Legal Fling: Blockchain Contracts For Legally Binding Consensual Encounters

A Dutch legal tech group, LegalThings One, has launched a blockchain-based contract system called ‘Legal Fling’ that is designed to allow people to record their agreement to consensual behaviour in the bedroom, but without having to produce a pen and paper in the middle of a romantic moment.

Instead, once the parties have ‘swiped right’ to agree to the terms of the encounter on the app, this time-stamped confirmation, in effect a signature, would be stored on a blockchain which in turn referred back to the terms of the legal contract contained within the app.

Although this may seem not entirely serious, the company says its Legal Fling app is really just a proof of concept for the team’s underlying ‘Live Contract’ technology, which is aimed – very seriously – at the world of commercial legal contracts, an area they want to radically change.

In an exclusive interview with Artificial Lawyer, co-founders Rick Schmitz and Arnold Daniels, explained that their goal is simply to draw attention to what they believe should be the future of contracting in commercial enterprises.

Schmitz, who previously was a tax lawyer at Big Four firm, PwC, explained that the goal is to provide a new type of contract that exploits the blockchain’s ability to store key information in a ‘trustless’ manner indefinitely, with the central idea being that a ‘live contract’ linked to this stored data will be able to respond depending on how the contract has been designed.

One might say that this is in effect a type of smart contract, although in this case, the system works by logging key data that relates to a contract onto a blockchain.

The contract itself contains self-executing elements which can respond to the information that has been logged on the blockchain, including for example being triggered to send a letter or legal notification to one of the parties if certain conditions have been met.

Schmitz gave the example of a live contract for employment that would respond to the number of times an employee was late. Rather than have to collect evidence ‘after the fact’ and call in lawyers to sack the continually late employee, often relying on the subjective memory of other co-workers to gather evidence, the live contract would link to data stored on a blockchain that recorded, for example, reprimands for late arrivals at work.

Once the employment contract’s stipulated number of reprimands had been reached, which would be recorded on a blockchain, the employment would be terminated by the ‘live contract’. There would be no contesting the evidence, which could not be tampered with and the entire legal process of removing the employee would be massively sped up, perhaps not even needing any external legal input.

‘A paper contract gets signed and put into a drawer only to be forgotten. A Live Contract is something that you continue to interact with. Each event related to the contract is logged in an immutable way, using decentralised storage and the blockchain,’ Schmitz said.

Schmitz and Daniels stressed that the fundamental problem with contracts as they are today is that they cannot respond to the real world and that once signed the terms of the agreement are cut off from what is actually happening with the parties involved.

‘It’s about making the law more accessible and our plan is to open source the technology so that other people can make live contracts of whatever type they want,’ they said.

However, Schmitz, with his legal background, noted that no type of digital or smart contract could ignore the law of the local jurisdiction and that live contracts would always seek to be fully compliant.

As part of the strategy to share the technology, the company is undergoing an ICO, with their LTO token classified as a payment toward a software licence that people can purchase with the tokens.