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PROBLEMS OF DEFINING THE CONCEPT AND LEGAL NATURE OF
CONTRACT IN THE DIGITAL ERA: FEATURES OF BLOCKCHAIN-BASED
AGREEMENTS
Karshieva Sokhibjamol
Master’s degree student at Tashkent State University of Law
E-mail: sokhibjamolkarshieva@gmail.com
https://doi.org/10.5281/zenodo.15694633
Abstract:
This paper explores how the traditional concept and legal nature of contracts
are being transformed in the digital era, particularly under the influence of blockchain
technologies. Special attention is given to the distinctive features, enforceability, and legal
challenges posed by blockchain-based contracts.
Keywords:
contract law, digitalization, blockchain, smart contracts, legal certainty,
automation, private law.
The rapid development of digital technologies has triggered a profound transformation
of private law institutions, particularly the concept and structure of contracts. Historically, a
contract has been defined as a legally binding agreement between two or more parties,
concluded through offer and acceptance, and enforceable by law. With the transition to coded
formats, the legal system is increasingly confronted with the question of whether algorithmic
declarations of will can be treated as equivalent to traditional expressions of consent. This
development necessitates an analysis of how digital tools alter the conventional
understanding of legal intent.
In the digital era, consent may no longer be expressed through handwritten signatures
or oral declarations, but instead through clicks, electronic signatures, or even lines of
computer code. This shift necessitates a legal reassessment of what constitutes mutual assent,
especially when algorithms autonomously execute obligations without further human input.
In this context, smart contracts, self-executing agreements with terms directly written into
code, represent a new paradigm in contractual relations.
Smart contracts operate within blockchain systems, such as Ethereum, and ensure
automated execution of contractual terms once pre-set conditions are met. These agreements
are immutable, transparent, and decentralized, meaning they do not rely on a central
authority or intermediary. According to a 2024 report by Statista, which provides statistical
data on global technology trends, the global market for blockchain-based smart contracts is
projected to reach over $500 billion by 2030[1]. Moreover, the number of smart contract
transactions surpassed 1.5 billion in 2023, reflecting exponential growth in sectors such as
finance, logistics, and e-commerce. In Uzbekistan, the number of fintech startups utilizing
blockchain technology has grown more than fivefold since 2020, reflecting a rising demand
for legally reliable digital solutions. This growth raises practical concerns for legislators and
legal practitioners, as traditional frameworks may no longer suffice to ensure legal certainty
and enforceability in automated transactional environments.
In Uzbekistan, the current Civil Code of the Republic of Uzbekistan defines a contract in
traditional terms (Articles 151–166) requiring mutual consent and written or oral expression
[2]. Although flexible in interpreting form, the legislation does not yet recognize code-based
or automated contractual mechanisms. The Law of the Republic of Uzbekistan “On Electronic
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Document and Digital Signature” [3] allows legal recognition of electronic contracts and
digital signatures but does not extend this recognition to smart contracts or blockchain-based
enforcement.
From a comparative perspective, certain jurisdictions have already incorporated
blockchain concepts into their legal frameworks. The State of Arizona (USA), for example,
passed legislation in 2017 affirming that smart contracts and blockchain signatures are legally
enforceable [4]. This statutory recognition provides legal certainty to blockchain transactions
by acknowledging that code-based agreements can represent valid legal obligations.
Some jurisdictions, such as Malta and Liechtenstein, have adopted comprehensive
frameworks, such as the Maltese Innovative Technology Arrangements and Services Act [5],
and the Liechtenstein Blockchain Act [6], which explicitly define legal aspects of smart
contracts and digital tokens, offering robust regulatory models.
In this context, it becomes vital to redefine the legal nature of contracts in a manner that
accommodates technical developments while preserving the rule of law. A contract that
performs automatically may indeed fulfill its economic function, but from a legal perspective,
it remains essential to assess whether such execution aligns with doctrinal requirements of
intention, mutual assent, and fairness. These foundational concepts of contract law must
continue to inform how we assess the legitimacy of new digital mechanisms.
As discussed by Werbach K. and Cornell N. [7], smart contracts require a legal
framework that supports interpretation, dispute resolution, and mechanisms for redress.
Otherwise, errors in smart contracts could go uncorrected, and parties might be bound to
consequences they did not foresee or intend.
This debate is further complicated by the multiplicity of integration models. According
to legal studies, smart contracts may exist in three forms: code-only, dual-language (code and
natural language), and hybrid models. The hybrid approach, where performance logic is in
code, but legal definitions and dispute mechanisms remain in traditional text is widely
accepted as the most practical and enforceable.
De Filippi P. and Wright A. [8], emphasize that code-based governance may bypass
traditional legal institutions and undermine key principles such as fairness, accountability,
and transparency, eroding core values of private law such as good faith, fairness, and balance
of interests. In Uzbekistan, in article 354 of the Civil Code where the legal principle of
“freedom of contract” is a cornerstone of private law, smart contracts challenge not only form,
but also substance. A self-executing contract cannot adapt to changes in circumstances,
renegotiation, or equity-based defenses, which are essential features in human-driven
contracts.
Modernizing legal provisions related to contract form and interpretation may offer a
pathway toward integrating self-executing technologies. This does not require a wholesale
replacement of civil code norms, but rather a contextual updating of existing doctrines.
Recognizing code-based declarations of will, for example, may be a first step in acknowledging
smart contracts as part of the broader category of enforceable agreements.
Summarizing the above, it can be concluded that the transformation of contractual
relations in the digital environment requires legal systems to be guided by the principles of
legal certainty and functional adaptability. These principles should form the basis for
interpreting and applying contract law in the context of new technological instruments such
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as blockchain-based smart contracts. However, the absence of clear legal provisions on the
status and enforceability of self-executing agreements may limit the practical implementation
of digital tools and create uncertainty in cross-border transactions. Since a contract in its
essence reflects mutual will and legal balance, it is important to ensure that new formats of
agreement maintain this balance and are integrated into legal practice in a way that respects
core values of private law.
References:
Используемая литература:
Foydalanilgan adabiyotlar:
1.
Statista.
Global
blockchain
market
size
2021–2030.
https://www.statista.com/statistics/1263546/global-blockchain-market-size/
2.
Law
of
the
Republic
of
Uzbekistan
“On
Electronic
Document”.
https://lex.uz/ru/docs/111457
3.
Law of the Republic of Uzbekistan “On Electronic Digital Signature”.
https://lex.uz/en/docs/4410899
4.
Arizona Revised Statutes §44-7061. Recognition of smart contracts in Arizona. Arizona
Legislature,
2017.
https://www.azleg.gov/viewdocument/?docName=https://www.azleg.gov/ars/44/07061.ht
m
5.
Malta.
Virtual
Financial
Assets
Act
(Chapter
592).
https://legislation.mt/eli/cap.592/eng/pdf
6.
Liechtenstein. Token and Trusted Technology Service Providers Act (TVTG).
https://www.gesetze.li/konso/2020355000
7.
Werbach, K., & Cornell, N. (2017). Contracts Ex Machina. Duke Law Journal, 67(2).
https://scholarship.law.duke.edu/dlj/vol67/iss2/3
8.
Pasquale, F. (2015). The Black Box Society: The Secret Algorithms That Control Money
and
Information.
Harvard
University
Press.
https://www.hup.harvard.edu/books/9780674976429
