ABSTRACT
Smart contracts are computer programs used to transfer digital assets according to user-generated specifications. Smart contracts run on decentralized blockchain networks. The fact that smart contracts, a new means for parties to digitally trade, greatly eliminate ex ante promissory obligations in favor of the actual execution of contracts through a single legal instrument presents a fundamental issue for a contract law paradigm based upon promissory obligations. Therefore, smart contracts offer a novel opportunity to re-examine the foundations of contract theory. The Title-Transfer Theory of Contract, premised not upon promissory obligations but on the transfer of property titles to scarce resources, saves contract theory from the theoretical issues posed by smart contracts by basing contract theory in the property theory of Rothbardian-libertarian ethics. Because neither smart contracts nor the Title-Transfer Theory of Contracts focus on promissory obligations, the two are inherently congruent.
Hoffa, David, Contracts Without Promises: Blockchain-Based ‘Smart Contracts’ and the Title-Transfer Theory of Contract (January 1, 2020).
First posted 2021-04-21 16:15:21
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