Transactional Scripts in Contract Stacks

63 Pages Posted: 22 Jan 2020 Last revised: 26 May 2020

See all articles by Shaanan Cohney

Shaanan Cohney

Princeton University - Center for Information Technology Policy; University of Pennsylvania Law School

David A. Hoffman

University of Pennsylvania Law School; Cultural Cognition Project at Yale Law School

Date Written: January 31, 2020

Abstract

In conventional transactions, written contracts usually memorialize the terms of the commercial exchange. For deals in which some of the goods being transferred and the forum for the trade are digitized — as in the case of cryptocurrencies — parties may use computer code rather than a written contract to record their terms. Such pieces of code are sometimes called “smart contracts” because they perform many of the same functions as contracts but are expressed in a computing language. Coded exchanges embody a potentially revolutionary contracting innovation. But they are difficult to assimilate into traditional contracting terminology, conceptual framing, and doctrine.

This Article begins by distilling the central legally and practically significant type of smart contracts — what we call “transactional scripts.” It then develops an account of how these scripts, which operate on public blockchains, are created, the economic barriers to their adoption, and how they produce errors of legal significance. This account, in turn, allows us to more rigorously and accessibly situate transactional scripts in existing legal doctrine.

Commentators are enthusiastic about scripts in part because, the story goes, they are “self-executing” and require no third-party adjudicators. Yet we show that optimism to be unfounded by documenting how scripts, like ordinary contracts, can result in misunderstanding, frustrated intent, and failure.

When code misdelivers, disappointed parties will seek legal recourse. We argue that jurists should situate scripts within other legally operative statements and disclosures, or contract stacks. Precision about the relationship between script and stack sustains a novel framework, rooted in old doctrines of interpretation, parol evidence and equity, that will help jurists compile answers to the private law problems that digitized exchange entails.

Keywords: smart contracts, transactional scripts, blockchain, Ethereum, gas costs, interpretation, contracts, canons, parol evidence

JEL Classification: K12

Suggested Citation

Cohney, Shaanan and Hoffman, David A., Transactional Scripts in Contract Stacks (January 31, 2020). Minnesota Law Review, Forthcoming, U of Penn, Inst for Law & Econ Research Paper No. 20-08, Available at SSRN: https://ssrn.com/abstract=3523515 or http://dx.doi.org/10.2139/ssrn.3523515

Shaanan Cohney

Princeton University - Center for Information Technology Policy ( email )

C231A E-Quad
Olden Street
Princeton, NJ 08540
United States

University of Pennsylvania Law School ( email )

Philadelphia, PA
United States

David A. Hoffman (Contact Author)

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States

Cultural Cognition Project at Yale Law School

127 Wall St
New Haven, CT 06520
United States

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