Formalizing Contract Law for Smart Contracts

Abstract

Smart contracts are presented as a self-executing, autonomous alternative to traditional contracts that require enforcement by court involvement. The first experiences with smart contracts show that contracts involve more than conditional execution. This paper proposes a method for formalizing contract law in order to make this as far as possible tractable for incorporation in smart contracts.

Contract law can be viewed as a set of rules for resolving disputes while also protecting legitimate interests of parties. Examination of a simple example shows that formalization is complicated by several issues that arise from lay expectations regarding (smart) contracts. This exercise also shows implicit assumptions and characteristics of contract law, and challenges whether such characteristics are unavoidable.

Keywords: smart contracts, contract law, formalization, blockchain