Smart Contract Templates: foundations, design landscape and research directions
Christopher D. Clack Centre for Blockchain Technologies Department of Computer Science University College London
Vikram A. Bakshi Investment Bank CTO Office Barclays
August 4, 2016
Lee Braine Investment Bank CTO Office Barclays
In this position paper, we consider some foundational topics regarding smart contracts (such as terminology, automation, enforceability, and semantics) and define a smart contract as an agreement whose execution is both automatable and enforceable. We explore a simple semantic framework for smart contracts, covering both operational and non-operational aspects. We describe templates and agreements for legally-enforceable smart contracts, based on legal documents. Building upon the Ricardian Contract triple, we identify operational parameters in the legal documents and use these to connect legal agreements to standardised code. We also explore the design landscape, including increasing sophistication of parameters, increasing use of common standardised code, and long-term academic research. We conclude by identifying further work and sketching an initial set of requirements for a common language to support Smart Contract Templates.
The aim of Smart Contract Templates  is to support the management of the complete lifecycle of “smart” legal contracts. This includes the creation of legal document templates by standards bodies and the subsequent use of those templates in the negotiation and agreement of contracts by counterparties. They also facilitate automated execution of the contract and, in the event of dispute, provide a direct link to the relevant legal documentation.
The templates and agreements may (or may not) be agnostic to the method by which a contract is executed – that is a design choice for the template issuer, counterparties, network, etc. The intention is to interface with a wide range of execution platforms. Smart legal contracts could potentially be executed as software agents operating on distributed ledgers (such as Corda , Ethereum , Hyperledger , etc.).
Here we aim to make a practical contribution of relevance to financial institutions. We consider how contracts are written, how they are executed, how they are enforced, and how to ensure that the execution of a contract is faithful to the meaning of the legal documentation. We discuss these issues using reasonably straightforward language, so that it is accessible not only to financial institutions but also to lawyers, regulators, standards bodies, and policy makers. We hope that the issues and views raised in this paper will stimulate debate and we look forward to receiving feedback.
Acknowledgements: We would like to thank Clive Ansell (ISDA), Ian Grigg (R3) and Darren Jones (Barclays) for their helpful feedback.