Blockchain Technology and Smart Contracts: Transforming Contractual Relationships in the Digital Economy

Abstract

Blockchain technology has emerged as a significant technological innovation capable of transforming traditional approaches to contractual transactions. One of its most important applications is the development of smart contracts, which are computer programs designed to automatically execute predefined terms when specified conditions are satisfied. Smart contracts can reduce transaction costs, improve transparency, minimize dependence on intermediaries, and facilitate automated commercial relationships. However, their increasing use raises complex legal questions concerning contractual formation, consent, enforceability, interpretation, error, modification, jurisdiction, liability, and dispute resolution. This article examines the relationship between blockchain technology and traditional contract law and analyzes the legal challenges associated with smart contracts. It argues that technological execution does not necessarily correspond to legal enforceability and that the legal validity of a smart contract must be assessed independently from its technical operation. The article proposes a hybrid legal-technical framework combining conventional contractual principles with technological safeguards. It further examines the role of human intervention, digital identity, oracle mechanisms, and dispute-resolution systems. The study concludes that smart contracts can complement traditional contract law but should operate within a legal framework capable of addressing technological complexity while preserving established principles of fairness, consent, and accountability.