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Full-Text Articles in Contracts
The Limits Of Smart Contracts, Jens Frankenreiter
The Limits Of Smart Contracts, Jens Frankenreiter
Ira M. Millstein Center for Global Markets and Corporate Ownership
This essay investigates the potential of smart contracts to replace the legal system as an infrastructure for transactions. It argues that (contract) law remains relevant for most transactions even if they are entirely structured by way of smart contract. The reason for this is that the power of smart contracts to create and enforce obligations against attempts by the legal system to thwart their execution is limited. These limitations are most relevant for obligations to perform certain actions outside the blockchain, but also apply to other obligations contingent on facts outside the records stored on the blockchain.
State Contract Law And Debt Contracts, Colleen Honigsberg, Sharon Katz, Gil Sadka
State Contract Law And Debt Contracts, Colleen Honigsberg, Sharon Katz, Gil Sadka
Ira M. Millstein Center for Global Markets and Corporate Ownership
This paper examines the relationship between debt contracts and state contract law. We first develop an index to evaluate whether each state’s law is favorable or unfavorable to lenders. We then analyze how the contract terms, the frequency of covenant violations, and the repercussions of covenant violations vary across states. We find that cash collateral is most likely to be used when the contract is governed by law that is favorable to debtors and that out-of-state borrowers who use favorable law pay higher yield spreads. In addition, when the law is favorable to lenders, there are significantly fewer covenant violations, …