Smart contracts have radically transformed the management of commercial agreements, with contracts automatically executed when their conditions are met, reducing the need for legal intermediaries and improving operational efficiency for businesses.
How smart contracts work
Smart contracts are based on blockchain technology, which provides immutable records that ensure transparency of business operations. According to a report by Harvard Business Review, 60% of large companies have started experimenting with smart contracts to reduce legal costs.
Legal Challenges of Smart Contracts
Despite the great benefits, there are legal challenges facing smart contracts, such as:
- Lack of clarity of legal responsibilities when software errors occur.
- The need for regulatory frameworks that determine the extent to which smart contracts are enforceable before the courts.
Sources:
- https://hbr.org/
- https://www.ibanet.org/