Buying a house is likely to become cheaper and easier as the government agrees granting smart contracts valid in law.
The move signals the end to the stranglehold lawyers and other legal professionals have over drafting contracts – with conveyancing the most likely candidate to disappear.
Smart contracts are legally binding agreement between two or more parties written into a secure database called a blockchain.
The blockchain is open to public view and is made up of transactions that cannot be changed without permission of the people signing the contract.
The process is based on templates and is completed much quicker and without the cost of lawyers.
The surprise announcement came from Sir Geoffrey Vos, chancellor of the High Court, who praised the initiative as “a watershed for English law and the UK‘s jurisdictions. No other jurisdiction has attempted anything like it.”
He went on to say legalising smart contracts was “not what they would like the law to be, but what they believe English law to be now.”
“Other jurisdictions have addressed the problem differently, starting with regulations and remedies, and worked backwards . There is no point introducing regulations until you understand the legal status of the asset class you are seeking to regulate.”
Vos also announced that UK courts would recognise cryptoassets, such as Bitcoin, as property as they are blockchain-based too.
“The worldwide smart contract market is expected to reach $300 million by 2023 and the World Economic Forum predicts 10% of global GDP will be stored on the blockchain by 2027,” said Jenifer Swallow, director of the Lawtech Delivery Panel, a group promoting legal technology solutions.
“It is great to see the adaptability of our common law system to fast-changing technology, demonstrated in this landmark legal statement from the UK judiciary.”