THE LAW AND LEGALITY OF SMART CONTRACTS Max Raskin * CITE AS: 1 GEO. L. TECH. REV. 305 (2017) https://perma.cc/673G-3ANE ABSTRACT A new technology called “smart contracts” has emerged. What makes these legal agreements innovative is that their execution is made automatic through the use of computers. This Article examines smart contracts from a legal perspective. Specifically, this Article explains smart contracts’ operation and place in existing contract law. It introduces a distinction between strong and weak smart contracts, as defined by the costs of their revocation and modification. The article concludes that smart contracts are simply a new form of preemptive self-help that should not be discouraged by the legislatures or courts. While certain unconscionable examples of strong smart contracts may need to be policed, judges and policymakers should foster a climate that treats smart contracts as another form of more traditional agreements. ABSTRACT.............................................................................................................................. 305 INTRODUCTION.................................................................................................................... 306 SMART CONTRACTS: STRONG AND WEAK........................................................................ 309 Definition ......................................................................................................................... 309 Contractware .................................................................................................................... 311 The Radical History of the Vending Machine .............................................................. 315 Decentralized Ledgers ..................................................................................................... 316 History of the Idea and Some Preliminary Observations ............................................ 320 PLACE IN EXISTING CONTRACT LAW ............................................................................... 321 Formation ......................................................................................................................... 322 Performance and Modification ....................................................................................... 326 * At the time of writing, author was a fellow at the NYU Law Institute of Judicial Administration. B.A., New York University; J.D., New York University School of Law. For signaling purposes and for help on the paper, I would like to thank Oren Bar-Gill, Will Baude, Richard Epstein, Dan Evans, Ian Grigg, Andrew Hinkes, Mario Rizzo, Nick Szabo, David Yermack, the Mechanic’s Liens Steering Committ ee, the NYU Austrian Colloquium, and the NYU Law Classical Liberal Institute. All errors contained herein are my own, except any egregious ones that may exist. In that case, I blame the aforementioned for their laxity in review. Cf. D.C. Makinson, Paradox of the Preface, Analysis 25, 205-207 (1965); see also Robert Bork, The Antitrust Paradox, xvi (1978). © 2017, Max Raskin.
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