U.K Law Commission Investigating The Legality of Blockchain Smart Contracts
As a part of its new research project, the U.K Law Commission is currently investigating the legality of the blockchain-based smart contracts. Last Thursday, the commission published a working paper wherein the agency talks of having already out internal research on this topic with a plan to launch a formal project in this summer.
The law commission notes that this work is to "ensure that the law is sufficiently certain and flexible to apply in a global, digital context and to highlight any topics which lack clarity or certainty. There is a serious intention to take forward reform in this area.”
Smart Contracts in a blockchain is basically a simple computer protocol designed with pre-defined conditions between both the transacting parties. The smart contracts can be executed in stages or as a whole. As and when the conditions of the contract are met and approved by both the parties involved, the execution of the contract takes place automatically on the network. As a result, smart contract allows for credible transactions to take place between two parties without the need of an intermediary.
The Law Commission says that smart contracts certainly helps to bring more and trust and transparency in businesses. It also mentions that the existing legal system should adapt to this evolving blockchain technology which can give a huge boost to enterprise market in the U.K.
The working paper notes "It is important to ensure that English courts and law remain a competitive choice for business. Therefore, there is a compelling case for a Law Commission scoping study to review the current English legal framework as it applies to smart contracts.”
After a year-long consultation process with the public and the businesses, the law commission has outlined 14 areas for the effective use of smart contracts. The commission says that the research process involving smart contracts could take about another 9-18 months. It says: “There are questions about how this feature (smart contract) would interact with contract law concepts such as implied terms or contracts which are held to have been void from the outset. There are also questions about data protection law.”
Earlier this week, there was a report of how the United Kingdom is emerging as a potential force in the blockchain space. The research conducted by three companies - Big Innovation Centre, DAG Global, and Deep Knowledge Analytics - U.K will be at the forefront of the global blockchain industry.