A company in the supply chain management sector is looking to incorporate blockchain technology into its supply chain processes. The company wants to use smart contracts to automate the payment process for its suppliers, as well as to ensure the secure transfer of goods and relevant documentation between parties.
Our Blockchain law firm provided the following legal services to the supply chain management startup:
Smart Contract Drafting: Our team of IP lawyers worked with the company to draft a smart contract that accurately reflects its business needs and agreements with suppliers. The contract included provisions for payment terms and the transfer of goods, maintenance of quality of goods and documentation.
However, recently many startups and companies are approaching us to draft a ‘hybrid’ or a ‘split’ contract which clearly defines it's ambit of execution in the online and offline world.
Six step strategy to write and review a smart contract by a blockchain IP attorney:
Identify the terms of the contract that can be executed automatically by a smart contract and those that require human input for accuracy purposes. For example, explaining the phrase “negligence”, “good faith”, “Intent”, and “Unforeseen circumstances” are very difficult to encode and execute. Translating legal contracts into code aka software as self-executing algorithms needs a proactive approach.
Draft a traditional legal contract for the terms that require human input, making sure to include all necessary clauses, sub-clauses and provisions that would typically be found in a contract.
Translate the clauses from the traditional legal contract into code that can be executed on a blockchain network by preparing flow diagrams and flowcharts.
Integrate the code into the smart contract so that it performs the automatic execution of the legal obligations specified in the code.
Test the smart contract to ensure that it performs as expected and that all clauses are executed correctly.
Have both the traditional legal contract and the smart contract executed and signed by all parties involved, making sure to keep a copy of both documents for future reference. Therefore, the traditional legal offline agreement acted as a “wrapper” to the automated performance of the legal obligations executed by the smart contract.
Legal Review: Our Blockchain AI lawyers conducted a thorough review of the smart contract to ensure that it accurately reflects the company's legal agreements and meets all necessary legal requirements.
Regulatory Compliance: We advised the company on the regulatory compliance of its smart contract, including any relevant laws and regulations governing laws for example, laws related to supply chain management and payments.
Dispute Resolution: We assisted in designing a dispute resolution mechanism for the smart contract, such as arbitration, to ensure a fair and efficient process for resolving disputes.
Risk Management: Our lawyers identified and managed legal risks and leaky pipeline associated with the use of the smart contract, such as the enforceability of the contract and the potential for hacking or other security breaches.
By hiring our Blockchain AI law firm, the company became confident that its smart contract is legally sound, legally compliant with relevant laws and regulations, and provided a secure and enforceable mechanism for executing its supply chain processes globally.