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Abstract

This essay examines the challenges that smart contracts pose for contractual interpretation. While smart contracts are often viewed as unambiguous because they operate through deterministic computer code, disputes may nevertheless arise where the outcome produced by the code diverges from the parties’ understanding of their agreement. The essay argues that these disputes are not adequately addressed by treating code as a definitive expression of contractual intention or by adopting the ‘reasonable coder’ standard proposed by the United Kingdom (‘UK’) Law Commission. The reasonable coder standard is theoretically incoherent because it lacks alignment, generality, and reviewability and therefore cannot perform the descriptive and normative functions served by the reasonable person standard. Thus, this standard should be discarded entirely. Interpretation should continue to be governed by the reasonable person standard, while relaxing the evidentiary constraints imposed by the parol evidence rule. By permitting greater reliance on contextual materials, including pre-contractual negotiations and subsequent conduct, courts can more accurately identify the bargain the parties intended to conclude without having to invoke a conceptually unstable standard.

Digital Object Identifier (DOI)

10.55496/FKXX3521

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