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Olga Klepikova, Oleksandr Harahonych y Iryna Antoshyna
Smart contracts in the context of digitalization: the legal realities of world experience
Smart-contracts are also not quite similar to classic contracts because
they are written in legal language that can be applied in everyday life.
In contrast, smart-contracts are a technical, or even mathematical,
representation of ordinary contracts because the language in which they are
written is programmatic or source code that is strictly formalized and has
a mathematically balanced structure. In this aspect, smart-contracts look
stricter than regular contracts. They do not have the exibility of linguistic
techniques that can be contained in a regular contract (Levy, 2017). In this
regard, Sklaro (2017) emphasizes that some terms of regular contracts
(such as bona de obligations) cannot be reected to the same extent in
smart-contracts, as the latter are expressed in other language means. Such
inexibility of smart-contracts is, at the same time, their advantage because
the parties can be sure that no discrepancies can be allowed (De Filippi at
al., 2021).
The limits of the application of smart-contracts also have their own
characteristics (Egberts, 2017; Mik, 2017). For example, if a smart-
contract requires the involvement of a third party, such as the state, or
certain administrative procedures such as a certicate of ownership, land
registration in the land cadaster, obtaining licenses, certicates, etc., smart-
contracts cannot guarantee the success of transactions involving a third party
that is not part of the actual blockchain technology (e.g., administrative, or
institutional power) in which the smart-contract is executed. For example,
a smart-contract can be used to secure the transfer of ownership of land,
but only the fact of such transfer or payment (for example, in the form of a
sale or gift agreement). Simultaneously, the smart-contract cannot cover all
stages of this process that require the legalization of the status of the new
owner as a property owner. In this sense, Hulicki (2017) draws an analogy
with the vending machine: it implements the contract of sale only of specic
objects of the material world contained in it.
Accordingly, a blockchain-based smart-contract also implements
a contract through transactions in the blockchain network. Another
disadvantage is that once a smart-contract is launched, its execution is not
so easy to stop if something similar has not been programmed in it from the
beginning (De Filippi et al., 2021). From this point of view, the termination
of a classical contract looks easier. Again, this is a manifestation of a special
language in which smart-contracts are written (programming language).
Other disadvantages of smart-contracts related to their implementation in
everyday life, for example, the formation of the appropriate sta of qualied
IT specialists in blockchain technology, programmers, the creation of
appropriate logistics infrastructure, etc. (Osmolovskaya, 2018).
Misconception is to believe smart-contract is always a self-executing
program (Zhou et al., 2019). For example, if the third party tasked with
monitoring the implementation of the smart-contract, as well as maintaining