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Are you saying the only time a contract is disputed is when the other party is evading the law? Nobody abuses the legal system to screw over people without enou

Are you saying the only time a contract is disputed is when the other party is evading the law? Nobody abuses the legal system to screw over people without enough resources to fight in court?

toomuchtodo 5y ago
I'm saying the legal system takes authority. A smart contract doesn't avoid or override that authority. https://digitalchamber.org/wp-content/uploads/2018/02/Smart-Contracts-Legal-Primer-02.01.2018.pdf https://digitalchamber.org/wp-content/uploads/2018/02/Smart-... > Is A Smart Contract Always A Legal Contract? > No. Because a smart contract is computer code, a smart contract may represent all, part, or none of a valid legal contract under U.S. law. Smart contracts function – in whole or in part – to give effect to legal contracts. Thus, smart contracts are the programmatic means by which some or all of the terms of the legal contract are performed. It is the underlying contractual terms that are given legal effect. That legal contract and the contractual terms is what is evaluated and governed by the legal system. Smart contracts are fancy business logic snake oil salespeople are attempting to sell as the law of the land.
- thebean11 5y ago
  Not quite sure what you're saying, that you expect the DOJ to somehow overturn the judgements of smart contracts, with possibly anonymous participants or participants outside of the DOJ's jurisdiction?
  - ceejayoz 5y ago
    I think the point is more that if you owe $200M to someone, a court is unlikely to accept "it's irreversibly stuck in a smart contract" as an out.
    - thebean11 5y ago
      Sure, I don't disagree with that. For example, defrauding someone with a smart contract obviously doesn't offer the scammer legal protections.
      - toomuchtodo 5y ago
        Who defines fraud if the contract is contested?
        thebean11 5y ago
        Depends on which jurisdiction alleged fraud happens in. If the parties are anonymous or in "difficult" jurisdictions, it will be pretty difficult. Fraudulent or not, though, you have a pretty heavy layer of protection as the money has already been transferred, and that money is not easy (close to impossible) to freeze. Any reversal that happens will be necessarily by a threat outside the blockchain, as the governing body can't actually reverse the transaction. It's a second transaction.
        deleted 5y ago
        [deleted]
        vkou 5y ago
        The courts.
    - tluyben2 5y ago
      I am against smart contracts because we do not know how to write software in that way. I like how they sparked a formal verification Renaissance of sorts but that did not help much either unfortunately (if the premise is wrong, no amount of proof will save you anyway). However, if you let all parties review the smart contract (the source is on the chain, you can check it) and agree with it's workings and sign a 'human' contract saying you do agree and then it goes wrong, I think it should be an out. We do not have proper ways to sue for misbehaving software (it happens all the time but MSFT is climbing higher and higher): this is easier to verify but we are adults here: if you agree to put money in smart contracts, you should have verified the code. And if you think the code is flawed, do not put money: otherwise do not complain afterwards. It is not that hard.
      - Daishiman 5y ago
        > but we are adults here: if you agree to put money in smart contracts, you should have verified the code. And if you think the code is flawed, do not put money: otherwise do not complain afterwards. It is not that hard. That's not how it works. Courts generally operate by ambiguous standard of what reasonable people and reasonable experts can actually do given the state of technology. No reasonable software engineer can tell you that a piece of code is flawless. I don't think courts will agree on a system that has been shown through evidence to be highly flawed.
        tluyben2 5y ago
        Sure, that will depend on the courts and specific case, as it seems it works exactly like this mostly. But if you inspected the code yourself and you put your money in anyway and it is gone, you might find that the court will not do anything at all. And who can you shout at then, the moon? I am saying that smart contracts are a special case: they are small pieces of code, if they have a bug, it usually causes major damage and, if they run on the eth chain etc and no one took public responsibility for deploying it, there is no one to sue. We have no way to write this type of bombs without flaws as you rightly say and because of the irrevocable damage and the lack of defendant in most cases, these contracts should not be used at all. There are already (many) cases like this, but if I write some software and put it in github, someone else deploys it and people die; that is simply not my fault: it is the deploying person. In normal situations, this is easy to find the defendant here: but on the chain, you won't be able to: anyone can deploy anything and you won't know who it was. So unless you to end open source software, you have no case against anyone.
    - kevincox 5y ago
      Sure, but if you both sign a legal contract to obey the outcome of the smart contract then no one owes anything, because the smart contract says that the $200M is gone. Obviously this doesn't allow you get around laws such as warranties but I don't see why it can't be used if everyone agrees to it.
      - ceejayoz 5y ago
        In some cases, perhaps, but not all. Fraud, for example, isn't legal even if you have a cleverly crafted contract that uses wording tricks to technically be true. I would expect a court to take a dim view of a smart contract that has an obfuscated, non-obvious mechanism for someone to siphon off all the money in an undisclosed fashion. "Code is law", but so's "you can't defraud people".
        SiliconAlley 5y ago
        Where’s the part where anybody defrauded anybody? This was clearly incompetence that benefited nobody (certainly the developers would rather not have TITAN implode and all of this USDC locked in a contract...). Embarrassing yes. Fraud? Pretty clearly no
        ceejayoz 5y ago
        It's an example of a scenario where you can't sign certain rights away. Not specific to TITAN.
        lupire 5y ago
        How can it be "locked"? Can't they deploy a protocol update to the members of the compute pool?
        acjohnson55 5y ago
        Depends on how you write the contract. If you make a smart contract unilaterally updatable, then it's no longer decentralized and trustless, because people with admin rights can plunder it, or can be extorted, or compelled by authorities to turn over the capital.
  - deleted 5y ago
    [deleted]
