If you pass through the entire bureaucracy associated with the conclusion of a traditional contract on paper, the legal consequences of its execution or non-performance will be predictable for you. But the usual contracts on paper have a number of shortcomings. The need to conclude them en masse entails large expenditures on the remuneration of labor of those who conduct contractual work. At the same time, the classic contract does not guarantee that its parties will not shirk obligations.
That’s why many start-ups and developers are promoting the technology of smart contracts that work on blockchain technology. They have no shortcomings how in paper contracts. They are cheap in mass application. They do not invoke the parties to action – smart contracts themselves perform the actions. Behind them is the future.
But what happens if someone breaks a smart contract? In most countries of the world there is no clear answer to this question, but in the US state of Arizona there is.
In March 2017, Arizona passed a law that recognizes the legitimacy of electronic-digital signatures recorded in the blockchain. Since that moment, Arizona has become a great place to register the blockchain companies that develop applications based on self-executing code snippets.
For Sweetbridge, based in the capital of the state of Phoenix and engaged in the development of a fintech-platform on the blockchain, the law provided a good legal basis and inspired a more intensive development. Sweetbridge attorney Caroline Lynch commented that the state’s decision to recognize the validity of the smart contract as equal to the legal force of the traditional contract was necessary for the company’s growth: