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Smart Contracts

Smart contracts are automated digital contracts that execute predefined conditions, offering benefits like speed and reduced costs by eliminating intermediaries. In Morocco, their legal recognition depends on compliance with existing laws, raising concerns about their validity and integration into the legal system. While they present transformative potential for various sectors, challenges related to legal adaptation, security, and the rigidity of smart contracts must be addressed for successful implementation.

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4 views

Smart Contracts

Smart contracts are automated digital contracts that execute predefined conditions, offering benefits like speed and reduced costs by eliminating intermediaries. In Morocco, their legal recognition depends on compliance with existing laws, raising concerns about their validity and integration into the legal system. While they present transformative potential for various sectors, challenges related to legal adaptation, security, and the rigidity of smart contracts must be addressed for successful implementation.

Uploaded by

jaafarimaryem26
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Smart contracts are autonomous computer programs that automatically execute predefined

conditions, offering speed, efficiency, and reduced transaction costs by eliminating


intermediaries like banks. In Moroccan law, they represent a major innovation in digital
transactions, requiring adaptation to local regulations for decentralized management.
Powered by blockchain technology, which ensures secure, tamper-proof, and decentralized
data storage, smart contracts benefit from enhanced reliability and efficiency. However,
their legal recognition in Morocco depends on compliance with existing laws, raising
questions about their validity as written evidence.
The adoption of smart contracts could revolutionize Moroccan contract law, necessitating
new skills in coding and blockchain for legal professionals. While these technologies offer
transformative potential, they also pose challenges in terms of regulation, security, and
legal adaptation.
At this stage, the legal issue that arises is the following:
How does the introduction and use of smart contracts transform the traditional legal
landscape, and what are the implications and legal issues of their integration into the
Moroccan legal system?

Part 1 : The Innovation of Smart Contracts

A- Introduction to Smart Contracts

Smart contracts are digital versions of traditional contracts, designed to automatically


execute specific tasks like transferring funds, fulfilling obligations, or ending legal acts.
Written in the Solidity programming language, they operate on conditional protocols such
as "if this, then that." For instance, if a condition is met, the program executes a predefined
action. However, while they are called "smart," these contracts are not fully adaptable and
cannot replace certain traditional legal practices, such as human negotiation, legal
representation, or the ability to sue. The effectiveness of smart contracts depends on both
the quality of their programming and the legal expertise in their design.

B- Applications and Benefits of Smart Contracts

Smart contracts have diverse applications that could revolutionize various sectors.
Examples include:
1. Optimizing Contract Execution:

o Securing Document Exchange: They ensure fast, secure, and low-cost


management of documents between stakeholders while guaranteeing the
integrity and authenticity of the exchanged documents.

o Example in Real Estate in France: They can digitize real estate documents,
building permits, or pre-emption rights notifications, making them nearly
impossible to contest.

2. Practical Applications:

o Insurance and Guarantees: Smart contracts can automate the payment of claims
once certain conditions (e.g., a natural disaster) are recognized or a required
document is uploaded, ensuring fast and automatic payments.

o Sales and Sales Promises: In sales, a smart contract ensures payment to the seller
only when the product is delivered to the buyer, reducing disputes and ensuring
fulfillment.

3. Transparency and Reduction of Intermediaries:


Smart contracts eliminate intermediaries, lowering transaction costs and enhancing
security. They also improve participant anonymity, as blockchain technology allows
transaction verification without disclosing personal information.

While smart contracts offer automation, secure transactions, and process optimization
across various industries like real estate, insurance, and sales, their effectiveness depends
on their design. They also raise legal questions regarding their integration into existing
legal systems.

Part 2 : The problematic of Smart Contracts

A- The Legal Nature of Smart Contracts:

The legal status of smart contracts varies depending on the jurisdiction. In the United
States, states like Arizona and Nevada officially recognize these digital contracts.
Generally, smart contracts are treated as electronic contracts and must meet the same
essential elements as traditional contracts, such as agreement, consent, lawful object,
capacity of the parties, and lawful cause. In Morocco, while the legal framework ensures
the security of electronic contracts, including mandatory security audits and encryption, it
may need adaptations to better integrate the specificities of smart contracts.

B- The Weaknesses of Smart Contracts:

Smart contracts have several legal concerns due to their immutable and automated nature:

- Consent Issues : Errors in the contract cannot be corrected, potentially leading to


invalidity. There should be a provision for termination due to lack of consent.

- Interpretation of Clauses : Smart contracts interpret clauses objectively, lacking the


ability for "real intention."

- Adaptation Over Time : They cannot adapt to changing circumstances, excluding the
clausula rebus sic stantibus.

- Legal Flexibility : They do not accommodate indeterminate legal concepts like


"reasonable time" or "good faith."

- Integration with the Real World : Economic value must be represented on the
blockchain as cryptographic assets.

- Programming Issues : Translating contracts into code involves human intervention,


which can introduce errors.

- Energy Consumption : Blockchain technology requires high energy consumption,


though future developments may mitigate this.

These weaknesses highlight the challenges in ensuring consistency between IT and legal
realities and maintaining flexibility in contract execution.

Smart contracts offer a revolutionary approach to managing digital transactions with


benefits like automation, efficiency, and precision. However, their integration into legal
systems presents challenges that must be addressed, including their rigidity and the need
for clear legal frameworks to ensure validity and adaptability. By carefully navigating these
issues and continuously refining the legal landscape, the full potential of smart contracts
can be harnessed within a secure and effective environment, paving the way for their
broader acceptance and application in the future.

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