Sale in Future and Smart Contracts with Analysis of Article ۳۶۲ of the Civil Code

Abstract

With the expansion of modern technologies, especially blockchain technology and smart contracts, traditional concepts of contract law face new challenges and opportunities. One such concept is sale in future, which has faced limitations in Islamic jurisprudence and Iranian law. This article aims to examine the feasibility of implementing sale in future through smart contracts by analyzing Article 362 of the Iranian Civil Code and the capacities of blockchain technology

Introduction

Smart contracts are self-executing programs implemented on blockchain platforms that automatically enforce the terms stipulated in the contract. These contracts, especially in the field of futures transactions, can play a significant role in ensuring the fulfillment of obligations. In this context, examining the compatibility of sale in future with smart contracts from the perspective of Iranian law and Ja'fari jurisprudence is essential

1. Article 362 of the Civil Code and Conditions for Validity of Sale

Article 362 of the Civil Code states the conditions for the validity of a sale contract as follows

1. Intention and consent of the parties
2. Legal capacity of the parties
3. Specific subject matter that is the object of the sale
4. Legitimacy of the purpose of the transaction

In sale in future, the main challenge relates to the third condition, i.e., the existence of a specific subject matter at the time of contract formation. In Ja'fari jurisprudence, sale of a non-existent item is considered void, except in forms such as Salam sale

2. Jurisprudential and Legal Challenges of Sale in Future

• Sale of Non-Existent Goods: In Ja'fari jurisprudence, sale of something that does not yet exist is void
• Sale of Deferred Goods for Deferred Price: A sale where both the subject and the price are deferred is void
• Ambiguity in Defining the Subject Matter: In futures contracts, sometimes the exact characteristics of the goods are not specified at the time of contract formation

3. Capacities of Smart Contracts in Implementing Sale in Future

• Guaranteeing Performance of Obligations: A smart contract can automatically and conditionally execute delivery of goods and payment
• Possibility of Precise Definition of Subject Matter: Using digital data and technical standards, the subject matter can be precisely defined
• Use of Suspensive Condition: A smart contract can make the contract's effectiveness conditional upon a future event, such as production of goods or initial payment

4. Legal Analysis of Feasibility with Article 362

• Intention and Consent of Parties: In smart contracts, offer and acceptance are done digitally with cryptographic signatures, which can indicate valid intention and consent.
• Legal Capacity of Parties: If the digital identity of the parties is verified, the capacity condition is fulfilled
• Specific Subject Matter: By precisely defining the specifications of the goods in the smart contract, the third condition of Article 362 can be met, even if the goods do not exist at the time of contract formation
• Legitimacy of Purpose: If the subject matter is legitimate, this condition is also fulfilled

Conclusion

Analysis of Article 362 of the Civil Code shows that the main challenge in accepting sale in future relates to the condition of having a specific subject matter at the time of contract formation. However, smart contracts can provide the means to fulfill this condition through precise definition of the subject, use of suspensive conditions, and guaranteeing performance of obligations. It is recommended that the legislator revise Article 362 and explicitly accept sale in future within the framework of digital contracts, taking an effective step towards aligning Iranian law with technological developments