Smart legal contracts and common law

Applicable law in England and Wales may apply to smart legal contracts.

The Legal Commission has confirmed that current law can include such contracts without the need for legal reform. The Commission has stated that in certain circumstances only a gradual development of common law is required to facilitate the use of smart legal contracts within the existing legal framework.

The Commission’s conclusion complements the legal opinion of the UK Jurisdiction Taskforce on crypto assets and smart contracts. This statement concluded that the current legal framework is robust and adaptable enough to support the use of smart legal contracts.


The Law Commission urges the market to anticipate and respond to possible uncertainties in the legal treatment of smart legal contracts by encouraging parties to include specific terms that address the issues in question. Examples are clauses that assign risks related to the performance of the code and clearly state the relationship between natural language and coded components.

As smart legal contracts become more prevalent, the Commission expects the market to develop well-established practices and model clauses that the parties can use to facilitate the process of negotiating and drafting such contracts.

Lord Wolfson of Tredegar QC, Parliamentary Undersecretary of State in the Justice Department, welcomed the judicial commission’s conclusions to provide “this all important legal certainty” for those looking to leverage smart legal contracts, which he believes are essential to ensuring the law supports new technology.

Conflict of laws

In analyzing how existing legal principles could be applied to smart legal contracts, the Law Commission identified conflict-of-law rules – the area of ​​law that determines where disputes should be resolved and the law applicable to those disputes – as one area that needs further work.

In particular, the Commission highlighted the challenges of applying existing conflict-of-law rules to smart legal contracts and related technologies (including distributed ledger technology), which can lead to multiple links in different jurisdictions. This difficulty is related to the need to map digital assets and their associated actions to real, physical locations, which is one of the greatest challenges national and international law must face when it comes to the areas of emerging technologies such as smart legal contracts .

It is for this reason that the Law Commission has agreed with the UK government that it will assess the conflict-of-law rules relating to new technologies – such as smart legal contracts and digital assets – and see if there is any need for reform. The Legal Commission wants to start doing this by the middle of next year.


Professor Sarah Green, Law Commissioner for the Commercial and Common Law Team, recognized that smart legal contracts have the potential to revolutionize the way business is done and increase the efficiency and transparency of transactions.

The Law Commission’s analysis of legal smart contracts has shown how flexible common law can be to accommodate such technological developments. His analysis can also be seen as a boost to business and innovation in England and Wales, where such contracts are likely to play an increasing role in the near future.

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