Generating and adjudicating digital legal agreements using Ethereum smart contracts

Abstract

Across the world, countless legal agreements are drafted, signed, and disputed every day. In most cases, the drafting process consists of costly and lengthy revisions of paper-based legal agreements. Furthermore, once finalized and signed, these legal agreements are hard to track, manage, and arbitrate, as there is no standard system for storing and sharing paper-based legal agreements. Regardless of their purpose, these legal documents must be carefully managed and approved by teams of lawyers for all parties listed in the agreement, resulting in lengthy face-to-face meetings, and in the case of breaches, in-person disputes over resolutions. In this thesis, we designed and implemented a novel blockchain-based alternative for generating, tracking, managing, and adjudicating legal agreements using Ethereum smart contracts. Through a front-end web-app, users can piece together common contract clauses with custom parameters to generate their own natural language legal agreements. Our interface then automatically creates equivalent digital smart contracts representing these parameters and clauses, deploying the smart contracts as permanent records onto the Ethereum blockchain. These smart contracts are formally verified with various techniques to ensure that they reflect the intents of the drafted contract and are free from execution vulnerabilities. To hold violators accountable, breaches by any signatory of the contracts can then be arbitrated digitally using secure voting by external arbiters. These violators can then be subject to monetary penalties paid in digital Ether tokens for breaching the agreement.