Law Commission publishes advice to the UK Government on smart legal contracts

On 25 November 2021 the Law Commission published its advice to the UK Government on smart legal contracts.

The World Economic Forum estimates that 10 percent of global gross domestic product will be stored on blockchain technology by 2027, and smart legal contracts (i.e. legally binding contracts in which some or all of the contractual obligations are defined in and/or performed automatically by a computer program) are expected to become increasingly important to businesses across a range of sectors.

The advice paper provides a useful introduction to smart legal contracts, before considering how existing legal concepts such as formation and interpretation would apply to smart legal contracts. The Law Commission’s conclusion is that the current legal framework in England and Wales is able to facilitate and support the use of smart legal contracts, with current legal principles applying to smart legal contracts in much the same way as they do to traditional contracts, albeit with an incremental and principled development of the common law required in specific contexts.

DLA Piper is acknowledged in the advice paper for our contribution. A cross-practice area team comprised of Bryony Widdup, Sophie Lessar, Dan Jewell, Mariel Luna, Sophie Brophy, Jenny Harrison, Alistair White, Angus Eames, and Naomi Lawrence provided responses to sections of the Law Commission’s Call for Evidence earlier this year, and our analysis is cited in several places in the advice paper.

To discuss any issues relating to the advice paper, please contact Bryony Widdup or Dan Jewell.