Did you feel the earth shift overnight?
The first "smart" contract transaction is monitoring the sale and shipment of 88 bales of cotton from Texas to China through financial partners in Australia and the US. Payment will be made automatically when all conditions of sale have been satisfied without human intervention.
Blockchain technology, the Internet of Things and digitally intelligent transactions will radically alter the nature of commercial interaction and the lawyers who make their living from it.
The use of IoT in the Brighann Cotton trade involves a GPS device that tracks the geographic location of the goods in transit. Once the goods, which were shipped on September 14 and are still being transported at the time of writing this story, arrive at its final destination in Qingdao, the smart contract will automatically trigger the release of funds.
The impact on law and lawyers should be obvious. The terms of contract execution are embedded in the transaction itself and the instantaneous transfer of data concerning the conditions of sale make enforcement, and adjustment of terms, automatic.
Michael Eidel, the executive of the Commonwealth Bank of Australia responsible for cashflow and transaction services, stated:
Peter Hunn, CEO of Clause whose technology empowered this ground breaking transaction, observes:
Notably, this is distinct from a blockchain-based ‘smart contract’ — where the use of the term ‘contract’ is a misnomer (also see the comments from Vitalik Buterin ). The supply agreement linked to an IoT platform to draw in humidity and temperature data to monitor breach conditions and provide dynamic pricing. The latter provides a means for legal contracts to update and provide a real-time state.
Can we even get our minds around the potential this development portends?
We can if put our minds, and efforts, to it. Those who are innovating the legal services industry are already working hard to do so.
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