Authored By: Walter Gabriel Matthew
Rivers State University
ABSTRACT
Contracts form the basis of commercial and social transactions by setting out the rights and duties of each party. While contracts were once limited to paper documents and human witnesses, they have changed with technology, moving from paper to electronic forms and now to blockchain based smart contracts. This article reviews that development, comparing traditional contract rules with their digital and blockchain versions. It looks at the legal framework, court decisions, and enforcement challenges in both Nigeria and internationally. The study finds that smart contracts can improve transparency, efficiency, and trust, but a unified legal framework is still needed to make sure they are legitimate, accessible, and fair in today’s business world.
INTRODUCTION
Contracts have always been the heartbeat of legal and economic relations, defining how individuals and entities exchange promises, goods, and services. In the classical sense, a contract is a voluntary agreement enforceable by law—anchored on offer, acceptance, consideration, and intention to create legal relations. Historically, this framework operated within a paper-based system, where ink signatures, seals, and physical documentation symbolized authenticity and intent.
However, globalization and digitalization have transformed the contractual landscape. The rise of the Internet and blockchain technology has birthed a paradigm shift—from paper to pixels, and now, from centralized authority to decentralized verification. These innovations have redefined how parties form, execute, and enforce agreements.
This topic matters because the law changes as technology advances. As more business moves online, the ways we handle consent, authentication, and performance must also change. This brings both opportunities and challenges, especially in places like Nigeria where digital growth meets developing legal systems.
This article examines how contract law has developed, from traditional written agreements to digital and blockchain-based smart contracts. It reviews the strengths and weaknesses of each approach and suggests reforms to balance innovation with legal certainty.
RESEARCH METHODOLOGY
This study adopts a comparative and doctrinal approach, drawing from statutes, case law, international conventions, and scholarly works. Primary legal sources include the Constitution of the Federal Republic of Nigeria 1999 (as amended); Evidence Act 2011 (as amended 2023), Cap. E14 Laws of the Federal Republic of Nigeria, 2010; Cybercrimes (Prohibition, Prevention, etc.) Act 2015; and the UNCITRAL Model Law on Electronic Commerce 1996. Secondary materials include academic writings such as Max Raskin, “The Law and Legality of Smart Contracts” (2017); Edema, “Legal Framework for Regulating Artificial Intelligence and Smart Contracts in Nigeria” (2020); and Nguyên, “Blockchain Smart Contract Applications” (2019).
The methodology is primarily analytical, assessing doctrinal consistency and technological adaptability across jurisdictions.
LEGAL FRAMEWORK
The classical law of contract emerged under common law, emphasizing written documents as evidence of consensus. A valid contract required offer, acceptance, consideration, capacity, and intention. Cases such as Carlill v. Carbolic Smoke Ball Co.1established that advertisements may constitute valid offers if there is clear intention to be bound, while Entores Ltd. v. Miles Far East Corp.2clarified that communication of acceptance must be effectively received to create a binding agreement.
Under Nigerian law, these principles remain fundamental. The Evidence Act 2011, particularly Sections 84–93, recognizes electronic records as admissible forms of evidence, effectively bridging the gap between paper and digital agreements. Similarly, Cybercrimes (Prohibition, Prevention, etc.) Act 2015, Section 17(1) validates electronic signatures, provided authenticity can be verified. This aligns with the UNCITRAL Model Law on Electronic Commerce 1996, which promotes functional equivalence between electronic and paper records. Recognizing electronic contracts shows that contract law can adapt to new technology. However, smart contracts, which are self-executing code on a blockchain, bring a new approach. As Raskin explains, smart contracts are “automated transactions reducing the need for legal enforcement through code execution.”3 These contracts use cryptographic verification instead of relying on institutions, reflecting a move toward decentralization. Nigerian law does not yet specifically address blockchain-based agreements, but the principles of freedom of contract and functional equivalence offer a basis for recognizing them. Still, new laws are needed to clarify questions about liability, jurisdiction, and dispute resolution in decentralized transactions.