- jMyles 5y ago
  > I'm saying the legal system takes authority. A smart contract doesn't avoid or override that authority. On a blockchain, this is absolutely false. The nodes interpret smart contracts. The "legal system" needs to be applied by some kind of oracle or by force to a node operator. Smart contracts are authoritative in their native environment.
  - toomuchtodo 5y ago
    > The "legal system" needs to be applied by some kind of oracle or by force to a node operator. Yes, this is usually how it's done. Business logic is not a legal authority.
    - jMyles 5y ago
      This is a strange statement. It's like saying that a forloop isn't authoritative because it hasn't been approved by a court. "Legal authority" isn't a well-defined object in the evaluation of smart contracts. It is certainly not an authority in the sense that the EVM (or, for other blockchains, corresponding VM) code is. Is this really a surprise? Nodes don't evaluate common law, they evaluate smart contracts. That's one of the reasons for enthusiasm for blockchain tech. Not everyone believes in the legitimacy of the state, let alone that the legal system is somehow the proper authority for evaluation of disambigous source code.
      - wins32767 5y ago
        >Not everyone believes in the legitimacy of the state, let alone that the legal system is somehow the proper authority for evaluation of disambigous source code. This is something that I haven't been able to figure out about blockchain enthusiasts. Assuming the blockchain is wildly successful, it poses an inherent threat to the ability of the modern state to collect taxes. Why do blockchain enthusiasts, who already don't think the state is legitimate, not take the logical next step. A potentially existential threat illegitimate parties that have large militaries will end well for the blockchain how? To put it more glibly, how many divisions has bitcoin?
- hef19898 5y ago
  Contracts, at least in my jurisdiction, can come in all forms and colours. Even purely verbal contracts are valid, in fact. Those are hard to enforce, with nothing written it is always he-said-she-said when it comes to disputes. So I would be surprised if "smart-contracts" couldn't be litigated if push comes to shove. No way avoid the legal system. And that is a good thing.
  - mcguire 5y ago
    Depends on how strong the cryptography is, no?
    - brazzy 5y ago
      Depends a lot more on how much you're able to leave no unencrypted evidence.
- jessriedel 5y ago
  It's common for people to take mechanical/technological steps to make sure agreements will be respected when they know that if they just wrote a contract they could not rely on the legal system to enforce it in a reliable or economical manner. This is not necessarily bad. When I get my car fixed at the mechanic, I am paying for the service but at no time do I transfer ownership to him. One procure we could follow is for him to do the repair, give me my car back, ask for payment, and then pursue me in court if I refuse to pay. But instead, the procedure is that he just keeps the car in his garage until I pay. (If I want to call the police to get my car back, I can, but now I have to explain to them why I'm not paying, and enforcement is much easier.) This forces me to respect the agreement we made - repairs in exchange for money - in a more robust way than any contract ever could.
  - jcrawfordor 5y ago
    Most places recognize something called a "mechanics lien" that means the police won't get your car back either. Workmen usually have a legal claim to property that they worked on and have not been paid for. Sometimes it requires specific paperwork (more often with real property, e.g. a contractor can place a lien on your house but usually needs you to agree to it before they start work) but often it's implicit. I guess my point here is that this is a scenario with specific legal backing that goes way back into history, which smart contracts don't really have.
    - jessriedel 5y ago
      Yes, of course the reality and usefulness of this particular mechanism has now been legally acknowledged and incorporated into the law in some (but not all) places. But mechanisms like this arise organically and are put to use long before they are officially recognized. I expect similar things to happen with smart contracts. In other words: things you might call "evading the law" in fact can be useful and then shape the law. If we were to adopt a principle like "anything that looks like it's trying to evade the law must be dismantled", we'd be worse off.
      - jboy55 5y ago
- biztos 5y ago
  > Smart contracts function – in whole or in part – to give effect to legal contracts. Except when they don't, which is... most of the time? It's true (and I would hope obvious) that a smart contract doesn't play like a legal contract, but aren't the vast majority of them intentionally doing things that are orthogonal to contract law? Or irrelevant to it? You can buy Beeples all day but you still don't own a copyright, and this doesn't seem to be a problem for anyone.
criddell 5y ago
They said "typically", so they aren't saying it's true in all cases, but generally when a person is trying to evade some legal authority, it's probably not for reasons good for society.
- thebean11 5y ago
  They are trading one legal authority for another, and this is agreed upon up front. Both parties agree that the code is the legal authority before entering into a contract, which is much different from evading authority after the fact. > but generally when a person is trying to evade some legal authority, it's probably not for reasons good for society Reminds me of the "nothing to hide" argument, that only someone trying to commit a crime would need or want protection from the legal system. History paints a different picture.
  - cool_dude85 5y ago
    >They are trading one legal authority for another, and this is agreed upon up front. Both parties agree that the code is the legal authority before entering into a contract, which is much different from evading authority after the fact. The parties might "agree", but who cares? If they are in the US, for example, and the two parties have a smart contract that breaks US contract law, one of the parties can file a lawsuit and attempt to get their money back. You can't go to the judge and say "sorry, the code is the legal authority here".
    - thebean11 5y ago
      Yeah I agree with that. Once the contract has executed, enforcement actions can certainly happen in meatspace. But do you not see the difference between: 1. A normal contract (legal or illegal) that requires outside enforcement in the first place to force parties to comply. 2. A smart contract (legal or illegal) that executes itself without outside enforcement and can be overturned later (not literally overturned, but a subsequent transaction can be forced) by meatspace mechanisms
      - 5y ago

