Smart Contract Templates: Foundations, Design and Research - Abstract and Intro

Table of Links

Abstract and 1 Introduction

2 Foundations and 2.1 Terminology — “smart contracts”

2.2 Automation

2.3 Enforceability

2.4 The semantics of contracts

3 Smart Contract Templates

3.1 Templates and Parameters

3.2 The design landscape for Smart Contract Templates

4 Summary and Further Work and References

Abstract

In this position paper, we consider some foundational topics regarding smart contracts (such as terminology, automation, enforceability, and semantics) and define a smart contract as an automatable and enforceable agreement. We explore a simple semantic framework for smart contracts, covering both operational and non-operational aspects, and describe templates and agreements for legally-enforceable smart contracts, based on legal documents. Building upon the Ricardian Contract, we identify operational parameters in the legal documents and use these to connect legal agreements to standardised code. We also explore the design landscape, including increasing sophistication of parameters, increasing use of common standardised code, and long-term research.

1 Introduction

The aim of Smart Contract Templates [2] is to support the management of the complete lifecycle of “smart” legal contracts. This includes the creation of legal document templates by standards bodies and the subsequent use of those templates in the negotiation and agreement of contracts by counterparties. They also facilitate automated performance of the contract and, in the event of dispute, provide a direct link to the relevant legal documentation.

The templates and agreements may (or may not) be agnostic to the method by which a contract is automated – that is a design choice for the template issuer, counterparties, network, etc. Smart legal contracts could potentially be implemented as software agents operating on a wide range of technology platforms, including distributed ledger platforms such as AxCore [1], Corda [3], Digital Asset Platform [5], Ethereum [6], and Fabric [11].

Here we aim to make a practical contribution of relevance to financial institutions. We consider how contracts are written, how they are enforced, and how to ensure that the automated performance of a contract is faithful to the meaning of the legal documentation. We discuss these issues using reasonably straightforward language, so that it is accessible not only to financial institutions but also to, for example, lawyers, regulators, standards bodies, and policy makers. We hope that the issues and views raised in this paper will stimulate debate and we look forward to receiving feedback.

Acknowledgements: We would like to thank Clive Ansell (ISDA), Ian Grigg (R3) and Darren Jones (Barclays) for their helpful feedback.