JUDICIAL INTERPRETATION
Judicial development of contract law reveals the courts’ role as both interpreters and gatekeepers of innovation. Traditional jurisprudence emphasized intention and consensus ad idem (meeting of the minds). In Carlill, the English Court of Appeal enforced a unilateral contract formed through advertisement, highlighting the objectivity of intention. Nigerian courts have consistently upheld similar principles. In Attorney-General of Bendel State v. Aideyan4, the Supreme Court reinforced the requirement of mutual consent and enforceability. With the emergence of electronic and smart contracts, courts face new interpretive challenges. How should consent be inferred when actions are automated? What happens when code executes without human oversight? As Raskin observes, the immutability of code can conflict with equitable doctrines like mistake, duress, or undue influence.5 Foreign jurisprudence provides guidance. The Singaporean Law Commission (2021) and the UK Law Commission (2022) have recognized that smart contracts can form valid agreements if traditional elements—offer, acceptance, and consideration—are satisfied, even if embedded in code.6 Similarly, U.S. courts in cases such as CFTC v. McDonnell7 acknowledged blockchain as a legitimate medium for commerce, subject to existing regulatory principles. Thus, while courts increasingly accept digital evidence and code-based contracts, there remains judicial hesitation in enforcing them without statutory backing, especially where algorithms replace human volition.
CRITICAL ANALYSIS
The transition from paper to on-chain contracts is not merely technological—it is philosophical. Traditional contracts depend on trust between parties and enforcement by institutions, while smart contracts shift trust to technology and code. From a legal standpoint, smart contracts raise key questions:
➢ Can a line of code truly embody “intention”?
➢ Who bears liability when automated performance leads to unintended results? ➢ How can courts interpret code whose meaning depends on programming logic rather than linguistic expression?
Raskin argues that the law must distinguish between “smart contracts” (legal agreements executed through code) and “code contracts” (purely technical programs without legal intent).8 Similarly, Edema contends that Nigerian law, though not yet adapted, could extend existing principles under the Evidence Act 2011 and Cybercrimes Act 2015 to recognize blockchain transactions as valid.9
Comparatively, jurisdictions like Singapore, the UK, and the European Union are already integrating blockchain governance frameworks. The EU’s eIDAS Regulation recognizes digital identities and signatures, enabling legal enforceability of on-chain agreements. Nigeria’s legal system, though receptive, must still establish clear regulations for data integrity, authentication, and cross-border enforcement. Moreover, the decentralized nature of blockchain poses a jurisdictional puzzle—contracts exist everywhere and nowhere at once. This challenge conventional doctrines of locus contractus (place of contract) and proper law of contract. Courts may need to adopt hybrid arbitration or on-chain dispute resolution models to handle such complexities. Ultimately, the evolution of contract law illustrates a broader shift—from trust in people to trust in protocols. Yet, the legal system must ensure that technological determinism does not erode the human element of justice and equity.
RECENT DEVELOPMENTS
In recent years, governments and international bodies have shown growing interest in digital governance frameworks for blockchain and smart contracts. Nigeria, while still in its formative stage, has made strides toward digital recognition through the National Blockchain Policy for Nigeria (2023), which seeks to harness blockchain for transparency, innovation, and regulatory clarity. The National Information Technology Development Agency (NITDA) has also issued draft frameworks to guide blockchain and artificial intelligence integration within Nigeria’s tech ecosystem.
Globally, the European Union’s eIDAS Regulation (EU) No 910/2014 and UK Law Commission’s 2021 report have recognized the validity of smart contracts under existing contract principles, stating that “a smart legal contract is capable of having legal effect.” Likewise, Singapore’s Electronic Transactions Act (2021) affirms the enforceability of blockchain-based contracts.
Meanwhile, international initiatives such as the UNCITRAL Model Law on Electronic Transferable Records (2017) and OECD blockchain policy recommendations continue to influence global best practices. These developments illustrate that, while blockchain challenges traditional notions of contract formation and enforcement, policymakers increasingly see it as a tool for efficiency and accountability, not a legal threat.
In Africa, Nigeria’s proactive steps position it as a potential leader in blockchain regulation, though successful implementation requires synergy between law, technology, and judicial interpretation.
SUGGESTIONS / WAY FORWARD
- Codification and Legislative Reform: The Nigerian legislature should consider explicit statutory recognition of smart contracts under the Evidence Act 2011 or through a dedicated Digital Transactions Act, similar to the UK Electronic Communications Act 2000. This would clarify enforceability, liability, and admissibility.
- Judicial and Professional Training: Continuous legal education programs should equip judges, lawyers, and policymakers with the technical literacy needed to interpret blockchain-based evidence and smart contracts effectively.
