What are Smart Legal Contracts?
Smart Legal Contracts (SLCs) are natively digital legal agreements with embedded counterparty neutral automation that executes operational tasks and enforces agreement terms.
SLCs simplify contract fulfilment for signatories. Hunit’s approach, validated by key UK regulators, combines legally compliant blockchain-based automation with natural language contracts. This integration creates court enforceable agreements that interact and guide parties towards accurate fulfilment.
Hunit’s Web3 platform turns natural language agreements into Smart Legal Contracts that fulfil their agreed terms, interacting with counter parties and external systems in real time while generating legally certain records. AI assisted authoring tools linked to a growing library of integrations make SLCs easy for lawyers and signatories.
Smart Legal Contracts are a certainty and represent a seismic shift in law
The Ministry of Justice of the United Kingdom has created a specialized body, the Jurisdictional Task Force, to prepare the English and Welsh jurisdiction for the use of SLCs.
As the most important international jurisdiction (underpinning approx. 40% of international corporate transactions globally), the Master of the Rolls (the second highest position in the UK judicial hierarchy) believes that soon ‘trillions’ of SLCs will be signed per year.
Hunit performed customer focus groups with legal professionals across 6 countries in firms representing 10s of thousands of lawyers. We found a unanimous belief in our interviewees that the future of law is natively digital.
Don’t confuse Smart Legal Contracts with Smart Contracts
Smart Legal Contracts
▪ Purpose: create counterparty-neutral contract automation embedded in the legal agreement itself
▪ Status under law: a fully enforceable, comprehensive treatment of the matter governed by the legal agreement
▪ Compliance: Include features that allow for full compliance with legal and regulatory frameworks such as title law or corporate code
▪ Flexibility: Using the judicial system as a backstop, SLCs incorporate features that allow for self-enforcement, task automation and the underlying agreement itself to be paused or amended to meet evolving business environments
▪ Written by: Legal professionals
Smart Contracts
▪ Purpose: eliminate counterparty risk in anonymous decentralized finance transactions
▪ Status under law: none (or rarely) - the first and final arbiter of truth is the smart contract’s code
▪ Compliance: Non-compliant with basic legal and regulatory framework such as title law or corporate code (i.e. a court ruling or injunction cannot be enforced without access to the specific ‘private key’ for the digital assets in question)
▪ Flexibility: none - fatalistic by intention due to inability to enforce terms in a legal setting
▪ Written by: Technologists
Smart contracts are critical to the function of the decentralized finance sector - but their technological base is unsuited for use in the legal sector
1) Foundational concepts
Video 1 of the Hunit's Overview of Smart Legal Contract technology and use under English law
Blockchain and smart contracts (not smart legal contracts) explained
Presented by Aaron Powers, Hunit's CEO and Co-Founder.
2) What are smart legal contracts?
Video 2 of the Hunit's Overview of Smart Legal Contract technology and use under English law
Key information and developments in the Smart Legal Contract space.
Presented by Aaron Powers, Hunit's CEO and Co-Founder
3) Smart legal contract use in regulated client services
Video 3 of the Hunit's Overview of Smart Legal Contract technology and use under English law
Guidance and best practices for the use of Smart Legal Contracts by SRA regulated service providers
Presented by Aaron Powers, Hunit's CEO and Co-Founder
4) Potential impacts of smart legal contract use
Video 4 of the Hunit's Overview of Smart Legal Contract technology and use under English law
An informed, but speculative look at what’s on the horizon
Presented by Aaron Powers, Hunit's CEO and Co-Founder
Fulfilling a contract is fragmented and ad hoc, resulting in significant hidden costs. On average, companies fail to capture 9.2% of potential revenue and $2.5 trillion is left in unrealised global GDP.
Most contract fulfilment is done with email and reminders. Current solutions like contract lifecycle management are applicable to a subset of enterprises and benefit one party in a contract – silos remain, and counterparties may be using rudimentary systems that fail accurate fulfilments.
What can an SLC do in the “real-world”?
▪ Move and monitor funds- In the global banking system as well as on chain
▪ Enforce + report compliance - Only allow ownership by investors that meet specific criteria investment class
▪ Delivery-vs-payment - Automate closings and issuances for both new and secondary offerings in any market
▪ Perform governance - Automate triggering of voting procedures as needed
▪ Report structured data - Enable portfolio management of private market investments – end PDF reporting
▪ Connect to external data - Connect to a wide variety of APIs to incorporate data into performance of contract
▪ Enforce title law - Any assets recognised under law must respect court rulings
▪ Enforce movement of ownership - Critical to pre-planned remedies and shareholder agreements (tag/drag)
▪ Call upon service providers - Activate and manage the use of external services in the performance of an agreement