A guide to Non-Fungible Tokens (NFTs), 2023 - Flipbook - Page 39
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An agent: determination on the basis of the location of the defendant, as
above, would become even more difficult where there is an agent acting on
behalf of any defendant, or indeed applicant. The agent could take the form
of a coder or other person implementing the transaction via the blockchain.
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Formation of the contract: the place where the contract is made will likely
be England and Wales if this is where the person making the offer for the
contract resides or is located, given that this is where any communication of
acceptance of an offer will be received. However, this may be challenging to
determine in instances where there is no clear acceptance, and particularly
in a case where the contract is purely smart, and there is no hybrid element
(that is, it is formed entirely on a computer network).
Governing law
As with jurisdiction, determination of the law which will govern any
smart contract where this is not made express by the parties is likely
to pose a challenge.
It is of course possible that parties will have made, or attempted to make, a
choice of the governing law. This could be done within the metadata or within
a separate natural-language contract. If the parties purport to choose the rules
and protocols of a digital platform or blockchain protocol as the governing
law of the smart contract, that choice might be ineffective. In the event of a
dispute arising out of the smart contract, it is likely that the courts will apply the
law of a country as the governing law of the smart contract. The difficulties of
establishing the governing law of digital assets is one of the issues which the
Law Commission is planning to tackle in its recently announced consultation
Digital assets: which law, which court? (which is sponsored by the MoJ).
In any case, where the law has not been determined by the parties, factors that
the courts are likely to consider include:
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Location of private key.
Location of central administrator.
Location of ledger.
Location of underlying assets.
Location of parties involved.
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