Civil Liability Incurred from Smart Contract Error

Subject Areas : Legal Studies of Cyberspace

Seyed Mahdi Razavi ¹ (Department of Private Law, Faculty of Humanities, Azadshahr Branch, Islamic Azad University, Azadshahr, Iran)
اسماعیل دائمی ² (Department of Private Law, Faculty of Humanities, Azadshahr Branch, Islamic Azad University, Azadshahr, Iran)

Received: 2023-12-24 Accepted : 2024-07-25 Published : 2024-09-09

Keywords: Artificial Intelligence, Blockchain, Civil Liability, Error, Smart Contract ,

Abstract :

Smart contracts, as a new generation of electronic contracts, have been welcomed by many people to conclude contracts in cyberspace due to unique features, including transparency, self-execution, decentralization, and accuracy. Nevertheless, this technology will pose unknown legal challenges similar to what happened to the DAO smart contract in 2016. In this study, the causes of civil liability in case of occurrence of errors during the implementation of smart contracts were identified and studied. Utilizing library and internet resources with descriptive and analytical methods, with the underlying assumption that the terms of the contract were known to the parties, and mutual agreement on the contract's provisions was reached at. It was further posited that any errors that occur were not a result of a mistake by the will of the contracting parties. The results indicated that at least four cases can incur civil for the errors caused by implementing the smart contract, including (1) the blockchain on which the smart contract was implemented, but caused errors in the smart contract due to a security gap or programming problems, (2) artificial intelligence that is responsible for analyzing and executing smart contract codes and has not analyzed or executed the code correctly, (3) oracles connected to the smart contract that provide insecure or wrong information to the smart contract, and (4) the smart contract developer who did not write the security codes of the contract correctly or inadvertently put the wrong code in the smart contract, due to lack of skill or negligence.

References:

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