Introduction

- Something about the technological advancement

there exists a lot of potential in technology to revolutionise the way contracts are performed. Smart
contracts provide the platform to do exactly that.

Smart contracts pose a technological change orders of magnitude greater than anything the legal industry has
experienced in the last few decades.

The legal industry makes extensive use of technology for legal research and data storage. And now,
the most recent technological advancement is the application of artificial intelligence which is also
being used in various areas of the legal field as well. Of the various fields, the rise in the use of AI-
powered smart contracts is the talk of the town.

 These are programming codes that are saved and duplicated on the system and are monitored by the
blockchain’s computer network. Blockchain technology is also used for these AI-powered smart
contracts.

AI enables the processing of large amounts of data, while blockchain provides security, immutability,
and decentralised data storage.

These sophisticated technologies cover a wide range of applications, with smart contracts being only
one of them. Now we realise how sophisticated technology has aided in the development of smart
contracts.

With the advent of modern technology and innovation, we are moving towards a more digitised world where
automation is the name of the game. The ideas surrounding the blockchain, artificial intelligence and big data are
revolutionary and are poised to change the way business and human infrastructure operates. Today, these the
concepts are closer to us than one might first think, and stand to indelibly change our lives.

We believe this is the new economy, this is the future, and we believe this is something that is going to boost our
economy.

 blockchain technology is a rapidly growing branch that may offer more efficiency and
efficacy for several business transactions. 

 who want to bridge the gaps between code and law. Ideally, he said, code and law could
work together.

“I’m not going to say it’s easy to advance our thinking,

Maybe, smart contracts can promote a new theory of contracts that would encompass not only
smart contracts, but other contracts as well
Some say that Smart Contracts or blockchain technology is still in infant stages. However many
governmental authorities, commercial entities and financial institutions are already experimenting
with applications of these technologies in existing work processes with intentions to build a modern
 digital infrastructure. Most professionals believe that one day mortgages, loans, insurance and even
global trade will be run on the block chain technology

- What are Smart Contract?

Smart Contracts are the codes that “run on top of the Blockchain and encapsulate the business
logic to be executed when certain conditions are met.”

A smart contract is a self-performing contract whereby the terms of the agreement that exist between a buyer and a
seller are written directly into lines of code. A distributed, decentralized blockchain network contains the code, which
consists of all the agreement terms. In addition to the agreements, the code also consists of information that executes
the transactions and ensures that these transactions are tracked and are irreversible.  

a smart contract is a self-executing contract that is triggered upon the happening of certain pre-determined events.

Today's smart contracts are programs that operate and are stored on a blockchain, that are self-executing and run
when the encapsulated code, which contains certain predetermined conditions for the execution of the agreement,
are met. This process is typically done by following simple "if/when.then." commands

Although so far, there is no concrete legislation which deals with smart contracts, the Telecom
Regulatory Authority of India (TRAI) released a notification in 2018 which briefly defined the term. It
stated that they work on a programmable code which can implement predetermined tasks or rules so as
to check regulatory compliance in advance, in the absence of human intervention. Further, it mentioned
that such contracts are suitable for a DLT (Distributed Ledger Technology) system to formulate a digital
agreement, with certainty (owing to cryptography) that the agreement has been executed in the ledger
of every party to the agreement. -Telecom Regulatory Authority of India, “The Telecom Commercial
Communications Customer Preference Regulations, 2018”, Gazette of India (July 19, 2018).

The key feature of a smart contract is that it is self-performing in nature, i.e. the terms of the agreement
between the parties to the contract are directly incorporated into lines of the code. The code is
contained in a distributed block chain network, and it comprises all the agreement terms. Apart from
the agreements, it consists of information that enables execution of the transactions and makes sure
that these transactions are fully tracked, permanent, irreversible and time stamped.

