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Smart contracts, the blockchain-automated programs, are now legal in Argentina after local jurisdiction recognized the enforceability of the first one. They can now be used to execute rental agreements, purchase payments, and other legal contracts, as cryptocurrency is now approved for use as payment in commercial contracts in the country.
Smart Contracts Reach Legally Enforceable Status in Argentina
Smart contracts, the automatically executed blockchain-based equivalent of paper contracts, have reached a milestone in Argentina. According to local reports, the first Cardano-based smart contract was approved to be legally binding by Argentine jurisdiction, which might be the first time this has happened in the country and even the world.
The contract specifies a four-month loan repaid with a 10% interest between Mauro Andreoli and Lucas Macchia, two Cardano ambassadors in Argentina. The loan was issued for 10,000 ADA (close to $3,430). Andreoli stated that, in practice, this contract formalization means that “any breach can be enforced in court for the performance of the obligation in ADA.”
However, due to the digital nature of smart contracts, the duo had to sign a legal document as a complement. This document specifies the details of the smart contract subscribed loan, the blockchain in which it was built, and the wallet addresses involved with the transaction ID. As this is the first time this has happened, this kind of document might also be required in other instances to legalize smart contracts.
Andreoli stressed the relevance of the event. He stated:
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.
Andreoli believes the crypto community has to work on educating national judges to be accustomed to this new kind of contract, highlighting this event marked “the initial phase of creating favorable jurisprudence in the country and facilitating commercial transactions.”
Smart contracts are supported by President Milei’s Omnibus Bill, which legalized the use of bitcoin and other cryptocurrencies as part of commercial contracts in Argentina. Andreoli concluded that smart contracts can now be used to formalize rent or purchase agreements and other legal contracts.