UK Law Commission Is Creating Legal Framework For Smart Contracts
The UK Law Commission is in the process of drafting a law that will legalize the use of smart contracts. The process is part of the government’s mission to update the British law so that it is appropriate to face up to the new age technology.
The news was communicated in the Law Commission’s 52nd annual report for the period ranging between April 1, 2017 and March 31, 2018. Creating a powerful legal framework for smart contracts was one of the main objectives of the “Commission’s Thirteenth Program of Law Reform.”
Lord Chancellor Rt Hon David Lidington MP has approved the report, which lists out 14 spheres of legal research recognized for reform. The divisions include automated vehicles, surrogacy, residential leaseholds, and smart contracts, among others.
The decision to establish a new legal framework for smart contracts is an outcome of a signal from the Ministry of Justice in accordance with the Law Commission Act 2009. According to the report, the drive to recognize and administer smart contracts further supports the UK government’s eagerness to “promote Global Britain in the field of legal services.”
According to the report, the research and policy formulation project started in spring 2018. The project is expected to fully come into existence in Summer 2018. The report defines ‘smart contracts’ as a technology that runs on the blockchain, which enforces the rules mentioned in the legal contracts automatically, as and when required.
In its report, the Law Commission explains why smart contracts are of interest
“The use of smart contracts to execute legal contracts is expected to increase efficiency in business transactions and it is suggested that the use of blockchain technology will increase trust and certainty. It is important to ensure that English courts and law remain a competitive choice for business. Therefore, there is a compelling case for a Law Commission scoping study to review the current English legal framework as it applies to smart contracts. The purpose of this project would be to ensure that the law is sufficiently certain and flexible to apply in a global, digital context and to highlight any topics which lack clarity or certainty.”
According to the Law Commission Act 2009 and the 2010, the formal announcement from the Ministry of Justice regarding the drafting of law to legalize smart contracts is a firm indication of the government’s intention to implement reform in this area.
If the draft turns into an enforceable law, then UK will become one of the few countries that legally recognize smart contracts.