Norton Rose Fulbright has been contracted by the blockchain consortium R3, in order to determine whether smart contracts have contractual effect and their enforceability, finextra reported.
Norton Rose Fulbright that aims to position itself as a leader in diversity and inclusion and as an employer of choice worldwide, has taken global research on whether there is a legally binding contractual effect on smart contacts and whether it is enforceable. It has also taken research on whether disputes arising from smart contracts can be resolved by an automated resolution process that can be built into a smart contract.
“The industry has been grappling with the issue of whether or in what circumstances a smart contract gives rise to a legally binding contract. Through our research and analysis, we have concluded that the answer can vary according to, among other things, the smart contract model used,” Sean Murphy, global head of blockchain and distributed ledgers at Norton Rose Fulbright said. “The answer can also vary by country because of differences in local law. Inserting a dispute resolution mechanism into a smart contract could provide a potential solution to the question of enforceability, and in the paper, we examine how such a mechanism would operate.”
From across various jurisdictions, Norton Rose Fulbright has published a white paper that addresses the problems including whether there are other variables that determine the legally binding nature and enforceability; whether the answer vary country by country, or are there some common principles; can a dispute resolution mechanism address enforceability and country variations and, if so, how would it work; among others.
“The past few years have seen a great deal of talk about blockchain technologies given the profound impact they will have on the future of financial services. In order to fully realize the benefits of the technology, it is essential that we design smart contracts that are legally enforceable. Working with our partners at Norton Rose Fulbright, we're exploring various ways to ensure smart contracts meet that threshold,” Todd McDonald, co-founder and COO of R3 said.
