Smart Contracts don’t negate Power of Attorney or the need for one.
Tags: Decentralized Apps, Smart Contracts, Bitcoin, Blockchain, Stablecoins

Key takeaways:

Emmanuel J. Arri “ #smartcontracts are actually as smart as…a vending machine. They execute what has been programmed by humans.” Morvareed Salehpour, Esq. “Smart contracts are simply self executing code rather than a legal contract, and, in fact, that code can be subject to unexpected code error (think DAO hack).” “Smart contracts do not draft nor negotiate themselves.” — Samson Dr David Utzke “ ….as a coder in this field we properly refer to them as “crypto-contracts” as it us coded if-then conditions in transactional arrangements in using DLT.” The Our Shawn McBride “Craig Barnett theorizes that if you went to a court today and told a judge a smart contract was going to execute many judges would issue an injunction which defeats the whole purpose of smart contracts”

Below is a conversation captured on LinkedIn regarding Smart Contracts. The original chain can be found here.

#SmartContracts don’t negate Power of Attorney or the need for one. Keep this in mind as you build your #blockchain solutions, particularly that have any international, data requirements or money involved. Follow Maureen L. Murat, Esq. to learn more. #BlockchainLaw #UNHBlockchain #UNHBlockchainLaw #PowerOfAttorney

Morvareed Salehpour, Esq. also has a great grasp on the above and I recommend her for her great insights and commentary on LinkedIn 👍🏻

Thanks, Aleks Vorobets. There is a common misconception that smart contracts can take the place of competent legal counsel. However, what people fail to understand is that smart contracts are simply self executing code rather than a legal contract, and, in fact, that code can be subject to unexpected code error (think DAO hack). Smart contracts do not replace the need for lawyers and well-drafted written contracts.

The funny part is trying to explain to people that their “smart contract” is actually based on a good ole fashion, “dumb” one.

lol that comment made laugh. Surprise!!!

Samson Williams, yes, always fun to tell them that despite what they may think a “smart contract” does not draft or negotiate contract terms.

Morvareed Salehpour, Esq. draft and negotiate terms? That’s just crazy talk!

Samson Williams Haha, I have had countless people come up to me and tell me that smart contracts replace lawyers and they don’t need to hire legal counsel anymore 🤦🏻‍♀️

Those of us in the business of developing blockchain-centric solutions would do well to push away from the nomenclature of “smart contract”. I feel it’s a misnomer. It is merely a smart data structure that either changes the state of a tokenized “thing” (notice I did not use ‘asset’) based on conditions of the blockchain, reacts to a state change, simply stores data, or a combination of all of the above. It is only a contract in the sense that it follows code laid out by us devs. Come on solutions architects, let’s get our folks to understand!

@pedermuller Thank you for the well put technical explanation but nonetheless a set of terms agreed upon by parties with an expectation of performance and remedies to non-performance with exponential and/or infinite variations of an end result. Attorneys adept in “writing” “smart” contracts will in great demand in the near foreseeable future will never be automated out of a career. Thank you for your commentary. Always great content Samson Williams

Morvareed Salehpour, Esq. — I agree with your assessment that attorneys are necessary in the legal process, but much of the confusion around “smart contracts,” which was a concept introduced by Nick Szabos in 1994. As a coder in this field we properly refer to them as “crypto-contracts” as it us coded if-then conditions in transactional arrangements in using DLT. A lot can be gained in this area if attorneys and coders will collaborate and work together as crypto-contracts are put in place. Thanks

Dr David Utzke yes, I think that the best business practice for “smart contracts” is for attorneys and developers to be working together and collaborating.

Great point. Given some of the statutory requirements there are indeed many places — including Power of Attorneys, Wills, Etc. where we can’t just jump into smart contracts.

And as Craig Barnett drove home one time on the Future Done Right(TM) Show even with smart contracts we may have major enforceability issues as some judges unfamiliar with them might issue injunctions to block the execution. Would love to see what Maureen L. Murat, Esq. and Morvareed Salehpour, Esq. think about the risk of current day courts not understanding smart contracts.

The Our Shawn McBride ⭐️ 🌟💥 (aka R. Shawn McBride), transactions occurring on blockchains actually create new and more complexities on the legal side and can create particularly complicated issues re jurisdiction, liability, and enforcement. This is why proper forethought should be put into structuring those transactions on the front end and blockchain knowledgeable lawyers and developers should be working together in terms of smart contract development. For example, given my contract drafting and negotiation background as well as litigation and trial background, I assist blockchain clients in structuring their entities and transactions (including smart contracts) with the appropriate legal considerations put into place (including provisions to set them up in a position of strength if called into court). Further, advocacy in gray areas in court is nothing new and something I have routinely dealt with. The way to success is to have a knowledgeable attorney in the space who can educate the court on the novel issues.

The Our Shawn McBride also the issue with injunctions will actually be the other way around — i.e. it is more difficult to enforce an order for injunctive relief in a decentralized system vs. in a traditional system with centralized parties.

Morvareed Salehpour, Esq. Craig Barnett theorizes that if you went to a court today and told a judge a smart contract was going to execute many judges would issue an injunction which defeats the whole purpose of smart contracts

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About the Author

Samson is an internationally recognized expert in Operations & Technology, Blockchain, cryptocurrencies, mobile payments, mortgage finance and organizational change management in FinTech.

Samson is ranked among the globe’s top innovative technology professionals for his cutting edge research and applications in crowdfunding, tokenomics and digital securities. Samson is a professor at the University of New Hampshire School of Law , Columbia University and Head of Humanity at Axes and Eggs. For business inquiries Samson can be reached at samson@axesandeggs.com