Barclays and the University College London recently published this linked academic paper on Smart Contracts and the need for formalized language. Interestingly enough, it is a good step in the right direction, as it seeks to normalize the current tension between Smart Contracts as automated computer code with the legal notion of a Contract as a formal agreement. It is a tough read but worthwhile for anyone interested in the topic.
I'm still digesting it, but one thing that stands out is the call (which I have seen repeated elsewhere) for a standardization of "Smart Contract" language (in both code and the legal meaning) as a way forward. While this is great in theory, I think it also is a red herring in turning "Smart Contracts" into an everyday form of business.
In a traditional paper and ink world, contract terms have a level of standardization that has arisen out of practice, however much is also open to interpretation. Additionally, under U.S. law there is a significant body of case law surrounding the various negotiation power of a contract. Does each side have equal power to negotiate? Who drafted the actual words, even if both approved in the end? Is this a take it or leave it contract, or can the terms be negotiated?
This is where the movement to standardize Smart Contract terms breaks down - even if a group were to come up with defined, standardized terms to be used in all Smart Contracts, it would still be conditioned upon both parties agreeing to use those pre-defined terms and not either a) a different set of pre-defined terms or b) negotiating the terms from scratch. Right away, you have opened yourself up to potential litigation on the terms.
This in and of itself shouldn't be a roadblock to further development, but a good, readily available analogy is to compare this to website terms and conditions. A "Smart Contract" for trading crypto currency based on other pre-defined values could use the standardized Smart Contract terms promulgated by a party, but this is no different than agreeing to the jurisdiction under which the contract terms are interpreted. Essentially, you have layered an additional jurisdictional requirement over the contract.
It is refreshing to see experts working to solve some of the fundamental problems, and taking a somewhat academic approach to do so, but it is clear that issues still exist and Smart Contracts remain in the realm of Automated Computer Code.