The Issue of Consumer Protection in relation to Contracts from the Use of Smart Contracts on Blockchain Systems

Abstract

This paper investigates the blockchain technology for smart contracts that involves applying blockchain to any types of contracts. This enables the contract to have a high level of security and reliability. In relation to this matter, the complexity of encryption technology causes several consumers to find it difficult to review the contract terms. The lack of knowledge or understanding of the contract contents potentially leads to their entering into agreements that place them at significant disadvantages.

In this study, the author further suggests that it is crucial for the government intervention to protect consumers who possess weaker economic bargaining power and to address injustices and social unrest that may arise when smart contracts are applied in business transactions, involving the sale of goods or provision of services that legally require written contracts. The author proposes that the Contract Committee, under Section 35 bis of the Consumer Protection Act, B.E. 2522, be empowered to designate any business transactions, including smart contracts for goods or services as a regulated contractual business. In addition, the author recommends that unfair contract terms should be reviewed in light of inequities in the contracting process and substantive contract terms and in accordance with the U.C.C. §2-302. As for smart contracts that are merely standardized agreements, without additional grounds of unfairness, would not be sufficient to deem them as containing unfair contract terms under Section 4 of the Unfair Contract Terms Act, B.E. 2540 (1997).