- Integration of Hybrid Dispute Resolution: The establishment of on-chain arbitration mechanisms or blockchain-backed Alternative Dispute Resolution (ADR) frameworks would help resolve jurisdictional ambiguities and promote efficiency.
- Data Integrity and Privacy Regulation: Since blockchain records are immutable, Nigeria’s Data Protection Regulation 2019 should be synchronized with blockchain use to ensure data rights, security, and compliance with global standards like the GDPR.
- Cross-Border Cooperation: Smart contracts often transcend national boundaries. Nigeria should collaborate with regional bodies such as ECOWAS and the African Union to create harmonized frameworks that support digital commerce and mutual legal assistance in enforcement.
- Public Awareness and Innovation Incentives: Governments and private institutions should promote public awareness of blockchain’s benefits and encourage adoption by creating legal sandboxes, grants, and research collaborations.
These steps will help bridge the gap between technological innovation and legal governance, ensuring that Nigeria remains competitive in the emerging digital economy.
CONCLUSION
The journey from paper to on-chain contracts illustrates law’s resilience and adaptability to change. From the age of handwritten agreements and judicial seals to cryptographically secured smart contracts, the underlying objective of contract law remains constant: the enforcement of promises and the protection of trust. While blockchain introduces automation, immutability, and transparency, it also exposes legal gaps relating to consent, jurisdiction, and liability. Nigerian law, through its Evidence Act 2011,
Cybercrimes Act 2015, and evolving blockchain policy, already provides a foundation for digital adaptation. However, the lack of specific legislation on smart contracts necessitates reform to align with international standards such as the UNCITRAL Model Law on Electronic Commerce (1996) and the EU eIDAS Regulation (2014). Ultimately, the law must not only catch up with technology but also guide it ethically and equitably. As the world transitions into a Web3-driven economy, the challenge is not whether smart contracts can be legal, but whether the law can remain humane, fair, and accessible in a code-driven world.
REFERENCES / BIBLIOGRAPHY
- Constitution of the Federal Republic of Nigeria (1999, as amended).
- Evidence Act 2011 (as amended 2023), Cap. E14 Laws of the Federal Republic of Nigeria, 2010.
- Cybercrimes (Prohibition, Prevention, etc.) Act (2015) (Nigeria).
- National Blockchain Policy for Nigeria (Federal Ministry of Communications, Innovation and Digital Economy, 2023).
- National Information Technology Development Agency (NITDA) Act (2007). 6. Data Protection Regulation (2019) (Nigeria).
- UNCITRAL Model Law on Electronic Commerce (1996).
- UNCITRAL Model Law on Electronic Transferable Records (2017).
- Regulation (EU) No 910/2014, eIDAS Regulation on Electronic Identification and Trust Services.
- Carlill v. Carbolic Smoke Ball Co., (1893) 1 Q.B. 256 (C.A.).
- Entores Ltd. v. Miles Far East Corp., [1955] 2 Q.B. 327 (Eng. C.A.).
- Attorney-General of Bendel State v. Aideyan, (1989) 4 N.W.L.R. (Pt. 118) 646 (Nig. S.C.). 13. Max Raskin, The Law and Legality of Smart Contracts, 1 Geo. L. Tech. Rev. 305 (2017). 14. Nguyên, Blockchain Smart Contracts Applications (2019).
- Edema, Legal Framework for Regulating Artificial Intelligence and Smart Contracts in Nigeria (2020).
- UK Law Commission, Smart Legal Contracts: Advice to Government (2021). 17. OECD, Blockchain Policy Recommendations (2020).
- Szabo, The Idea of Smart Contracts (1996).
- Meyer, Digital Trust and the Law (2020).
1(1893) 1 QB 256 (Eng)
2 [1955] 2 QB 327 (Eng)
3 Max Raskin, The Law and Legality of Smart Contracts, 305, 306 Geo. L. Tech. Rev. V1 (2017). 4(1989)
4 NWLR (Pt. 118) 646
5Id. at 309.
6 UK Law Commission, Smart Legal Contracts: Advice to Government (2021). 7 287 F. Supp. 3d 213 (E.D.N.Y. 2018).
8 Raskin, supra note 1, at 314.
9 Edema, Legal Framework for Regulating Artificial Intelligence and Smart Contracts in Nigeria (2020).
