Smart Contracts: The Need Of Legal Implications In India
- IJLLR Journal
- 4 minutes ago
- 2 min read
Mitali Aditya Patil, DES Navalmal Firodia Law College
ABSTRACT
“Code it, Trust it, Seal it: Smart Contracts simplify everything”. Smart contracts are automated, self-executing electronic contracts that are maintained on a blockchain and will automatically enforce and carry out the terms and conditions of an agreement when specific criteria are satisfied. Smart contracts have emerged as a key component of the blockchain ecosystem, encouraging innovation across industries by automating agreements and transactions in a safe, transparent, and decentralized manner. Currently, platforms such as Ethereum, Binance Smart Chain, Polkadot, and Cardano host millions of smart contracts, which power decentralized finance (DeFi), non-fungible tokens (NFTs), supply chain solutions, and more. DeFi, in particular, has experienced tremendous growth, with smart contracts allowing for decentralized lending, borrowing, trading, and staking without the use of intermediaries. Despite their popularity, smart contracts confront obstacles such as scalability, security flaws, and a lack of defined legal frameworks. Smart contracts are not explicitly recognized and regulated under the Indian legal framework, leading to their enforceability ambiguity under laws like the Indian Contract Act,1872. The lack of specific regulations governing blockchains affects the validity of smart contracts under Indian law. The incorporation of laws and regulations regarding smart contracts in the Indian legal system efficiently enhances the governance of enforceability and legal validity of smart contracts. With an emphasis on their enforceability under current laws, this research attempts to investigate the legal and regulatory obstacles to smart contract adoption in India. It aims to evaluate sector-specific applications, find gaps in the current legal framework, and suggest changes to bring it into line with emerging technologies. Recommending solutions for consumer protection, legal recognition, and effective dispute resolution while encouraging innovation and compliance is the goal.
Keywords: Apps, Automated, Blockchains, Codes, Contracts, programs, Decentralized Finance, Non-fundable Tokens, Smart contracts, Self- executing.
