SMART CONTRACTS IN MODERN BUSINESS TRANSACTIONS: EXAMINING THEIR LEGAL ENFORCEABILITY AND COMMERCIAL IMPLICATIONS UNDER INDIAN LAW

The growth of blockchain technology has transformed the way commercial transactions are created and performed. One of its most significant innovations is the smart contract. Smart contract is a self-executing agreement that are automated, when the predetermined conditions are fulfilled. While smart contracts offer significant advantages, like greater efficiency because of automation, transparency as it is immutable, and reduced transaction costs by reducing reliance on intermediaries they also challenge traditional legal principles governing contract formation, evidence, liability and dispute resolution. Unlike foreign jurisdictions that have expressly recognised smart contracts through legislation, India does not yet have a dedicated statutory framework for regulation. Their legal validity is therefore determined through existing legislation, particularly, Indian contract Act, 1872, The Information Technology Act, 2000, and the Bhartiya Sakshya Adhiniyam, 2023. This article examines whether these statutes are sufficient to govern blockchain based agreements. It contends that although the present legal regime provides a workable legal foundation for recognising electronic agreements, they do not adequately address issues arising from automated execution, coding defects, decentralised systems, and cross- border transactions. The article further explores issues relating to evidentiary challenges, contractual remedies, regulatory concerns, and the need for legislative reform. It concludes that India should adopt a hybrid legal framework that preserves the flexibility of existing contract law while providing statutory recognition for smart contracts, and establishing clear standards for liability, consumer protection, and dispute resolution.