Are you saying the only time a contract is disputed is when the other party is evading the law? Nobody abuses the legal system to screw over people without enough resources to fight in court?

toomuchtodo 5y ago

I'm saying the legal system takes authority. A smart contract doesn't avoid or override that authority. https://digitalchamber.org/wp-content/uploads/2018/02/Smart-Contracts-Legal-Primer-02.01.2018.pdf https://digitalchamber.org/wp-content/uploads/2018/02/Smart-... > Is A Smart Contract Always A Legal Contract? > No. Because a smart contract is computer code, a smart contract may represent all, part, or none of a valid legal contract under U.S. law. Smart contracts function – in whole or in part – to give effect to legal contracts. Thus, smart contracts are the programmatic means by which some or all of the terms of the legal contract are performed. It is the underlying contractual terms that are given legal effect. That legal contract and the contractual terms is what is evaluated and governed by the legal system. Smart contracts are fancy business logic snake oil salespeople are attempting to sell as the law of the land.

thebean11 5y ago
Not quite sure what you're saying, that you expect the DOJ to somehow overturn the judgements of smart contracts, with possibly anonymous participants or participants outside of the DOJ's jurisdiction?
- ceejayoz 5y ago
  I think the point is more that if you owe $200M to someone, a court is unlikely to accept "it's irreversibly stuck in a smart contract" as an out.
  - thebean11 5y ago
    Sure, I don't disagree with that. For example, defrauding someone with a smart contract obviously doesn't offer the scammer legal protections.
    - toomuchtodo 5y ago
      Who defines fraud if the contract is contested?
      - thebean11 5y ago
        Depends on which jurisdiction alleged fraud happens in. If the parties are anonymous or in "difficult" jurisdictions, it will be pretty difficult. Fraudulent or not, though, you have a pretty heavy layer of protection as the money has already been transferred, and that money is not easy (close to impossible) to freeze. Any reversal that happens will be necessarily by a threat outside the blockchain, as the governing body can't actually reverse the transaction. It's a second transaction.
        deleted 5y ago
        [deleted]
      - vkou 5y ago
        The courts.
  - tluyben2 5y ago
    I am against smart contracts because we do not know how to write software in that way. I like how they sparked a formal verification Renaissance of sorts but that did not help much either unfortunately (if the premise is wrong, no amount of proof will save you anyway). However, if you let all parties review the smart contract (the source is on the chain, you can check it) and agree with it's workings and sign a 'human' contract saying you do agree and then it goes wrong, I think it should be an out. We do not have proper ways to sue for misbehaving software (it happens all the time but MSFT is climbing higher and higher): this is easier to verify but we are adults here: if you agree to put money in smart contracts, you should have verified the code. And if you think the code is flawed, do not put money: otherwise do not complain afterwards. It is not that hard.
    - Daishiman 5y ago
      > but we are adults here: if you agree to put money in smart contracts, you should have verified the code. And if you think the code is flawed, do not put money: otherwise do not complain afterwards. It is not that hard. That's not how it works. Courts generally operate by ambiguous standard of what reasonable people and reasonable experts can actually do given the state of technology. No reasonable software engineer can tell you that a piece of code is flawless. I don't think courts will agree on a system that has been shown through evidence to be highly flawed.
      - tluyben2 5y ago
        Sure, that will depend on the courts and specific case, as it seems it works exactly like this mostly. But if you inspected the code yourself and you put your money in anyway and it is gone, you might find that the court will not do anything at all. And who can you shout at then, the moon? I am saying that smart contracts are a special case: they are small pieces of code, if they have a bug, it usually causes major damage and, if they run on the eth chain etc and no one took public responsibility for deploying it, there is no one to sue. We have no way to write this type of bombs without flaws as you rightly say and because of the irrevocable damage and the lack of defendant in most cases, these contracts should not be used at all. There are already (many) cases like this, but if I write some software and put it in github, someone else deploys it and people die; that is simply not my fault: it is the deploying person. In normal situations, this is easy to find the defendant here: but on the chain, you won't be able to: anyone can deploy anything and you won't know who it was. So unless you to end open source software, you have no case against anyone.
  - kevincox 5y ago
    Sure, but if you both sign a legal contract to obey the outcome of the smart contract then no one owes anything, because the smart contract says that the $200M is gone. Obviously this doesn't allow you get around laws such as warranties but I don't see why it can't be used if everyone agrees to it.
    - ceejayoz 5y ago
      In some cases, perhaps, but not all. Fraud, for example, isn't legal even if you have a cleverly crafted contract that uses wording tricks to technically be true. I would expect a court to take a dim view of a smart contract that has an obfuscated, non-obvious mechanism for someone to siphon off all the money in an undisclosed fashion. "Code is law", but so's "you can't defraud people".
      - SiliconAlley 5y ago
