Brazil: Can Smart Contracts be Nullified?

Smart contracts have not been defined under Brazil’s legal code. Here are some considerations on this topic:

It is unacceptable to the Brazilian legal system for a contract without validity to be executed with full efficacy without any chance for the parts to claim full or partial nullity due to non-fulfillment of subjective or formal requirements, for two main reasons: i) there is no able time for this to be done after the signing of the contract; ii) after the enforcement of the contract, the goods or values may be in a situation that makes it impossible for the contract to be reversed. From a traditional legal viewpoint, there is no such situation as that described in point ii): once the claim for nullity of a contract is recognized by a judge, he/she may issue a court order forcing the other part to to take the necessary measures for the goods and values to return to the status quo. It just happens that a smart contract creates a possibility in which there is no human part to be coerced and therefore the good or value to be completely out of reach for state jurisdiction. When a smart contract becomes the owner of a purely digital good or value, only a pre-determination by code and technical mechanisms might allow for such good or value to be transferred to someone else.


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