The Law Commission in the UK confirmed that the existing law of England and Wales is able to accommodate and apply to smart legal contracts, without the need for statutory law reform. It also noted that in some contexts an incremental development of the common law is all that is required to facilitate the use of smart legal contracts within the existing legal framework.
These findings build on the conclusions reached by the UK Jurisdiction Taskforce’s legal statement on crypto assets and smart contracts.
The market should anticipate and cater for potential uncertainties in the legal treatment of smart legal contracts by, for example, including clauses allocating risk in relation to the performance of the code, and setting out clearly the relationship between any natural language and coded components. In addition, as smart legal contracts become increasingly prevalent, the Commission anticipates that the market will develop established practices and model clauses that parties can use to simplify the process of negotiating and drafting their smart legal contracts.
Professor Sarah Green, the Law Commissioner for the Commercial and Common Law Team, said in a statement: ““Smart legal contracts could revolutionize the way we do business, particularly by increasing efficiency and transparency in transactions.”
Lord (David) Wolfson of Tredegar QC, Parliamentary Under-Secretary of State, Ministry of Justice, said in a statement: “The Law Commission’s findings provide that all-important legal certainty for those seeking to use smart legal contracts.”