        Where’s the part where anybody defrauded anybody? This was clearly incompetence that benefited nobody (certainly the developers would rather not have TITAN implode and all of this USDC locked in a contract...). Embarrassing yes. Fraud? Pretty clearly no
        ceejayoz 5y ago
        It's an example of a scenario where you can't sign certain rights away. Not specific to TITAN.
        lupire 5y ago
        How can it be "locked"? Can't they deploy a protocol update to the members of the compute pool?
        acjohnson55 5y ago
        Depends on how you write the contract. If you make a smart contract unilaterally updatable, then it's no longer decentralized and trustless, because people with admin rights can plunder it, or can be extorted, or compelled by authorities to turn over the capital.
- deleted 5y ago
  [deleted]
jMyles 5y ago
> I'm saying the legal system takes authority. A smart contract doesn't avoid or override that authority. On a blockchain, this is absolutely false. The nodes interpret smart contracts. The "legal system" needs to be applied by some kind of oracle or by force to a node operator. Smart contracts are authoritative in their native environment.
- toomuchtodo 5y ago
  > The "legal system" needs to be applied by some kind of oracle or by force to a node operator. Yes, this is usually how it's done. Business logic is not a legal authority.
  - jMyles 5y ago
    This is a strange statement. It's like saying that a forloop isn't authoritative because it hasn't been approved by a court. "Legal authority" isn't a well-defined object in the evaluation of smart contracts. It is certainly not an authority in the sense that the EVM (or, for other blockchains, corresponding VM) code is. Is this really a surprise? Nodes don't evaluate common law, they evaluate smart contracts. That's one of the reasons for enthusiasm for blockchain tech. Not everyone believes in the legitimacy of the state, let alone that the legal system is somehow the proper authority for evaluation of disambigous source code.
    - wins32767 5y ago
      >Not everyone believes in the legitimacy of the state, let alone that the legal system is somehow the proper authority for evaluation of disambigous source code. This is something that I haven't been able to figure out about blockchain enthusiasts. Assuming the blockchain is wildly successful, it poses an inherent threat to the ability of the modern state to collect taxes. Why do blockchain enthusiasts, who already don't think the state is legitimate, not take the logical next step. A potentially existential threat illegitimate parties that have large militaries will end well for the blockchain how? To put it more glibly, how many divisions has bitcoin?
hef19898 5y ago
Contracts, at least in my jurisdiction, can come in all forms and colours. Even purely verbal contracts are valid, in fact. Those are hard to enforce, with nothing written it is always he-said-she-said when it comes to disputes. So I would be surprised if "smart-contracts" couldn't be litigated if push comes to shove. No way avoid the legal system. And that is a good thing.
- mcguire 5y ago
  Depends on how strong the cryptography is, no?
  - brazzy 5y ago
    Depends a lot more on how much you're able to leave no unencrypted evidence.
jessriedel 5y ago
It's common for people to take mechanical/technological steps to make sure agreements will be respected when they know that if they just wrote a contract they could not rely on the legal system to enforce it in a reliable or economical manner. This is not necessarily bad. When I get my car fixed at the mechanic, I am paying for the service but at no time do I transfer ownership to him. One procure we could follow is for him to do the repair, give me my car back, ask for payment, and then pursue me in court if I refuse to pay. But instead, the procedure is that he just keeps the car in his garage until I pay. (If I want to call the police to get my car back, I can, but now I have to explain to them why I'm not paying, and enforcement is much easier.) This forces me to respect the agreement we made - repairs in exchange for money - in a more robust way than any contract ever could.
- jcrawfordor 5y ago
  Most places recognize something called a "mechanics lien" that means the police won't get your car back either. Workmen usually have a legal claim to property that they worked on and have not been paid for. Sometimes it requires specific paperwork (more often with real property, e.g. a contractor can place a lien on your house but usually needs you to agree to it before they start work) but often it's implicit. I guess my point here is that this is a scenario with specific legal backing that goes way back into history, which smart contracts don't really have.
  - jessriedel 5y ago
    Yes, of course the reality and usefulness of this particular mechanism has now been legally acknowledged and incorporated into the law in some (but not all) places. But mechanisms like this arise organically and are put to use long before they are officially recognized. I expect similar things to happen with smart contracts. In other words: things you might call "evading the law" in fact can be useful and then shape the law. If we were to adopt a principle like "anything that looks like it's trying to evade the law must be dismantled", we'd be worse off.
    - jboy55 5y ago
biztos 5y ago
> Smart contracts function – in whole or in part – to give effect to legal contracts. Except when they don't, which is... most of the time? It's true (and I would hope obvious) that a smart contract doesn't play like a legal contract, but aren't the vast majority of them intentionally doing things that are orthogonal to contract law? Or irrelevant to it? You can buy Beeples all day but you still don't own a copyright, and this doesn't seem to be a problem for anyone.