Every transaction carried out by the smart contract is placed as a block on the platform, which helps in
establishing a clear audit trail, and erasing or wiping- it out is an arduous task

So much of Indian contracting is for show. It’s a way

for parties to tell each other what matters to them
and who the boss is. It’s only when breaches are
egregious and perhaps catastrophically damaging
that people re-read contracts after signing them
 - Modern Day Smart Contract

The main point of difference between a smart contract and a traditional contract is that the former is a
self-executing computer programme, which cannot be tampered with by parties and works on
complicated block chain technology. On the other hand, the latter relies on the performance of the legal
terms agreed upon by the parties, which can be modified at any given parties with their mutual consent
and leaves room for conflicts.

Modern day smart contracts operate on the blockchain, which is a public electronic ledger that creates an immutable
record of transactions by way of a distributed and decentralised network of computers. Each transaction recorded on
this network is entered into an encoded 'block', which is a set of information. Each block can store a certain amount of
data per block, and once a block is filled it will be closed and all following data will be stored in a succeeding block.
Each new block is connected to a previously filled block, forming a chain of blocks, or a blockchain. The entirety of this
data stored creates the electronic ledger that we now know to be the blockchain, an immutable and transparent
public record of information, which may be accessed at any time. Given that contemporary smart contracts operate
on a blockchain, they imbibe some of the properties of a blockchain, including immutability, meaning they cannot be
modified once they have been created.

- Rise in the use of Smart Contract.

Today, it is necessary to upgrade old processing systems for contracting. As a step forward toward
this, we are witnessing an increase in demand for smart contracts in sectors such as banking in
order to get quicker and more effective outcomes. Efficient banking systems will facilitate access
to financing and will enable banks to operate more efficiently. As a result of the rise in demand,
investment and adoption are unavoidable. Additionally, the government is placing a greater
emphasis on resolving the problem of excessive influence in contracting. Smart contracts open up
new possibilities for India by establishing ‘digital identities for people who are not already recorded
in the system

Blockchain technology securely saves all legal papers, ensuring that confidential documents are
not tampered with and that all legal information is unalterable. It provides security by allowing for
the traceability of all papers. As a result, it has become a source of truth for detecting and
contesting contract violations. We can ensure the validity of a contract by implementing the
consensus process, which ensures that no modifications, revisions, or interference are made after
the contract is signed. 

- What is blockchain?

 A blockchain is a digital ledger of transactions that is replicated and distributed throughout the
whole network of computer systems that comprise the blockchain. Each block on the chain
contains a number of transactions, and whenever a new transaction occurs on the blockchain, a
record of it is added to each participant’s ledger. 

As a consequence, the data is not only protected, but can also be cross-checked for length, date,
and temporal components.

- Working of Smart Contracts?

Artificial intelligence creates and executes complex smart contracts by using crucial analysis,
making them more functional. And the more data AI has, the better its forecasts will be. To that
end, when it comes to contract negotiation and determining the best route to reach an agreement,
Artificial Intelligence may analyse prior discussions to determine how parties negotiated in the
past.

They enable the enforcement of a safe and secured transaction between the two parties to the
contract. Further, they ensure that while one party gains something of value from the other party
for some collateral, the other party is the only prioritized party to that specific.They enable the
enforcement of a safe and secured transaction between the two parties to the contract. Further,
they ensure that while one party gains something of value from the other party for some collateral,
the other party is the only prioritized party to that specific.

Further, data protection is ensured through cryptography and the operation of the distributive
ledger system. Every block consists of information and in order to modify that, each block in a chain
will have to be hacked since they are related to each other.

The if-then principle can be explained best by- “If ‘x’ condition is fulfilled, ‘then’ y obligation must be
enforced”. This feature makes smart contracts extremely lucrative for the insurance industry and
the financial services sector. Moreover, creation of smart contracts is easier when there are bare
minimal to none non-operational clauses involved. Since such clauses are ambiguous and leave
room for interpretation, they are unsuitable for smart contracts. They are well suited for cases
where the agreement has mechanical and straightforward clauses, and well defined outcomes”.-
John Ream et al., “Upgrading blockchains: Smart contract use cases in industry”, Deloitte Insights
(June 8, 2016).

Example of Smart Contracts?

A famous example of smart contract usage in the real estate sector is Propy. Propy
incorporated the technology of smart contracts to facilitate real estate contractual
agreements. Here, the owners can list their properties, and interested buyers may navigate
such lists and negotiate online. If a deal is struck, each transactional step is coded on the
blockchain. In fact, Propy has recently taken it to a whole new level by auctioning a real
property in the form of a non-fungible token (NFT).

Smart Contracts have entered the insurance market as well and are in the direction of
revolutionizing the sector. A smart contract based scheme called ‘Fizzy’ was launched by
AXA which is essentially a travel insurance in cases of flight cancellations or delays. The
most useful aspect of such tech-driven schemes is the element of transparency. The claims
made by the insurance beneficiaries and the terms on the website are stored on a
blockchain that is traceable and irreversible. In instances of delays or cancellation, the
contract execution is triggered on its own, ensuring performance. Such initiatives raise
intriguing debates – to what extent can smart contracts affect other kinds of businesses? 

IRCTC
Artificial intelligence systems will be critical for interpreting data from a wide range of sensors and
providing it in precise terms on which smart contracts may operate. Contracts that result in actual
activities (for example, goods delivery) must, on the other hand, interact with robotic agents and
humans. For example, operators and owners of vital energy infrastructure may need insurance
contracts against damaging weather conditions and cyber-attacks. Thus, a smart contract would
need to determine when the payment event will occur.

In a very recent development, i.e. in June, 2021, Gujarat-based ArcelorMittal Nippon Steel (AMNS)
executed a paperless bill discounting transaction in partnership with ICICI bank. This was referred
to as the country’s first domestic paperless bill discounting transaction.

The concept of a smart contract may be traced back to a paper authored by American computer scientist Nick
Szabo in 1996, titled "Smart Contracts: Building Blocks for Digital Markets."1 In the paper, Szabo explores the idea of
embedding certain kinds of contractual clauses in the hardware and software of a computer program, which are
structured in a way that breach of contract would be, possibly even prohibitively, expensive for the breaching
party.2

He explains this concept through the analogy of a vending machine, wherein smart contracts go through the
machine in order to dispense the desired product: to operate a vending machine you would need to input a
command (offer), you would need a certain amount of money (consideration), and then the machine will dispense
the product (acceptance).3 Fundamentally, if you use the same inputs to operate the machine, the same outputs
shall be reached each time. Intrinsically, vending machines are automated machines, and as such, smart
contracts are the automation of its software.

Difference between Traditional contracts, smart contracts and Modern Form of Contracts?
 Thus, we can show that smart contracts have a significant technical advantage over paper
transactions in this area, as the data is never lost. 

he two primary benefits of the self-executing and incontrovertible nature of smart contracts are 'trustlessness'
and efficiency, with the latter being a consequence of the former. The execution of traditional contracts hinges on
the performance of the terms of the agreement by the parties, while an automated smart contract shall not be
executed unless the prearranged terms of the line of code that forms the contract have been met, dispensing
with questions of enforcement of the terms; if the predetermined conditions of the code have not been met, the
contract shall not be executed. Thus, with smart contracts, the question of non-performance doesn't arise, and
the threat of executional disagreement doesn't exist.

Advantages:

Cost, Reliability, quick and direct contact with customers, Fraud Prevention and records management.

mart contracts have many important features, including improved transactional efficiency, cheaper
enforcement, and monitoring costs, and reduced risk. These advantages may lead to reduced
operational expenses, which can be passed on to customers, as well as more time to seek new clients
or opportunities. Because smart contracts reduce counterparty risk, institutions may be able to
conduct business with a broader variety of customers.

once a smart contract transaction is completed and recorded, it becomes irreversible and is connected
to the remainder of the transactions on that chain. Individuals in positions of power who were
previously able to conceal or cover up unlawful activities will now be exposed due to the inherent
transparency of such technology. It will be a significant benefit to society, but there will be resistance
and reaction from those who have been exploiting individuals as a result of their use of immoral
contract conditions. 
IMPORTANT ASPECT

A smart contract, by itself, can’t get information about a “real-world” event by its own design. It can’t send HTTP
requests (on the Ethereum network.) This is done because if a smart contract were to rely on external
information, it opens it up for a point of failure.

For example, let’s say we executed a smart contract for the 2020 Presidential Election. Bob bet Trump wins,
Mary bet Biden– 1 ETH, the winner gets all. IF contracts pulled from real-world events, they would have to
determine which source to use. Let’s say Bob and Mary specified Fox and CNN had to both agree on the
winner. 

Let’s imagine in a hypothetical situation that both news networks disagreed. What would the contract do?

Let’s say someone hacked CNN and FOX for a day and said the losing candidate won. The contract would
execute based on false information. 

Ethereum is a decentralized network, so picking a central point of failure such as a news source, introduces an
Achille’s Heel. 

So, how do smart contracts get around this? They use oracles, like ChainLink. An oracle is a bridge between
the off-chain real-world and cryptocurrency world. 

An oracle is like an on-chain API that is trusted to be queried for smart contract information; they can showcase
price information, weather points, to sports outcomes.
https://iot.taylorwessing.com/legal-challenges-associated-with-the-adoption-of-smart-contracts-in-
the-industry-4-0/

https://www.lexology.com/library/detail.aspx?g=31c4d588-990c-4fdd-bec9-e5506f403dad

https://lawgazette.com.sg/feature/legal-risks-beneath-blockchain-enabled-smart-contracts/

https://freemanlaw.com/legal-issues-surrounding-cryptocurrency/

https://blog.ipleaders.in/white-paper-on-smart-contracts-an-indian-perspective/

https://legaldesire.com/the-indian-road-for-smart-contracts/

https://s3.amazonaws.com/documents.lexology.com/0428cf18-0a3e-4746-a7c1-3a36821ebeb6.pdf?
AWSAccessKeyId=AKIAVYILUYJ754JTDY6T&Expires=1638533280&Signature=jV07SOykbfxPy0LGHN7
p%2Bfmi4uQ%3D

https://vinodkothari.com/wp-content/uploads/2019/06/An-Introduction-to-Smart-Contracts.pdf

https://cryptopotato.com/iota-launches-assembly-a-multi-chain-smart-contract-platform/

https://www.obhanandassociates.com/blog/smart-contracts-in-india/#page=1

https://www.lexology.com/library/detail.aspx?g=31c4d588-990c-4fdd-bec9-e5506f403dad

https://iot.taylorwessing.com/legal-challenges-associated-with-the-adoption-of-smart-contracts-in-
the-industry-4-0/

https://lawgazette.com.sg/feature/legal-risks-beneath-blockchain-enabled-smart-contracts/

CH-2 INDIAN REGULATIONS

hese AI-powered smart contracts are not specified in any Indian legislation as of yet.

Courts on Blockchain and its uses etc. - https://www.managingip.com/article/b1kqlt87g006c7/india-

computer-related-inventions-to-be-tested-on-technical-contribution

Ministry using Smart contracts.

but for a basic concept, they may be derived from one of the notifications issued by the Telecom
Regulatory Authority of India (TRAI) in 2018.

According to the notification, smart contracts are digitally encrypted agreements that are formalised
using cryptography. Smart contracts are intelligent because they operate on the execution of pre-set
instructions while also ensuring regulatory compliance. They also explicitly eliminate any possibility of
human involvement or mistake. All of these processes and procedures are documented and handled
on all of the systems at the same time. As a result, each party may verify the stage at which the
agreement is now operating and whether it has been fully respected or not. The contractual party
benefits from such contracts for a variety of reasons, the most important of which is that even if the
party wants to modify or alter the agreement to his advantage, he cannot do so after it has been
codified.

