Smart contracts gain legal recognition in Argentina

Smart contracts, blockchain-based automated agreements, have achieved legal enforceability in Argentina, marking a significant step forward for digital contracts.

This breakthrough allows smart contracts to be used for various purposes such as rental agreements, purchase payments, and other legal transactions in Argentina, alongside the acceptance of cryptocurrency as payment in commercial contracts.

Local reports revealed that Argentina’s legal system recognized the enforceability of the first Cardano-based smart contract, a major milestone not just for the country but potentially for the world.

The smart contract in question involved a four-month loan between Mauro Andreoli and Lucas Macchia, two Cardano ambassadors in Argentina, for 10,000 ADA (approximately $3,430) with a 10% interest rate.

Andreoli explained that this recognition means any breach of the smart contract can now be enforced in court, with performance in ADA as the legal obligation.

Due to the digital nature of smart contracts, the duo had to sign an accompanying legal document that outlined the specifics of the contract, such as the blockchain used and the wallet addresses involved.

This additional document serves to formalize the smart contract for legal purposes, and Andreoli suggested similar documentation might be necessary in future cases to further legitimize smart contracts.

"We did it, we just signed the first legally and judicially binding contract on the Cardano network, in full compliance with the laws of the Argentine Republic," said Andreoli.

He also noted the need to educate national judges about smart contracts, highlighting that this event represents the initial phase of creating favorable jurisprudence in the country and facilitating commercial transactions.

This development aligns with President Javier Milei's Omnibus Bill, which legalized the use of bitcoin and other cryptocurrencies in commercial contracts, paving the way for broader adoption of blockchain technology.

Andreoli concluded by pointing out that smart contracts could now be used to formalize a range of agreements, including those related to rent, purchases, and other legal commitments.