In a significant endorsement of blockchain technology, the Law Commission for England & Wales - the independent government-appointed body that suggests regular reforms to law - has said that it is actively researching smart contracts in a legal context.
In its annual report published yesterday, the body explains that it is already in the process of researching the subject and recognises the potential for smart contracts to revolutionise legal agreements:
The use of smart contracts to execute legal contracts is expected to increase efficiency in business transactions and it is suggested that the use of blockchain technology will increase trust and certainty.
Emphasising that “it is important to ensure that English courts and law remain a competitive choice for business,” the report explains that it is conducting research to ensure the law is sufficiently “certain and flexible” and that there is “ a serious intention" to move reform forward for this area.
Smart Contracts and the Legal Industry
This latest report comes after the Law Commission in December of last year detailed several areas that it believes are ripe for reform, explaining with respect to smart contracts:
There are questions about how this feature (smart contract) would interact with contract law concepts such as implied terms or contracts which are held to have been void from the outset. There are also questions about data protection law.
The legal industry too has been increasingly interested in the space.
In April, three out of five of the UK’s “Magic Circle” of elite law firms joined the Accord Project – a group launched in 2017 that aims to set industry standards for legal smart contracts.
Shruti Ajitsaria, head of tech innovation space “Fuse” at Magic Circle firm Allen & Overy, explained how the firms are rapidly warming to the tech:
We recognise that smart contracts and blockchain infrastructure have the potential to revolutionize the markets in which we work, so it’s vital that we establish robust standards for their use and ensure consistency