- Contracts Act

The Indian Contract Act, 1872 ("Contract Act") necessitates the existence of a party's indication of their
willingness to do or not do something, for the purpose of gaining another party's assent for that act or
omission.6 For smart contracts, the language of the self-executing code shall indicate the existence of intention to
contract with another party, and the act of publishing that line of code for a single smart contract on any
blockchain, would amount to the communication of an offer. Next, the assent, of another party, to the terms
outlined in an offer amounts to acceptance of that offer.

7
 For the execution of a smart contract, it is imperative that the other party/ies carry out certain tasks or functions
that the contract necessitates. As such, any party who performs the requisite functions, as outlined by the code
for the execution of the smart contract (be it by way of inputting certain commands in a vending machine), shall
have accepted the offer. Finally, as per the Contract Act, consideration includes any act done for the benefit or
interest of a party, or may be qualified by some detriment or loss suffered by the other party.

 Further, the Contract Act states that, "all agreements are contracts if they are made by the free consent of parties
competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be
void."9 Given that smart contracts may only be executed when the predetermined conditions envisaged and
encapsulated under the code are met, the parties seeking to enter into an agreement under that smart contract
would thus have to have consented to the execution of the terms of the for the code (or smart contract) and thus
would have agreed to enter into that contract.

- After Contracts Act

Essentially, smart contracts offer a framework for negotiating with parties that may or may not know
one another and may also become responsible for risks. While smart contracts are binding under
Indian law, if care is not taken while contracting with another party, the penalties of a failed
transaction must be borne alone, since the legal system lacks an elaborate framework for regulating
smart contracts.

A smart contract may be unenforceable under Indian law in certain circumstances if the consideration
for the contract is not reciprocal. This is possible if the contract is unilateral. However, smart contracts
that lack mutual consideration are still enforced via code. However, a breach of such a contract would
not be considered a breach in Indian courts, as the court would conclude that there was never a
contract in the first place due to a lack of mutual consideration, a critical component of a contract.

While the legality of smart contracts in India permits their use, it does not provide legal protection to
parties involved in the smart contract who become liable or incur damages. Because there is no
regulatory framework in place to govern smart contracts, the law will assist to the extent that the
smart contract falls within the bounds of contract law.
 - Judgment of Mobile Association of India v. RBI

Looking at the validity of cryptocurrencies in India. In March 2020, the Supreme Court under Mobile
Association of India vs. RBI reversed the RBI’s 2018 circular which strictly prohibited all regulated
entities from dealing in or providing services for the facilitation of virtual currencies on the internet.
The Supreme Court said that in the absence of a legal prohibition on the purchase or sale of
cryptocurrencies, the RBI cannot impose excessive limitations on their trading. This was also accepted
by RBI, making the circular invalid. Thus, there is no issue with cryptocurrencies in India.

The importance of this to the smart contract is that, as seen above, any contract to be a valid contract
needs a valid and lawful consideration. As with any other contract, including smart contracts, if you
provide a service or sell a product, you expect to be compensated. One of the primary characteristics
of smart contracts is that they enable rapid payment across the world in the form of cryptocurrency
(which is a form of virtual currency). Thus, the 2018 circular would cause certain barriers, but the
judgment has made a more hopeful pathway for the enforceability of smart contracts. Hence, the
consideration of virtual currency is valid too in India.

- Risk Associated with Smart Contract and legal perspective

- How it will be useful in Indian Context

Insurance plans are well-suited to take advantage of smart contract automation by scripting
certain outcomes to occur if certain criteria are fulfilled. Insurance policies may be made more
broadly available by lowering the cost of issuing them and increasing confidence among parties.
Similarly, the potential advantages of utilising smart contracts to automate portions of the
consumer credit process, such as credit applications, thus increasing customer access to lines of
credit.

here is little doubt that the real world applications of this technology, such as in cases of maintenance of land
records thereby avoiding title fraud, have the potential to automate and streamline processes and systems that
are notoriously difficult to navigate, and perhaps even help lessen the burden of title disputes from our judicial
system. 

