Smart Legal Contracts and PDF

Does PDF have a role to play in the world of Digital Contracts, Blockchain and Crypto-Assets?

Neil Pitman, Aquaforest Limited

 Agenda
▪ 1. Contracts and PDF
▪ 2. Smart Contracts
▪ 3. Smart Legal Contracts
▪ 4. The Future: Smart Legal Contracts and PDF

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1. Contracts and PDF

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 Contracts and Smart Contracts
▪ Mesopotamia 2000BC

Mesopotamia 4,000 Years Ago London 1920

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Before Word Processing and Email

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Word and PDF

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Today’s Typical Contract Workflows

▪ 1. A lawyer for one of the parties creates the first draft of a contract in

▪ Word, often based on a template or precedent;

▪ 2. She emails it to colleagues to edit; there is some back and forth via

▪ tracked changes or redlines and email;

▪ 3. She emails it to the counterparty to review; in this case, there is

▪ some negotiation via tracked changes, redlines and email;

▪ 4. She converts the contract to PDF;

▪ 5. Internal approvals are obtained by all sides;

▪ 6. The parties sign the contract, either manually or using an e-signature tool;

▪ 7. The contract is stored in a personal, shared or network drive;

▪ 8. Key dates are tracked manually or via a contract lifecycle management

▪ (CLM) tool.

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 Challenges and Solutions
▪ Challenges
▪ What is in the contracts?
▪ Identifying legal obligations
▪ Transaction / negotiation history
▪ Renewal dates
▪ Solutions
▪ Contract Analytics NLP/AI
▪ Contract Lifecycle Management

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 Contract Analysis
▪ A contract review tool analyses the documents and attempts to tag (and
thus structure) the unstructured data within.

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Contract Lifecycle Management

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Browser-based Collaboration

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 The Role of PDF in Contracts Today
▪ Downstream, final form standard.
▪ Signed
▪ PDF/A
▪ Typically text only, no structured data.

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 “Digital Paper” is no longer enough
“We still approach contracts in much the same way as we have done for
centuries. Decades old software such as PDF and Microsoft Word is used to
create and store agreements in a digital format, but they are basically
digital copies of paper documents. This fails to take advantage of
technology that allows for dynamic data access and streamlined
contracting.”

(Source: UK Lawtech)

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2. Smart Contracts
▪ What is a smart contract?

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Non-Fungible Tokens (NFTs)

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$Millions for a JPEG?

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 Crypto-Assets
▪ Cryptoassets are cryptographically secured digital representations of
value or contractual rights that use some type of distributed ledger
technology (DLT) and can be transferred, stored or traded electronically.
▪ A cryptoasset is any digital asset that uses cryptographic technologies to
maintain its operation as a currency or decentralized application.

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Belvedere Museum Example

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Wallet and Etherscan Example

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DLT and Blockchain

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Smart Contract Code

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 Interplanetary File System (IPFS)

"name": "Hydro Whales Mining Club #811",

"description": “………”
"image": "ipfs://QmR3Te9VzPfApGD1kWVVBXfLvaM58juavQMzrzEhp7ABjG/811.png",
"dna": "8d655fb366a592ad2d17d1ebf1d4c8db93d0fd67",
"edition": "811",
.....

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 IPFS
▪ IPFS is a distributed
system for storing and
accessing files,
websites, applications,
and data.

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3. Smart Legal Contracts

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 Smart Contracts vs Smart Legal Contracts
▪ Smart Contract :
▪ computer code that, upon the occurrence of a specified condition or conditions,
runs on a distributed ledger (or blockchain).
▪ Smart Legal Contract
▪ A legally binding, digital agreement in which part or all of the agreement is intended
to execute as algorithmic instructions.

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 Smart Legal Contract Layers
▪ Visual Representation
▪ Data
▪ Automation Logic

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 Visual Representation Layer
▪ Recognizable as a “Contract”
▪ Clauses, signatures etc
▪ Visually Responsive
▪ Desktop
▪ Mobile
▪ Tablet

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Data Layer

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Data Layer Schema

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Logic Layer
▪ TBC

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Use Cases

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Digital Bill of Lading

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Smart Cargo

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“SmartCo”

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Ownership of Physical Assets

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Parametric Insurance : Crop Failure

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 4. The Future: Smart Legal Contracts and PDF

▪ Machine Readable
▪ Data Rich
▪ Logic / Reference to Logic
▪ Collaborative

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PDF Myths

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 E-Invoicing – EN16931
▪ European standard EN 16931
▪ ZUGFeRD 2.1/Factur-X
▪ PDF/A-3

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Solutions for PDF Smart Legal Contracts

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 PDF Data Options

XML
JSON Attachment XML Attachment Embedded XMP
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Smart Contract Code

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 PDF Package for Smart Legal Contracts

https://www.pdfa.org/pdfpackage-a-lightweight-content-management-platform/
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 Opportunities for the PDF Community
▪ Improve tooling
▪ Attached Files
▪ Metadata
▪ Collaboration
▪ Consider options for logic layer

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Myths Busted!

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 Summary
▪ 1. Contracts and PDF
▪ 2. Smart Contracts
▪ 3. Smart Legal Contracts
▪ 4. The Future: Smart Legal Contracts and PDF

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References

neil.pitman@aquaforest.com

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