LawtechUK’s Major Project Shows How ‘Smarter’ Contracts Are Here to Bring Benefits to Businesses Worldwide
LONDON, March 21, 2022 /PRNewswire/ — The ‘Smarter Contracts’ project has been launched by LawtechUK to encourage greater understanding and use of ‘smarter’ contracts by businesses globally.
Smarter contracts are legally-binding digital contracts that use technology to provide benefits over conventional contracts. They range from simple applications like electronic signatures all the way through to sophisticated ‘self-executing’ contracts. Smarter contracts are changing the way people live and work for the better and, as businesses across sectors realise that technology is available to improve and evolve contracts, the use of smarter contracts will increasingly become the norm. LawtechUK’s explainer video is here.
Billions of contracts are entered into each year, with 26% of people regularly handling contracts in their everyday work. Digital contracts offer significant benefits, including increased efficiency and productivity, greater trust and transparency, and reduced risks of fraud. Paper-based and manual ways of contracting result in businesses missing out on 9%1 of revenue each year. Moving from paper to digital trade documents is anticipated to free up an estimated £224 billion in efficiency savings and generate £25 billion in global economic growth by 2024.2
The project includes a Smarter Contracts Report and a new Smarter Contracts & Digital Assets Hub with a range of additional guidance, insights, courses and resources, intended to provide a central space to learn more.
LawtechUK and its UK Jurisdiction Taskforce (UKJT) worked with collaborators across sectors, professions and countries to produce the Smarter Contracts Report. The examples included in the Report demonstrate why smarter contracting adds value to business practices and show how widely the technology is already being used across commercial, financial and consumer sectors. They include:
- The use of digital documents and blockchain technology in supply chains reducing friction in global trade and transforming logistics operations
- Self-executing contracts being central to renewable energy microgrids, with the automatic recording of transactions and immediate payments for small amounts of energy significantly increasing efficiency and enabling the transition to clean energy
- Smarter contracts and blockchain technology being used to expedite the sale, purchase and registration of homes
- Smarter parametric insurance contracts allowing for immediate payments to be made as soon as the relevant data is recorded – for example, when flights are delayed or storm damage occurs
- Smart legal contracts and non-fungible tokens being securely linked to the ownership of physical assets, revolutionising the way assets are traded with economic and environmental advantages
In the UK, work by the Law Commission and LawtechUK’s UKJT has provided a strong legal foundation for the mainstream use of smarter contracts, including through the Legal Statement on Cryptoassets and Smart Contracts, the Law Commission’s advice on smart legal contracts and electronic trade documents, and the Digital Dispute Resolution Rules.
Emma Dearnaley, LawtechUK: “Contracts are a vital part of business activity across all sectors. Yet many still approach contracts in much the same way as we have for centuries, creating and managing them in paper form. Technology makes this unnecessary now. Contracts and the valuable data they contain can be digitised, offering a wide range of benefits and the opportunity to reimagine contracts as live sources of intelligence that add value to business all the time. At LawtechUK we wanted to build on the legal and technical work already done by shining a light on practical ‘smarter contract’ solutions to real-world problems, to spark ideas and inspire confidence in the further use of these new technologies.”
Sir Geoffrey Vos, Master of the Rolls and Chair of LawtechUK’s UK Jurisdiction Taskforce: “The Smarter Contracts report explains how smarter contracts and blockchain technology are currently being used. The theory is to dispel the myth that blockchain is a fringe technology used only by those wanting to risk their livelihoods or possibly make their fortunes on volatile cryptoassets like Bitcoin. The blockchain is now at a stage in its development equivalent to where the internet was in or around 1995. The internet was unstoppable in 1995 and blockchain technology is unstoppable now. It will become ubiquitous in all major industrial and financial sectors, simply because it allows for the immutable recording of data, thereby reducing friction in commercial and consumer transactions and obliterating the scope for dispute as to what has occurred. This technology is not something that might happen in years to come; it is happening now. Our report collates some of the most accessible examples.”
Professor Sarah Green, Law Commissioner for Commercial and Common Law at Law Commision of England and Wales: “Digital and smarter ways of contracting could revolutionise the way we do business, particularly by increasing efficiency and transparency. The Law Commission has concluded that electronic signatures can be used to execute documents and that the existing law of England and Wales is clearly able to facilitate and support the use of smart legal contracts. This confirms that the jurisdiction of England and Wales provides an ideal platform for the use of a wide range of ‘smarter contracts’ in practice. The Law Commission’s related work on electronic trade documents, digital assets and conflict of laws will further support the use of smarter contracts. The Smarter Contracts report published by LawtechUK is a helpful practical contribution to show the market how technology is already revolutionising contracts.”
LawtechUK is an initiative to support the transformation of the UK legal sector through technology, with a targeted work programme delivered through collaboration between the UK’s Ministry of Justice, Tech Nation and the LawtechUK Panel.
For more information, please contact: Corrie Raine, 07887593940 Corrier@lansons.