Bermuda
Answer ... The Electronic Transactions Act 1999 (ETA) provides that information, which includes data, text, images, sounds, codes, computer programs, software and databases, shall not be denied legal effect, validity, admissibility or enforceability solely on the ground that it is (a) in the form of an electronic record, or (b) not contained in the electronic record purporting to give rise to such legal effect, but is referred to in that electronic record. Where information is required by law to be in writing or is described in any statutory provision as being written, that requirement or description is met by an electronic record if the information contained in the electronic record is accessible and is capable of retention for subsequent reference. In any legal proceedings, nothing in the rules of evidence shall apply so as to deny the admissibility of an electronic record in evidence solely on the ground that it is an electronic record. Information in the form of an electronic record will be given due evidential weight and in assessing the evidential weight of an electronic record, regard shall be had to (a) the reliability of the manner in which the electronic record was generated, stored or communicated, (b) the reliability of the manner in which the integrity of the information was maintained, (c) the manner in which the originator was identified, and any other relevant factor. Accordingly, provided the principles of contract law are met and the subject of the contract does not otherwise offend the laws of Bermuda, a smart contract should be recognised under Bermuda law, subject to evidence to the contrary, as a legally binding contract between the parties to which the smart contract relates.
It should also be noted that in 2020, the Bermuda Government signed a Memorandum of Understanding ("MoU") with The Proof of Trust, a globally patented smart contract validation and automated dispute resolution technology Company5. This MoU enables the Bermuda Government to explore, develop applications and adopt smart contract technology.
5. The Proof of Trust hail the Ottiwell Simmons International Arbitration Centre | Government of Bermuda (www.gov.bm)
Bermuda
Answer ... Whilst the principles and guidelines applicable to the conduct of Digital Asset Issuances and provision of Digital Asset Business Activities to the public in and from Bermuda do not expressly reference smart contracts, they do contain the standards and requirements that any Digital Asset project must adhere to for the purposes of compliance with the DAB Framework. DABs must ensure that any use and involvement of smart contracts in a project will not adversely affect the DABs ability to comply with the DABA Framework. Conversely, smart contracts would be a welcome addition if they can be shown to assist or increase in a DABs ability to comply. Of importance is the ability to ensure the smart contract is auditable so that its purpose and terms can be understood and verified.
Bermuda
Answer ... The ETA was designed to facilitate electronic transactions on a technology neutral basis by means of reliable electronic records. Accordingly, other than the creation, execution or revocation of a will or testamentary instrument or the conveyance of real property or the transfer of any interest in real property, provided the criteria set out under the ETA are met, any transaction or contract has the ability to be carried out by electronic means in Bermuda. It is generally accepted that aspects of contracts which require third party involvement may be replaceable by smart contract. Escrow arrangements and notification provisions are two obvious examples. Certain insurance contracts can also be improved upon by the use of smart contracts where trigger events and pay-outs can be hardcoded.
Bermuda
Answer ... The creation, execution or revocation of a will or testamentary instrument or the conveyance of real property or the transfer of any interest in real property are excluded from the ETA.
Due to their self-executing nature, the possible outcomes of a smart contract are typically limited to being binary. The risks of an unintended outcome can be high if the smart contract itself contains errors or has not been properly coded. In addition, common yet subjective terms (such as 'good faith') are incapable of being incorporated into smart contracts.
Bermuda
Answer ... No specific issues have presented themselves before the Courts in Bermuda. However, if the smart contract has not been coded, prepared or established with the basic principles of contract law, the ETA, the DAIA or the DABA in mind, there may be issues surrounding the validity and enforceability of the underlying contract. Also, issues that might arise may centre on the way in which a smart contract might be undone or amended. There may also be jurisdictional issues, where it is not easy to identify the location of a particular digital asset.
Bermuda
Answer ... It is important to consider the ability to audit the smart contract and the method for evidencing acceptance of its terms. The ability of anyone to evidence and prove that they are legally entitled to the rights attached to the smart contract is also something to be considered.
Bermuda
Answer ... The same principles of contract law apply when considering validity and enforceability.