Smart contracts - the new form of the legal agreements

Today we are witnesses an explosion of online business, developed on the internet – a special environment that requires own resources and tools and it is governed by specific rules. In this context, a new type of technology has been developed – the distributed ledger system, which allowed the creation of a new form of the agreement - the smart contracts. Smart contract is the next step forward in the process of digitalized contracts, after using the PDF documents with electronic signatures, and it favors the businesses to be carried out completely automatically, without the need for human intervention, and to gain greater efficiency and reduction in costs. This paper will try to provide the answers to several questions, such as: what is a smart contract?; how smart contract will be used?; how smart contract will be enforced?; etc. Moreover, it will be emphasized the advantages of smart contract and the new developments such as “Ricardian” contracts representing more efficient and transparent agreements that can be drafted and enforced on platform. Most important issue of this paper consists in analysis of legal framework of smart contracts using the basic principles of contract law combined with blockchain regulations, taking into account changing the paradigm from “code is law” to “law is code”.