With the blockchain, the future of contract is "SMART"
Source : Blockchaintechnologies.com
A Smart contract, is a new type of contract, enabled by the Blockchain technology.
Its main characteristic is that it “automatically” executes when an occurrence appears. For example, a Smart Contract can manage a payment, that executes immediately when an event (previously coded in the contract) occurs : automatic payment when a delivery at final destination is confirmed.
We can also think about a change of prices, automatic, when material indexes of reference reach a certain level.
Smart contract is a totally new tool that brings full guarantees of good execution of agreed clauses. It can also simplify, accelerate and drive cost down of contract management, as parameters are set in advance, and self-operate.
No need to check, or to have parallel and manual alerts for the implementation of certain clauses.
Smart contracts can be created thanks to Ethereum, a specific protocol, working on the Blockchain.
Smart contracts are linked to the IoT (Internet of Things) technology, as the occurrence of an event is in most cases identified and transferred thanks to a connected object.
For example, when a tool is out of service, it can send the message to the blockchain, and a 3rd part maintenance service company can be automatically informed. It can then intervene without further communication from the customer.
This is already possible. But the Smart Contract takes a step ahead. As a matter of fact, the maintenance intervention is traced and tracked and all parties can check its state directly in the Blockchain. And the intervention can also be paid automatically upon its reception, in the Blockchain of course.
As smart contracts work on the Blockchain, all transactions are available to all parties, in a decentralized way. Nobody in particular owns the information. It is time stamped and cannot be modified.