The Senate of the state of Arizona has passed a bill relating to the blockchain that would give smart contracts and blockchain signatures legal binding status.
The bill, HB 2417, which was introduced by state representative Jeff Weninger on 6 February, 2017, means that a signature through the blockchain is considered as legally binding. Equally, ‘a record or contract that is secured through blockchain technology is considered to be in an electronic form and to be an electronic record.’
What’s interesting about this bill is the fact that it also pertains to smart contracts. By including smart contracts in the bill, it means that they must now be upheld and enforced under Arizona law.
The bill states:
„Smart contracts may exist in commerce. A contract relating to a transaction may not be denied legal effect, validity or enforceability solely because that contract contains a smart contract term.“
It further adds:
„Smart contract means an event-driven program, with state, that runs on a distributed, decentralized, shared and replicated ledger and that can take custody over and instruct transfer of assets on that ledger.“
The bill’s passing in Arizona’s senate will no doubt be welcomed by analysts who are been following the bill’s progress and what this now means particularly when it comes to court cases.
Many law firms have already been experimenting with smart contracts, which will, no doubt, help to establish future-proof mechanisms for binding agreements that may see them used as evidence in court.