Smart Contract in Blockchain: An Exploration of Legal Framework in Malaysia

Abstract

In 2017, the global Blockchain technology market was predicted
to reach 339.5 million U.S. dollars in size and is forecasted to grow to 2.3
billion U.S. dollars by 2021. The smart contract has an increasing role in
governing the legal relationship between the interested parties. This research
explores the current position of smart contracts in Malaysia and the viability
of the Malaysian framework in handling the latest development. This research
adopts the qualitative and doctrinal legal approaches in analysing the current
legal practice, the relevant statutes and the viability of the Malaysian legal
framework. These approaches are necessary to be carried out in ensuring the
workability of smart contracts in Blockchain. Additionally, the practices of
smart contracts from international experiences are collected as case studies in
this research. As a part of the findings, the researchers found that smart contracts
are more or less similar to traditional contracts. Therefore, the requirements as
stipulated under the Contract Act 1950 that are applicable in Malaysia must
be followed accordingly. In this study, based on the nature of Blockchain technology, the researchers evaluate the current position of Malaysian laws in
dealing with smart contracts. Additionally, the researchers also looked at the
acceptable legal practice of smart contracts in Malaysia.