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Contrary to common ones, smart contracts operate on blockchain-based technologies, denoting that there is no demand for a middleman to execute programmed algorithms. Allowing to avoid expensive court systems, smart contracts are much more affordable, so more P2P operations can be administrated by contractual mechanisms rather than trust deals. This is one of the main advantages of hybrid smart contracts (further mentioned as HSC) over common ones.
Contractual agreements between enterprises domiciled in opposite corners of the globe are often quite difficult, as applying to the separate court systems that have not a lot in common together is costly, and as a rule, the court mechanisms of one country have bounded authority over foreign entities. HSC do not feature this disadvantaging aspect; they don’t take the issue of citizenship into the consideration at all.
Implementing common contracts via the court systems does not only cost a fortune but also brings some confusion. There will always be a possibility that attorneys-at-law find some hidden way-outs that cancel the entire contract. Even when all terms are satisfactory, the parties still depend on their authority’s goοdwill to keep on guaranteeing that the contractual agreements is realized as expected.
The bright example of this use case of HSC is the mοratorium on evictiοn in the USA and other countries that recently took part. Leaseholders and tenants entered agreements under the condition that if renting fee was not repaid, the owner of the property would have the legal right to apply to the court and evict a tenant. This action undertaken by authorities around the world efficiently canceled practically all rental agreements that were in force at that moment.
This amendment didn’t only change the odds for the renters who could not repay their rents, it also canceled arrangements between dwelling owners and residents who had the payment capacity. Even those residents who could repay would not be subjected to forcing to vacate a property, meaning that some of them chose not to repay either. In this example, it is understandable that contractual agreements that can be destroyed at any time do not look beneficial in comparison with HSCs.
Shortly, common legit contracts will be changed by HSCs, as they operate more quickly, are more effective, and feature less vulnerability to legal escape clauses. Hence, the main benefits of hybrid smart contracts are that they are less costly and can reach internationally just as smoothly as at the local level.
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The international company Eternity Law International provides professional services in the field of international consulting, auditing services, legal and tax services.