- Last para of this Chapter

However, smart contracts come with a plethora of regulatory and policy issues, including problems of jurisdiction
and the potential of fraud arising out of the anonymity of the process of executing a smart contract.

While the theoretical benefits of employing blockchain technology and automating contracting, at least in certain
areas, can't be denied, concerns with such application still exist, and, at the very least, the Indian regulatory
framework would need to be amended and aligned to govern smart contracts.
While the legality of smart contracts in India permits their use, it does not provide legal protection
to parties involved in the smart contract who become liable or incur damages. Because there is no
regulatory framework in place to govern smart contracts, the law will assist to the extent that the
smart contract falls within the bounds of contract law.
CH-3 FOREIGN REGULATIONS

- Last para

Additionally, due to a lack of global coordination among authorities and diverse legal cultures, there
are divergent views on how to best regulate this space. As a result, rules vary by country, depending
on the level of technology and economic development in each country, which may affect the rate of
adoption of such advanced technologies. Considering this in the Indian scenario, India is still a
developing country with less developed technology than other first-world countries, so its ability to
adapt or invest in such advanced technologies will take longer.
CH- 4 Concerns

However, smart contracts may not be a panacea for ensuring compliance with the terms of an agreement, and
come with its own set of problems. For example, several issues may arise due to the inherently inalterable nature
of smart contracts that prevent parties from changing the terms of that agreement once it has been entered into
a block, leaving no room for negotiation of terms after the creation of the contract. Additionally, issues as to
jurisdiction may also arise. Given that blockchains are globally accessible ledgers, a transaction may very well
span multiple geographies and jurisdictions, all with their own interpretation of contract law, and perhaps even
their own laws relating to smart contracts and blockchains. As such, issues of applicable law and appropriate
jurisdiction could likely lead to complications.

certain smart contract characteristics, such as the parties’ potential anonymity may create
complications for customer verification and anti-money laundering regulations that require
verifying the parties to an agreement. These problems may certainly be resolved by mandating
precise technological requirements for the smart contract or the underlying blockchain.

he public is primarily concerned with privacy, data storage, and a new degree of security. There
have been significant issues with exposed data, including the biggest data breaches in history. 

Privacy Issue: Essentially, smart contracts establish confidence via transparency, since users may
see previous participants, whose hashes are included in the blockchain. These sophisticated
technologies have been designed in such a manner that the need for a middleman/party to handle
data and information has been eliminated. This accomplishes the primary objective of protecting
data privacy and gives people complete access and control over their data. The fact that smart
contracts can address privacy concerns will boost public demand for this system. Also, in the
situation of a pandemic and such health threats, paperless online transactions would always be
preferred. 

Additionally, if smart contracts become extensively utilised, there will be a greater number of
post-execution conflicts, since parties may argue whether a smart contract should have been
executed, raising legal problems such as whether the code underpinning a smart contract is
admissible as evidence in court. Additionally, for smart contracts to be broadly accessible and
solve the problem of financial inclusion, they will need to connect with data sources and
government organisations, which introduces a slew of third-party legal concerns. 

Suggesstions and way forward

he lack of public awareness of smart contracts at the district level or among small customers may
have a major impact on their degree of acceptance. At the moment, such technology is in the
early adoption stage of development. However, for mass consumerism to reach its zenith, it must
first be recognised by the populace. Many members of the public are unaware of what it is or the
various services it offers. Knowledge must be disseminated in order for such technology to
develop.

Blockchain technology securely saves all legal papers, ensuring that confidential documents are
not tampered with and that all legal information is unalterable. It provides security by allowing for
the traceability of all papers. As a result, it has become a source of truth for detecting and
contesting contract violations. We can ensure the validity of a contract by implementing the
consensus process, which ensures that no modifications, revisions, or interference are made after
the contract is signed. 

