Answer ... Broadly, in order for a smart contract to be compliant and enforceable in Gibraltar, it must demonstrate offer, acceptance, consideration, certainty and intention to create legal relations, with these terms encapsulating their various forms and means.
An ‘offer’ can be considered as an expression of willingness to contract on specified terms with the intention that it is to become binding as soon as it is accepted by the person to whom it is addressed.
In many cases, a smart contract code deployed on a distributed ledger would likely constitute an ‘offer’ if it was to exhibit the requisite certainty of contract (see question 4.4) and intention to be contractually bound, as opposed to an invitation to negotiate terms.
‘Acceptance’ is considered to be the final and unqualified expression of assent to the terms of an offer. For smart contracts, the expression of acceptance should present no particular issues or concern, with the communication of acceptance predominantly occurring by way of action (eg, signing the transaction with a private key – although this does present additional issues with regard to fraudulent signatures).
Notwithstanding the above, advanced smart contract algorithms may be employed to make decisions on behalf of a party, which may present further challenges in the event of a contractual dispute.
In order to be legally binding, a smart contract must demonstrate that some form of ‘consideration’ (eg, a type of value) is exchanged. Gibraltar courts generally will not judge adequacy of consideration.
Agreement between parties is assessed objectively: once both parties have outwardly agreed on the same terms and subject matter, neither can broadly rely on some unexpressed qualification or reservation to show that it had not in fact agreed to the terms to which it had appeared to agree (see question 4.4).
In principle, therefore, if structured correctly, smart contracts could be enforceable under Gibraltar law. However, despite much debate, courts worldwide – including those in Gibraltar – are yet to publicly announce their enforceability.
The UK Jurisdiction Taskforce of the LawTech Delivery Panel, established by the UK government, has issued a public consultation paper seeking input from industry stakeholders on the enforceability of smart contracts under English private law, among other things.