The Nature and Enforceability of Smart Contracts in the Metaverse: A Legal Analysis and Implementation Challenges

Abstract

Smart contracts, as one of the most significant achievements of blockchain technology, possess transformative potential in the formation, execution, and supervision of contractual relationships. By relying on self-executing code, these contracts enable the elimination of intermediaries, cost reduction, and enhanced transparency, and they play a fundamental role in environments such as the metaverse. Nevertheless, their digital nature and reliance on programming algorithms have generated extensive legal challenges in terms of acceptance and enforcement. The most significant of these challenges include difficulties in translating legal concepts into code, the lack of sufficient flexibility to modify or amend contractual terms, the complexity of determining liability in cases of algorithmic errors, and the incompatibility of such contracts with traditional dispute resolution mechanisms. Furthermore, the cross-border execution of smart contracts raises critical issues concerning judicial jurisdiction and conflict of laws, given the decentralized and non-territorial nature of blockchain technology. Concerns related to cybersecurity and the protection of privacy are also identified as major obstacles to the development of these contracts. Despite these challenges, legal and technological analyses indicate that, provided appropriate legal frameworks are articulated and effective supervisory mechanisms are established, smart contracts have the capacity to function as valid and efficient substitutes for, or complements to, traditional contracts. By examining the nature, legal status, and implementation challenges of smart contracts, this article emphasizes the necessity of revising existing regulations and aligning legal systems with emerging technological developments.