A government-designated certifying authority may acquire an electronic signature only according

to Section 35 of the Information Act. This creates concerns, since it is the blockchain technology
that produces the hash key that will be used to authenticate the smart contract, and there is
 currently no legal authority that sanctions electronic signatures. Section 88A of the Indian
Evidence Act provides that the court presumes the authenticity of an electronic record presented
in court but makes no assumptions regarding the contract’s sender. Thus, if a signature acquired
through blockchain technology is utilised, it will only complicate the acceptability of a smart
contract, since the signature was not collected in accordance with the Information Act. This not
only invalidates the blockchain technology’s encryption mechanism for smart contracts but also
precludes the filing of smart contracts as evidence before a tribunal.

Additionally, regulating the use of smart contracts would need a sophisticated approach to
specifying the kinds of contracts and technology that may be utilised, rather than blanket legality.
Apart from these minor technological details, the law will need to address several fundamental
legal issues relating to smart contracts. 

-  Vigorous commitment is needed to create an elaborate structure to govern the operation of

smart contracts in India.

We need to understand that humans are creatures of habit, and we are innately resistant to
change. However, given the advantages, adoption seems inevitable

The way forward with the implementation of smart contracts in the legal landscape is a road
not yet travelled, but it goes without saying that computer codes would not be able to
demonstrate the entire understanding reached between the parties to the contract. To tackle
this, a hybrid model, assimilating a smart and a traditional contract, can be used, with
precedence being given to the traditional contracts in case of conflict between the two. This
would provide the efficiency of smart contracts, alongside the understanding of a traditional
one. 

The commission said parties could structure their smart contract to include ‘kill switches’ to halt performance of the
code in certain circumstances, for example, where one of the parties terminated the contract following a breach.

The project on smart contracts was announced by the Law Commission as part of its 13th programme of law reform in
December 2017, but was paused pending the work of the UK jurisdiction taskforce, which declared in November 2019
that cryptoassets should be treated in law as property and smart contracts could create legal relationships just as well
as more traditional ones.1

CH-5. Conclusion

While blockchain-based technology has been dubbed the “next big thing” after the internet, it still
lacks the data localisation and border control that the internet is subject to in one way or another.

The applications and advantages of smart contracts are gaining traction in economic and financial
organisations on a daily basis. However, the success of smart contracts will ultimately be
determined by the legal and regulatory problems that must be handled correctly to achieve full
economic advantages.

As smart contracts gain traction, we will almost certainly witness a flood of new legal problems
arising from innovative uses, necessitating more complex, and continuously changing, policy and
case law to enjoy the advantages of smart contracts.

1
https://www.legalfutures.co.uk/latest-news/no-need-for-new-laws-on-smart-contracts-law-commission-says
After conducting a SWOT and pestle analysis on the future of AI-based smart contracts in India,
we determined that, despite the numerous advantages and benefits of smart contracts and their
application in certain sectors, blockchain technology is still in its infancy and will take time to
reach mainstream adoption. And, before embracing the technology, it is necessary to examine the
legal and regulatory implications of the technology and smart contracts before they are accepted
as a legitimate replacement for conventional contracts.

Despite the difficulties associated with implementing smart contracts in India, they will have a
significant effect on the country’s culture and legal system. It provides a reliable means of
establishing identification for all parties and identifying corruption and fraud, which are persistent
issues in these transactions.

we can conclude that additional political efforts are required to ensure a bright future for the use
of smart contracts in India. There is a possibility of a realistic approach to smart contracts in the
future with multiple research efforts and government support. (POLITICAL effort required)

Though we have seen some progress in support and research for AI technologies, there are no
steps taken upfront to widen the scope of AI-powered smart contracts in India. RBI’s willingness
to give full assent to cryptocurrencies is lacking. Though there is no ban on it, there is no proper
structure for it yet and cryptocurrencies play a large role as considerations in smart contracts, as
we have seen before.