English and Welsh law can apply to smart contracts, says Law Commission

The Law Commission stated today that the existing law of England and Wales can be applied to smart contracts. 

According to the commission, wholesale changes to the existing legal framework are not required to enforce smart contracts — except in some situations where only a minor modification of common law might be necessary.

Today’s announcement concludes the Law Commission’s work on smart legal contracts as part of its Thirteenth Program of Law Reform. The statement also affirms the conclusions already reached by the United Kingdom’s Jurisdiction Taskforce on the subject of cryptocurrencies and smart legal contracts in November 2019.


Keep up with the latest news, trends, charts and views on crypto and DeFi with a new biweekly newsletter from The Block's Frank Chaparro

By signing-up you agree to our Terms of Service and Privacy Policy
By signing-up you agree to our Terms of Service and Privacy Policy

According to the Law Commission, the common law is flexible enough to accommodate emerging technologies like smart contracts. As such, the commission stated that the jurisdiction of England and Wales was ideal for business and innovation.

The Law Commission also called for proactive steps by market participants in anticipation of the proliferation of smart legal contracts. These preparatory provisions include the creation of risk clauses to account for the performance of smart contracts as well as establishing protocols for understanding the links between natural and computer language in smart legal contracts.

The Law Commission also stated, however, as part of its conclusion that more study was required in the area of conflict resolution arising from smart contracts and emerging technology in general. In its recommendation to the government, the commission agreed that some types of smart contracts will come with their own unique legal issues.

Meanwhile, the Law Commission is also looking into crypto and digital assets regulations with a focus on property rights — whether tangible or intangible.

About Author

Osato is a news reporter at The Block as part of the crypto ecosystems team that focuses on DAO governance, staking, blockchain layers, and DeFi. He was previously a news reporter at Cointelegraph. Based in Lagos, Nigeria, he enjoys crosswords, poker, and attempting to beat his Scrabble high score. Follow him on Twitter at @OsatoNomayo.