Smart Contract on Blockchain
Smart Contract – Tool for Facilitating Business in this modern-day business, technology has been put to be used more and more, for instance a transnational trade and supply chain, removing the bank or financial institution of the picture.
The smart contract, one of the mentioned technologies, will facilitate the business operation because the seller will be able to deliver the goods in any way and the delivery information will be the smart contract conditions to launch the product to the buyer. Input of such information is also much convenient such as scan barcode, QR code, or intact ship to the product to let the smart contract recognize the payment condition is being fulfilled.
In comparison to the typical e-commerce transaction where the buyer buying product from the available service platform that the seller displays their products and services and the platform will hold on to the payment when there is transaction until delivery of product to the buyer then the money will go to seller. This typical e-commerce transaction still has the intermediary and involving of discretion to certain level unlike the smart contract that done and execute without any intermediary. Another example, an insurance business, as the nature of its operation is the fulfilment of contract conditions to be eligible to compensation, any occurrence of the agreed event and input of data into the smart contract system will trigger the payment of compensation agreed such as insurance of delay flight, where the flight timetable is in the computer system any delay from what schedule is, will trigger the compensation procedure to the insured or beneficiary without having to go through complaint process.
Unlike the centralised system that gather all data under one centre, blockchain is a decentralised information distribution network stored in the block and shared other users that can enter the block through input of password. The network will check for any input or change of information of the block and update that to the next block and chain the new and old one together ensuring it to be connected, shared and distributed to the network. Once the information is blocked together into chain, it is irreversible.
Blockchain is a network system that is an optional approach in doing business, non-application will render to non-benefit to business or at most can be used as irreversible recording system. However, without smart contract, there could be issues of time and parties making offer and acceptance as there is no human involving.
Blockchain is an applied technology that is an additional tool to boost a business, whereas smart contract is one of blockchain functions to execute according to the agreed clauses in the contract and fulfilment of the agreed clause will render to the predicted result either transfer of money or deliver of goods according to what parties agreed. Smart contracts boost the speed, efficiency and ensure accuracy according to the terms of the contract with absolute transparency, trust and security done through blockchain network. As such, it saves both time and expense.
Under the principle of law, a contract form when there is a proposal and acceptance of parties with the intention to create legal relation and be bound by the obligation arise of the agreed expression of intention where, in some agreements, certain form of proof of such agreement is required by th law. A smart contract is an electronic contract where parties create conditions or clauses set up through coding instead of paperwork and record of such electronic contract on the blockchain network system.
The parties to contract will set forth the conditions aim to achieve in advance and upon the completion of such aim the contract will automatically complete the process of transaction without any assist from any third party. The Thailand Civil and Commercial Code did not mention of the electronic contract form but under the Electronic Transaction Act recognised the online offer and acceptance done online including binding power, rights, duties, liabilities and obligation of engaging of online contact. With its latest amendment, the contract done on the information exchange machine with a person or machine-to-machine is legitimately recognised. Therefore, the smart contract setting with no human involving in the process done on the exchanging information machine to another machine is under the electronic transaction recognition.
Under the legal interpretation, the time of contract formation take effect when the information of the offer is being input into the network system of the receiver checked through timestamp appear on the transaction. As the contract is formed online, the place of the contract is hard to identify which affect the jurisdiction of competent court. The US court introduces the ‘Long Arm Jurisdiction’ for the court to have the competency upon perpetrator resides and operates outside the state where the place of cause of action is outside of the state. If the fact appears in accordance with minimum contact principle and relative considerations and the perpetrator intents to be bound in such transaction done in the state and be benefit of such transaction within the state and regardless of whether the information in put is the information that the perpetrator want to contact or exchange with others on the internet or not, all these will be considered under the ‘Long Arm Jurisdiction’ which should be reviewed along with Stare Decisis Principle. In addition, under the UNCITRAL, it indicates the place that the sender’s workplace and the receiver’s workplace is the formation of contract place.
Therefore, the competent court will be the premises local court of the sender’s or receiver’s workplace or the domicile of the sender or receiver in which Thai law has not yet introduced any legislation on such matter