Smart Legal Contracts are agreements between signatory parties that can be interpreted by machines and humans, that transfer value, using computational logic and human language.
They were initially named as Ricardians Contracts and defined by Ian Gregg in the late 90s, as a token that represents a contract, representing a valuable right to the holder, issued by someone, signed with cryptography, readable by humans and linked to an auto-executable code.
So he was thinking about the human factor, creating agreements that were not just focused on symbol and quantity (100 $DOTS), he was thinking about financial instruments with rights and obligations to the parties.
This brief post pretends to show to the Polkadot and Web3 Community that we need to rethink that vision and invest in the technology, if we want to have more adoption around the world, let’s be clear, we live in jurisdictions with laws and police, and at the end everything is going to be written in legal terms.
So the solution is to link the legal contract (the main token) into computational code that transfers value? I don’t think so, maybe that can be the first approach, but knowing that there are terms and conditions, facts, that still need interpretation, (e.g. A person in debt to a bank who is unable to make payments due to financial hardship, struggling to feed their family, and may resort to stealing to ensure their survival), means that the code needs to be an exact representation of the legal terms and allow disputes resolution (maybe more code mix with decentralized judges).
This solution wants to be tackled by the 1201 Treasury Proposal, with one use case, Vehicles. But also I think that other use cases can emerge (Intellectual Property, Real Estate, Debt, Insurance, etc). That’s why I want to share with the community that as a team we have decided to open-source that pallet if we get the funds to deliver.
Why open source? I firmly believe that we are the team with the knowledge to build it. But still, I am aware that there are brilliant people out there, lawyers, developers, users, governments, and companies, that can help us to create a stronger solution, and also that can take advantage of this technology.
I am not saying that there are not other projects out there trying to do the same, but we don’t have it in Polkadot, and we don’t have it in the substrate ecosystem, we regularly say that we have the brightest minds, the best technology, but I believe that we are far away to have the best real-world use cases.
Cheers,
Wario.
@wario_mx:matrix.org
Other notes:
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The proposal has more expenses, but the most costly one, the smart legal contract factory, is the main reason for this post.
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For the sake of transparency, I have to disclose that we are working on tokenizing Intellectual Property with Uniques Network NFT2.0, using solidity smart contracts that might take advantage of this pallet too.