From smart legal contracts to contracts on blockchain: An empirical investigation

Abstract

The issue surrounding the nature and function of smart contracts in the context of legal relationships has garnered significant attention from the European and national legislators, regulatory bodies and legal scholarship. Sections I and II of this essay give an account of the results of the ongoing doctrinal debate, which is not univocal. The objective is to provide an assessment of both the advantages and limitations associated with smart legal contracts. In Section III, the authors introduce a novel negotiation process termed "contracts on chain". This process enables parties to engage in negotiations, formalize agreements and execute contracts directly on the blockchain. Consequently, this negotiation approach serves as a potential bridge between the realms of Web 2 and Web 3. Further, it offers a user experience akin to online contracts but benefits from the inherent capabilities of third-generation blockchains. Albeit on-chain contracts can be deployed on both private and public blockchains, the authors express a preference for their use on the public blockchain within a "logical platform". This choice allows to enhance regulatory compliance and mitigate the effects of decentralization on liability regimes, while simultaneously optimizing the efficiency gains of public blockchains. Notably, this approach ensures a level of protection commensurate with that offered by private blockchains. The ultimate goal of this innovative process is to streamline the ongoing technological transition and cultivate greater trust within the market for emerging technologies.