rotecting weak contracting parties in smart contracts

Prof. Andrea Stazi’s new paper on “Protecting weak contracting parties in smart contracts” was published in Nuovo Diritto Civile, no 1/2022.

Abstract: The development of distributed ledger technologies, primarily the Blockchain, allows for the creation of so-called “smart contracts”, characterised by the self-execution of contractual clauses without the need for human intervention, and generally excluding the possibility of interrupting such execution or modifying the content. In European contract law, standard contractual terms are subject to restrictions which also seem applicable to “smart contracts”.

The Directive 2011/83/EU on consumer rights provides for various rights and related information obligations, for the exercise and compliance of which, on the one hand, it is also necessary to use a text written in natural language. 

On the other hand, in current practice, one of the parties for a multitude of contracts usually does not draw up the contractual forms in advance, but they are prepared by the suppliers of platforms for smart contracts. Therefore, the professional must verify that the information required by the consumer law is included in them, or integrate with the missing information. 

The specific method of drafting the computer code, then, may be relevant for the purposes of configuring various protection hypotheses provided for in the consumer law, and the possible exercise of the right of withdrawal. 

Lastly, the EU directives 2019/770 and 2019/771 on contracts for the supply of digital content and services and for the sale of goods in which such content and services are incorporated or interconnected, subject the terms of “smart contracts” to a consistency with respect to what has been agreed and suitability for the use of the content or service provided.