SMART CONTRACTS: THE POTENTIAL TO REDUCE LITIGATION AND BUREAUCRACY IN BRAZIL

Abstract

The present study addressed the potential of smart contracts as tools for reducing bureaucracy while simultaneously exploring the legal challenges and crucial considerations for their effective implementation in Brazil. Initially, the analysis highlighted the ability of smart contracts to automate contract execution, minimize the need for human intervention, and eliminate intermediaries, which could simplify processes and reduce bureaucratic obstacles. The transparency provided by blockchain platforms was also identified as a factor contributing to the establishment of trust. However, the widespread implementation of smart contracts faces significant legal challenges. The primary barrier identified is the absence of specific legislation in Brazil to regulate these contracts, leading to uncertainties regarding their validity and effectiveness. Issues such as the interpretation of the parties' intent expressed in code, the legal nature of smart contracts, and questions of jurisdiction and applicable law in decentralized transactions were also raised as complexities to be addressed. Additionally, the study considered the practical implications of implementation, including code security, interoperability between platforms, and the need to protect contracting parties' rights in an environment of automated execution. The adoption of mechanisms such as dynamic regulation and regulatory sandboxes was suggested as a possible approach to keeping pace with technological evolution and creating a more adaptable legal framework. In summary, although smart contracts offer considerable potential to streamline processes and reduce bureaucracy, their successful adoption in Brazil depends on overcoming legal challenges and implementing measures that ensure legal certainty and the protection of the rights of the parties involved.