A “smart” legal contract is a legally binding agreement that is digital and able to connect its terms and the performance of its obligations to external sources of data and software systems. The benefit is to enable a wide variety of efficiencies, automation, and real time visibility for lawyers, businesses, nonprofits, and government. The potential applications of smart legal contracts are limitless. Although the operation of smart legal contracts may be enhanced by using blockchain technology, such as by securely sharing contract data among a business network, smart legal contracts can operate using traditional software systems without blockchain. A central goal of Accord Project technology is to be blockchain agnostic.
A smart legal contract consists of natural language text with certain parts (e.g. clauses, sections) of the agreement constructed as machine executable components. The libraries provided by the Accord Project enable a document to be:
- Structured as machine readable data objects; and
- Executed on, or integrated with, external systems (e.g. to initiate a payment or update an invoice)
While the Accord Project technology is targeted at the development of smart legal contracts, the open source codebase may also be used to develop other forms of machine-readable and executable documentation.
Smart legal contracts should not be confused with so-called “smart contracts”, which are scripts that necessarily operates on a blockchain system. Smart contracts may form part of a smart legal contract or smart document but do not represent the agreement in its entirety. For example, a smart legal contract may include an on-chain smart contract script that is triggered to transfer a digital asset between counter-parties. Equally, a smart contract may have nothing to do with a legally binding agreement. For example, a smart legal contract may not use a blockchain system at all, such as where an agreement triggers a Stripe payment.
- Contractual agreements sit at the heart of any organization, governing relationships with employees, shareholders, customers, suppliers, financiers, and more. Yet contracts today are not capable of being managed as the valuable assets they are. Currently, a contract exists as a static text documents stored in cloud storage services, dated contract management systems, or even email inboxes. Often these documents are Word files or PDFs that can only be interpreted by humans. A smart legal contract, by contrast, can be interpreted by machines. This enables a host of beneficial functionality, including making contracts:
- Searchable —
- Analyzable —
- Real-time —
- Integrated —
Consequently, contracts are transformed from business liabilities in constant need of management to assets capable of providing real business intelligence and value.
The Accord Project is a non-profit, member-driven organization that builds open source code and documentation for smart legal contracts for use by transactional attorneys, business and finance professionals, and other contract users. Open source means that anyone can use and contribute to the code and documentation and use it in their own software applications and systems free of charge.
The purpose of the Accord Project is to establish and maintain a common and consistent legal and technical foundation for smart legal contracts. The Accord Project is organized into working groups focused on transactions: supply chain, financial services, intellectual property, venture and token sales, real estate and construction; and also on dispute resolution. The transactional working groups are assisted by the Technology Working Group, which builds the underlying open source code and specifications to codify the knowledge of the transactional working groups. More details about the internal governance of the Accord Project are available here.
The working groups have calls at least once a month and use the Accord Project’s Slack group chat application (join by clicking here) for discussion. The dates, dial-in instructions, and agendas for the working groups are all listed in the Project’s public calendar and typically also in working group’s respective slack channels.
A primary purpose of the working groups is to develop a universally accessible and widely used open source library of modular, smart legal contract and smart clause templates and models that reflect input from transactional attorneys and other experts. Smart legal contract templates are built according to the Project’s Cicero Specification.
Members are expected to at least provide some feedback into the templates and models relevant to a particular working group. You can immediately get started contributing smart legal contract templates and models by using the Accord Project’s Template Studio.
Another purpose of the working groups is to use and help develop an easy-to-use programming language for building and executing smart legal contracts called Ergo. The goals of Ergo are to be accessible and usable by non-technical professionals, portable across, and compatible with, a variety of environments such as SaaS platforms and different blockchains, and meeting security, safety, and other requirements. You can use the Accord Project’s Template Studio to create and test your smart legal contract models and run them on other software systems.