ISSUE 2: Are the smart contract binding on the parties?

The terms of the contract were already fixed by the claimant and the same was not
negotiated therefore the contract so formed was a standard form of contract as “Standard
terms are provisions which are prepared in advance for general and repeated use by one
party and which are actually used without negotiation with the other party.”1

The claimant sent an email to the respondent to generate the contract by creating his
signature key, but he nowhere mentioned about the terms of the contract also he asked the
respondent to link his bank account for automatic debit but he nowhere mentioned for
what the automatic debit is for.2

Also the automatic debit without the authorization of the respondent is a term which of
surprising nature and the same is not effective as a term can be surprising by the virtue of
its content.3

The language and presentation used by the claimant for the automatic debit of payment
was so wage that it was not clear as to what it relates to therefore that term in the contract
is not legally valid.4

The clause of automatic debit of payments without the consent of the respondent and giving the
claimant unilateral advantage is abusive and unconscionable term.5

The contra proferentem rule of interpretation which states that “any clause considered to be
ambiguous should be interpreted against the interests of the party that requested that the clause is
included”6 therefore the clause of automatic debit of payment as to what was not clear and the
respondent was of the belief that automatic debit is for the washing machines which he ordered.

Common intention of both the parties was missing while concluding the contract as the
respondent communicated to the claimant that he does not understand what blockchain and smart
contracts are and the claimant was aware of these type of contracts and its implication7. Also “A
contract shall be interpreted according to the common intention of the parties”8. a search to
determine if a contract exists must be a search for the intention of the parties9

1
Art. 2.1.19
2
Exhibit C4
3
Art. 2.1.20 of UNIDROIT
4
Art. 2.1.20(2) of UNIDROIT
5
Off Cmt 1 to Art 7.1.6, p 233. See further below, Art 7.1.6 paras 1, 8, 1
6
Art. 4.6 of UNIDROIT
7
Witness Statement by the Respondent
8
Art. 4.1 of UNIDROIT
9
RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG [2010] UKSC 14, [45], [2010] 1 WLR 753,
777
 “Terms and expressions shall be interpreted in the light of the whole contract or statement in
which they appear”10, which means that terms and expressions used by one or both parties are
clearly not intended to operate in isolation but have to be seen as an integral part of their general
context. Consequently they should be interpreted in the light of the whole contract or statement
in which they appear.

Therefore the smart contract is not binding on the respondent as the terms were not clear also
consensus ad idem was absent.

State of South Australia v The Commonwealth, where he said:

An agreement deliberately entered into and by which both parties intend themselves to be bound
may yet not be an agreement that the courts will enforce. The circumstances may (p. 260) show
that they did not intend, or cannot be regarded as having intended, to subject their agreement to
the adjudication of the courts. The status of the parties, their relationship to one another, the
topics with which the agreement deals, the extent to which it is expressed to be finally definitive
of their concurrence, the way in which it came into existence, these, or any one or more of them
taken in the circumstances, may put the matter outside the realm of contract law.11
As regards ambiguous provisions, Lücke, in noting that resort may be made to extrinsic
evidence, points out that ‘the Courts have felt free to ignore such clauses when their meaning is
hidden or obscure’.12He gives the example of Ellison v Bignold13
Waddams has suggested some doubt as to the effect of such a clause in a case where it is
‘unexpectedly lurking in the fine print of a standard form contractual document’14. Some
commentators believe that at least where the parties are not of equal bargaining power, such a
provision should be dealt with in the same manner that exclusion clauses are construed15

10
Art. 4.4 of UNIDROIT
11
(1962) 108 CLR 130, 154
12
Lücke, ‘The Intention to Create Legal Relations’ (1970) 3 Adel L Rev 419, 421
13
1821) 2 Jac & W 503, 37 ER 720
14
Waddams, The Law of Contracts (6th edn, Canada Law Book, Toronto, 2010) para 149. Waddams suggests that in
such a case the court might take account of the promisor’s conduct as well as the oral and written expressions in
order to find a promise on which the promisee might reasonably rely. Alternatively, in his opinion, the court might
attack the clause on the basis of unconscionability. See also McCamus, The Law of Contracts (2nd en, Irwin Law,
Toronto, 2012) 116.
15
Smith, Atiyah’s Introduction to the Law of Contract (6th edn, Clarendon, Oxford, 2005) 99–100.
‘In a written document prepared by one party it may raise a question of misrepresentation or
mistake or overreaching; to avoid such questions it may be read against the party who prepared
it.’ Lasker J also made this point in Dunhill Securities Corporation v Microthermal Applications
Inc16 where he stated: ‘In passing, it may be noted that the letter of intent … was drafted by the
plaintiff, and if any ambiguity arises—although none does—it is to be construed against the
plaintiff17.

16
308 F Supp 195 (1969).
17
308 F Supp 195, 197 (1969)