criddell 5y ago

They said "typically", so they aren't saying it's true in all cases, but generally when a person is trying to evade some legal authority, it's probably not for reasons good for society.

thebean11 5y ago
They are trading one legal authority for another, and this is agreed upon up front. Both parties agree that the code is the legal authority before entering into a contract, which is much different from evading authority after the fact. > but generally when a person is trying to evade some legal authority, it's probably not for reasons good for society Reminds me of the "nothing to hide" argument, that only someone trying to commit a crime would need or want protection from the legal system. History paints a different picture.
- cool_dude85 5y ago
  >They are trading one legal authority for another, and this is agreed upon up front. Both parties agree that the code is the legal authority before entering into a contract, which is much different from evading authority after the fact. The parties might "agree", but who cares? If they are in the US, for example, and the two parties have a smart contract that breaks US contract law, one of the parties can file a lawsuit and attempt to get their money back. You can't go to the judge and say "sorry, the code is the legal authority here".
  - thebean11 5y ago
    Yeah I agree with that. Once the contract has executed, enforcement actions can certainly happen in meatspace. But do you not see the difference between: 1. A normal contract (legal or illegal) that requires outside enforcement in the first place to force parties to comply. 2. A smart contract (legal or illegal) that executes itself without outside enforcement and can be overturned later (not literally overturned, but a subsequent transaction can be forced) by meatspace mechanisms
    - 5y ago