform is not currently required. Current legal principles can apply to smart legal contracts in much the same way as they do to traditional contracts, albeit with an incremental and principled development of the common law required in specific contexts. However, there are some traps for the unwary.
In this article, we consider the key features of the Law Commission’s advice on smart legal contracts.
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