The blockchain has recently become the new
financial instrument of the future. Experts in major industries,
such as the financial and legal communities, are continuously
working on researching how the development of blockchain technology
will impact the future of doing business.
Articles recently published by
Aird & Berlis LLP corporate and technology lawyer
Don Johnston include topics such as the
Law of the Blockchain. In parallel, smart contracts have become an equally hot
The term smart contract was first used by computer
scientist Nick Szabo in his 1997 paper "The Idea of Smart Contracts." Today, the
term smart contract is used somewhat loosely, and it
is continually evolving. One such definition is a contract that is
stored, verified and executed, as well as recorded, using a
blockchain system. "Smart contract" can also be a specific use
of the technology. In his paper, Nick Szabo originally used a
vending machine as a way to describe a smart contract. The mechanical device is
programmed to transfer ownership of a candy bar (the property) when
a set amount of money is received (the defined input). The vending
machine itself has control over the property, and through its
programming is able to enforce terms of a contract. Smart contracts in the future may be a
combination of code and traditional legal language. Josh Stark provides an example in which a
supplier of goods could enter into a smart legal contract with a
retailer, in which payment terms could be defined in code and
executed automatically when delivery is made.
Ethereum is just one example of a developer
whose goal is to be a platform for smart contracts. The company
aims to create a system where a contract can be implemented into a
blockchain. The company promotes the instant scalability of this system, stating
that teenagers could split revenue from an Ethereum-based lemonade
stand just as easily and transparently as a sovereign wealth fund
could similarly use it to disburse funds to hundreds of millions of
citizens. Smart contracts can be small pieces in larger
transactions, where each contract's execution can form part of
a much larger and complex endeavour.
The use of smart contracts has gathered much attention in
the financial community, with the possibilities of using the
technology for financial instruments like shares, bonds or
derivatives contracts. Recently, the TSX hired Bitcoin entrepreneur Anthony Di Iorio
as its first chief digital officer, in order to explore the
capabilities of the blockchain and smart contracts. Earlier this
year, the Australian Stock Exchange announced that it was building a
blockchain-based replacement for its current platform used for the
clearing and settlement of trades.
The jury is still out on whether a smart contract is legally enforceable. We
don't see any reason why they would not be, if the standard
conditions for forming a contract exist. The devil is in the
details, however, and we look forward to this exciting area of
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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