Charles Kerrigan, a banking and international finance partner at CMS, spoke late last year on a panel giving evidence at the UK’s All Party Parliamentary Group on Blockchain. (A summary of his remarks can be found in the January issue of Artificial Lawyer.) Here are a few of his many interesting points, beginning with his insistence on clarity of thought around contracts generally before jumping into smart contracts.
- Context matters. There is a big difference between buying an ice-cream, buying a house and buying a group of companies. They all use contracts but the context is crucial.
- Lawyer assumptions vary by place. English law recognizes freedom of contract, which means they can contain any terms the parties want. French law, on the other hand, distinguishes between civil and commercial agreements and reflects regulation to protect consumers.
- Lawyers don’t have all the answers. Their bias is toward categorization and systematization. But it’s still early for smart contracts. Let’s see what they can do before we set out to put them in tidy boxes.
While Kerrigan sees the benefits of smart contracts, such as the irrelevance of court enforcement, he also sees the problems. Some of those, such as enforceability, are perceived problems. (Where do you sue if there’s no governing law? You don’t need to if they’re self-executing.) But there are real hard problems, too, including equity, good faith and other things lawyers inject into agreements to mask ambiguity and fill gaps. For example, he frets about over-reliance on systems working well together. “This is a transparency issue not because we have a black box problem but we have a box which is so full of stuff we can’t untangle it – a Christmas lights problem.” Hear more from Kerrigan and his fellow panelists here.
Published March 7, 2019.