Smart Contracts and Their Status in the Validity of Contracts from the Perspective of Iranian Law

Abstract

The rapid expansion of blockchain-based transactions and automated digital systems has created new questions for contract law, particularly regarding the validity of agreements formed, recorded, or executed through computer code. This article examines the legal status of smart contracts from the perspective of Iranian law, with specific attention to the general requirements of contractual validity. The study adopts a doctrinal and analytical approach and argues that smart contracts should not be considered legally valid merely because they are technically executable, nor should they be rejected simply because they are coded or automated. Rather, their validity must be assessed according to the established principles of Iranian contract law, including intention and consent, legal capacity, definiteness of subject matter, and lawfulness of purpose. The article explains that code may function as a means of expressing contractual intention, recording agreement, or performing obligations, but it cannot replace the substantive legal foundations of a valid contract. Particular attention is given to problems of offer and acceptance, attribution of automated acts, cryptographic authorization, defects of consent, coding errors, oracle failure, pseudonymity, consumer protection, and the conflict between coded terms and natural-language agreements. The article further argues that the most appropriate model for Iranian law is a hybrid model in which a legally understandable written agreement defines the parties’ rights and obligations, while the smart contract automates selected aspects of performance. This approach allows Iranian law to recognize the practical advantages of smart contracts, including efficiency, certainty, and evidentiary reliability, while preserving judicial authority to examine validity, interpret intention, correct defective transactions, and provide remedies. The article concludes that smart contracts can have a valid place in Iranian contract law when they satisfy ordinary contractual requirements and when their electronic operation can be reliably attributed to legally responsible parties.