Contracts with Blockchain Technology Won't Reduce Need for Attorneys

Contracts utilizing blockchain technology (the foundation of bitcoins) could reduce potential arguments between businesses, customers and other parties when executing those contracts. However, this new technology will not lessen the work for attorneys in drafting the contracts.

The new blockchain technology often referred to as “Smart Contracts” can be used to document the terms of a transaction and then self-execute the terms directly. This process could reduce disputes by releasing bitcoins or some other currency when a certain action is completed. Nonetheless, attorneys will still be needed to write the Smart Contracts, which will have to be complex enough to avoid any of the not yet thought of disputes and issues that might arise because of the new contracting technology.

Smart contracts have not yet made it into the world of consumer financial products, but there is an opening there as well, said Riaz A. Karamali, a Pillsbury partner.

Companies could use smart contracts for standard usage contracts and terms of service for the use of some Internet applications, or they could get much more complicated, Karamali said. As an example, Karamali said that they could be used in auto finance. A company could use a smart contract in negotiating a consumer lease or financing agreement. If the consumer fails to pay, then the code could take action, Karamali said.

“That’s verified on the blockchain,” he said. “Basically, the platform tells my car to lock me out and it gives my electric key to the repo man.” - click here to read the full article (subscription required).