Smart Contracts will need ‘Smart Term Sheets'

In the age of smart contracts, many consider that formal written contracts, and the lawyers that draft them, will soon be obsolete.  However, lawyers will continue to have ample work ensuring the devs get the code right.

It is presumed that the agreed-upon term sheet will be handed to a software developer to transform into smart contract computer code. That code will result in the final agreement.  But what does a software developer know about drafting code to execute a term sheet? The negotiating parties understand their deal, and the lawyers know the relevant law and the customary terms, but the software developer does not. A traditional term sheet is therefore not enough.

Instead, a “smart term sheet” is necessary to join the information gap which exits between the agreed-upon business terms and the smart contract coding process. It can: specify the practical details required to implement the agreed-upon terms, identify and address the terms that cannot be implemented in a smart contract, and add the “boilerplate” legal terms.

Essentially, the practical and legal obstacles to realising a term sheet can be overcome.

Read the full article here.

(Original publication on CoinDesk.com , 9 December)

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