Smart contracts have received significant attention from legal academics and attorneys for the impact they may have on contract law and the role of lawyers. Some have also identified and described a series of use cases for smart contracts. However, the literature currently lacks a discussion of the legal implications of those use cases that are unrelated to contract law. To fill that gap, this white paper offers an initial analysis of the legal aspects of five prominent smart contract use cases: digital asset sales and capital markets, supply chain management, smart government records and smart cities, real estate land registries, and self-sovereign identity. We conclude that legal risk is inherent in each of these subject areas, but that with careful risk mitigation planning, companies can overcome those hurdles to offer effective products and services.

This white paper proceeds in four parts. Part I briefly defines the terms blockchain and distributed ledger technology as used for the purposes of this white paper and then briefly surveys the relevant technological characteristics of smart contracts, the platforms upon which they operate, and the challenges that face those creating and executing them. In Part II we review the current literature from both leading industry groups and academia regarding smart contracts and explain the importance of smart contracts for businesses and lawyers. Part III introduces five uses of smart contracts in business and government processes, and examines the legal regime(s) applicable to each. Finally, in Part IV we offer insight into practical steps a business may take when launching a product or service that uses smart contracts to mitigate legal risk.