If a contract cannot be represented by computer code, then it probably isn’t a valid, logically consistent contract.

"One of the most important aspects of a peace treaty is to define who owns what, how ownership changes, and how disputes are resolved. Any confusion over ownership creates conflict and conflict is supposed to be resolved by a peace treaty. Therefore, it follows that the peace treaty should define the process by which individuals may contract with respect to their property such that it minimizes ambiguity. This in turn brings up the question of what constitutes a valid contract and how are they to be enforced?

Fortunately, there is a framework that ensures that it is impossible to construct an invalid contract: smart contracts. A smart contract is effectively computer code that deterministically executes an algorithm based upon the signed statements of individuals. Computer algorithms must be consistent and are unable to assign two owners to the same property at the same time. Anything that can be represented as a smart contract is compatible with the Title Transfer Theory of Contract. If it cannot be represented by computer code then it probably isn’t a valid, logically consistent, contract. The only thing the courts need to do to enforce smart contracts is to ensure that the physical property referenced by the smart contract is under the control of the owner specified by the smart contract. A smart contract need not be represented in software code in order to be smart.

A smart contract on a blockchain is effectively an automated escrow agent which holds title to all assets subject to conditional transfers. Computer code governs how titles transfer based upon how the people involved in the contract interact. A smart contract could be implemented manually with a human escrow agent. A contract’s enforceability under a true democracy should be limited to the transfer of assets managed by the escrow agent. The parties to a contract need not hire a 3rd party escrow agent so long as they personally account for all liens on any property in their possession. In the event of a dispute a 3rd party can be brought in to interpret the smart contract and evaluate the conditions. Anyone who fails to transfer physical possession after such a ruling is no different than a thief.

One of the greatest innovations of the blockchain industry is the concept of smart contracts. When implemented on a blockchain, a smart contract is a “self-executing”, deterministic agreement among parties enforced by a community without reliance on a credible threat of violence. Traditionally smart contracts are used with respect to purely digital property because the blockchain has complete authority over its database. Representing all property rights under a “software is law” mindset provides a useful framework for constructing smart contracts enforced by more manual means. In principle, all agreements should be capable of representation in software which manages the transfer of title of any and all property based upon relatively objective conditions. Any contract that could not be translated into equivalent code should be considered invalid.

Under a smart contract all potential liabilities and conditions are explicit. Contracts only get drafted for big ticket items and are completely unnecessary at all other times. We eliminate a large percentage of “economically pointless” contracts when everyone knows that a “verbal contract” is not enforceable and that the courts cannot create “implied contracts”. A society based upon smart contracts completely eliminates the vast majority of the “contracts” you sign and the smart contracts that remain are vastly simplified.

This simplification of contracts empowers people and disempowers courts. This makes everyone more equal."

Author: Daniel Larimer

Source: https://moreequalanimals.com/assets/MoreEqualAnimals-1.15.2021.pdf

"This is one of the challenges with smart contracts, they can enforce the rules which is good, but they can also restrict flexibility."