A guide to Non-Fungible Tokens (NFTs), 2023 - Flipbook - Page 29
The exact requirements of consumer legislation will depend on the context
of any NFT sale, such as whether it takes place online or offline, see Practice
Note, Consumer Contracts: which rules apply? However, some of the potentially
applicable provisions of UK consumer law and their interaction with NFT
products are examined further below.
Transparency & fairness
In any contract between a trader and a consumer, all written terms
must be transparent and fair.
As smart contract natural language terms and source code terms are likely to
be deemed to be “in writing”, meeting the requirement of transparency may be
challenging. Source code is the language that is inputted into computer systems
to create computer programs, encompassing forms such as JavaScript or
HTML. This is likely not to be easily intelligible to the average consumer without
previous training or education in coding, so traders will need to take additional
steps to give adequate explanation within a natural language contract to ensure
transparency.
Information requirements
In any case, where products are offered for sale to consumers, traders
must ensure that certain key terms of such a transaction are provided
in advance to the consumer.
This includes details such as information about the trader and its contact
details, the contract price, characteristics of the product and information about
the right to cancel. The precise information to be provided and the method for
this provision will depend on the method of sale, see for example, in relation to
online selling. Where a hybrid contract is being used (see Smart contracts), care
should be taken to ensure these information requirements are met in natural
language, wherever they must be presented (either in the terms or elsewhere in
the consumer’s purchase journey).
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