In an effort to bring legal clarity on the use of blockchain-based smart contracts, a research project has been initiated by the U.K. Law Commission that is going to probe the necessary reforms to make use of technology possible. For those who do not know, a smart contract is a computer protocol that digitally verifies or enforces negotiations or the performance of a contract. The involvement of third parties is not necessary yet, the smart contracts can facilitate credible transactions.
On Thursday 21st July, a working paper was published mentioning the independent agency that initially has already made a research on the aforementioned topic. The agency plans to commence a concrete project in the upcoming summer. The purpose of the research was clearly mentioned in a statement that says, “The basic aim is to make sure certain law is proper and at the same time flexible. This is ultimately going to help them to be applicable in a digital, global context. Additionally, it is also going to highlight all the topics which do not have proper clarity or conviction.”
The working paper further added, “Introducing the necessary reforms in the field of blockchain –based smart contracts is the prime consideration.”
According to the Law Commission, it is believed that the smart contracts are better placed in the aspects of increasing “faith and assurance” which in turn would give businesses the necessary transaction boost. Therefore, the present legal system should embrace this new technology which certainly has a lot of potentials. By doing so, the Law Commission also argued that U.K. would become more attractive for enterprises.
According to the statement published in the working paper:
“It is vital to make sure that the English Courts and law always remain a spirited choice for businesses. Thus, the Law Commission has enough reasons to study and review the existing English legal framework since it is also applicable to smart contracts.”
It is believed that the Law Commission’s efforts for the research project are followed by a report that was published by them last year in December 2017. The use of smart contracts was also included along with other 14 outlined areas. They are now going to undergo a law reform which was made after a year-long public consultation process.
A period of 9-18 months would be necessary for researching and finishing the smart contract research process at the movement. The Commission further added:
“A lot remains to be answered about the smart contract feature, and that how they are going to work together with the contract law concepts which includes certain implied terms or contracts that were already held to be void right from the outset. Additionally, there are also certain questions involving the data protection law.”
At the lecture that was hosted by the Law Commission last year, notable remarks were made by John Thomas who is the top judge for England and Wales. Thomas further mentioned that an update needs to be made into the British Law in order to operate blockchain-based smart contracts.