September 24, 2018

September 24, 2018

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If There Are No Minds, Can There Be A "Meeting Of The Minds"?

Old school lawyers are familiar with the notion that "the failure to reach a meeting of the minds on all material points prevents the formation of a contract even though the parties have orally agreed upon some of the terms, or have taken some action related to the contract." Banner Entertainment, Inc. v. Superior Court  (Alchemy Filmworks, Inc.)  62 Cal. App. 4th 348, 359 (1998).  Even as technology advanced, the idea that a contract required an agreement remained.  Thus, California's Uniform Electronic Transactions Act (aka UETA) defines a contract as "the total legal obligation resulting from the parties’ agreement as affected by this title and other applicable law."  Cal. Civ. Code § 1633.2(d).

Time and technology, however, wait for no one.  The advent of blockchain technology has birthed a new kind of contract, a so-called "smart contract" and so the definition of "contract" may soon change.  In February, Assembly Member Ian Calderon introduced a bill, AB 2658, that would amend the UETA definition of "contract" to include a "smart contract".  The bill defines a "smart contract" as follows:

“'Smart contract' means an event-driven program that runs on a distributed, decentralized, shared, and replicated ledger that can take custody over, and instruct transfer of, assets on that ledger."

Notably this definition avoids any mention of an agreement, or parties, or consideration.  

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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...

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