Smart Contract This! An Assessment of the Contractual Landscape and the Herculean Challenges it Currently Presents for “Self-executing” Contracts

The widespread use of “self-executingSelf-executing ” contracts is now only a question of time. For certain standard contract types with simple and well understood provisions, little international variation, no intermediation and short execution periods, that time is now as the change is already happening (examples are digital rights management and various banking applications.). It is the other more complex, more entrenched, and less agile sectors of the global economy which are the focus of this paper. Here there will be hurdles to overcome and more time needed for implementation—it will be a difficult task. The arrival of this new technologyTechnology presents important questions about the future of contracting, as well as about traditional legal practiceLegal practice within both legal departments and law firmsLaw firms , calling for a new quality of cooperation between businessBusiness and their lawyersLawyers . Given that the natural reaction to change is resistance, that companies are having ever-greater challenges navigating international regulation and that as a result legal department within companies tend to exert a strong influence out of line with the number of employees they include, the power of institutional resistance to delay adoption of the change will be considerable. This chapter will seek to add a dose of realism to the techno-optimists in the late adolescence of the 21st century for whom the change is so far advanced it is practically finished. In this chapter it is largely assumed that readers understand how Distributed Ledger TechnologyDistributed Ledger Technology (DLT) works, and the principal focus will be on the contractual challenges standing in the way of the implementation of “self-executingSelf-executing contracts,” to which it will also offer some solutions. The original idea contained in this chapter is to embark on a well-planned Digital Contract OptimizationDigital contract optimization journey, supported by new technologies, as a means to manage various risks associated with algorithmically driven processes. This chapter will address the question of the institutional legal mindset as a potential delaying factor and will present a Darwinian argument to explain that change is inevitable and will be radical in terms of the new demands on lawyersLawyers .