Contracts have been the cornerstone of human interaction since time immemorial, serving as the bedrock of agreements and transactions. With the advent of blockchain technology, the emergence of smart contracts has sparked a new wave of innovation in the realm of legal agreements. However, amidst this digital revolution, questions linger regarding the legal enforceability of smart contracts under existing legal frameworks, such as the Indian Contract Act of 1872.
The Indian Contract Act, 1872, defines the fundamental principles governing contracts in India. According to Section 10 of the Act, all agreements are considered contracts if they meet certain criteria, including free consent, lawful consideration, and a lawful object. However, the Act also stipulates that certain contracts must be made in writing or in the presence of witnesses, highlighting the importance of formalities in contract formation.
One of the key elements of contract formation is consent, which is defined in Section 13 of the Act as an agreement upon the same thing in the same sense by two or more parties. Consent can be expressed through actions or explicitly in writing or speech, with written consent often being preferred for evidentiary purposes.
Smart contracts, a concept introduced by computer scientist Nick Szabo, are programmable contracts that automatically execute predefined terms of an agreement. These contracts leverage blockchain technology to ensure transparency, immutability, and security. While the legal status of smart contracts remains a topic of debate, they have gained recognition in certain regulatory frameworks, such as the Telecom Commercial Communications Customer Preference Regulations, 2018, issued by the Telecom Regulatory Authority of India (TRAI).
Despite the potential benefits of smart contracts, concerns persist regarding their legal validity and enforceability. Unlike traditional contracts, which are expressed in recognized languages, smart contracts are coded in computer language, making them less accessible to the general population. Additionally, issues related to anonymity and identity verification pose challenges to the adoption of smart contracts on a wider scale.
To address these challenges, platforms like 10P are pioneering solutions to enhance the security and reliability of smart contracts. Through features such as KYC/KYB verification and real-time monitoring on an immutable distributed ledger, 10P aims to mitigate risks associated with anonymity and information asymmetry. Furthermore, by facilitating the trade of asset-backed tokens and providing legally binding agreements for underlying assets, 10P offers users a seamless and secure trading experience.
In conclusion, while the legal validity of smart contracts may still be evolving, platforms like 10P are leading the way in bridging the gap between traditional contract law and emerging blockchain technology. By addressing concerns related to identity verification, security, and transparency, these platforms are paving the way for the widespread adoption of smart contracts in the digital age. Join the 10P Revolution today and experience the future of contract trading firsthand.
