The Legal Nature of Smart Contracts

Blockchain's smart contracts—self-executing, code-driven agreements—challenge traditional contract law by introducing immutability and coding vulnerabilities. This chapter examines whether such errors constitute breaches of contract, analyzing their classification and consequences under common and civil law frameworks. It explores the intersection of blockchain, AI, and contract law, assessing how principles like good faith, consideration, and anticipatory breach apply to automated agreements. The chapter evaluates the EU AI Act and Directive 2019/770, identifying gaps in addressing oracle failures, defective performance, and liability—especially in hybrid AI-blockchain environments. Through case studies, it argues for legal adaptation to align smart contracts with contractual intent, ensuring accountability and trust in automated systems.