Smart Contracts and Consumers
52 Pages Posted: 5 Apr 2019 Last revised: 12 Aug 2020
Date Written: March 18, 2019
‘Smart contracts’ are a way of using computers to make contracts unbreakable. Contracting parties do not need to trust one another to perform or rely upon intermediaries to enforce performance. Performance is guaranteed. This is supposed to be a victory for consumers – a clever socio-economic application of cryptography that strips power from companies and governments and gives it to consumers. But it turns out that less trust does not mean more freedom, or better bargains. The law of contract supports valuable relationships both by enforcing duties and by allowing parties to escape the consequences of ill-formed contracts and oppressive terms. Smart contracts remove these safeguards. Consumers may be bound, inexorably and without recourse, to contracts that are wholly devoid of virtue. The lesson of smart contracting is clear and urgent: when we design the future of commerce, we should direct our resources towards building, not emaciating, relationships of trust.
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