Abstract
This study aims to assess the feasibility of using smart contracts to implement performance-based incentives in South African sports contracts. Prior to assessing the feasibility of smart contracts, it is necessary to examine the essence of contracts and their historical evolution, to comprehend the implications of this emerging technology in contract law.
Law evolves in response to the dynamic requirements of society, and this applies equally to process of formulating and finalising contracts. Contracts have progressed from oral agreements communicated through spoken language to written agreements documented on printed paper and authenticated with wet ink signatures. The progression of technology has led to the development of electronic contracts, such as click-wrap and browse/web-wrap agreements, which are prevalent in present-day commercial transactions. These modes of contracting have developed even further into automated transactions, which are more commonly referred to as “smart contracts”. Some legal scholars contend that as the internet becomes more powerful, there will be an inevitable increase in fear and mistrust among parties engaged in contractual commercial transactions. The emergence of smart contracts based on blockchain technology offers a potential solution to address potential issues that may arise from contracts, such as concerns about defects in performance or non-performance. In the domain of sports contracts, smart contracts have the potential to be advantageous in monitoring performance-based incentives. In this context, an event that meets this criterion could be a player surpassing a pre-established statistical milestone, such as an average of blocks per game (BPG) or average points per game (PPG) over a specified number of competitive matches. Smart contracts may well be the solution that guarantees performance and prevents clubs from defaulting on payments or failing to perform when players reach specific statistical milestones.
This research analyses the fundamental nature of smart contracts, assesses their advantages and disadvantages, and examines the characteristics that promote or impede their implementation. A comprehensive analysis of whether the South African contractual landscape sufficiently facilitates the implementation of smart contracts for the purpose of instigating performance-based incentives in sports contracts is performed. The core objective of this research is to determine whether it is possible to leverage smart contracts to incorporate performance-based incentives into sports contracts. More specifically, this study examines whether the computer code can function as autonomous contractual agreements, or if they are more appropriate for facilitating execution and enforcing obligations specified in a conventional contract.
Keywords: Smart contracts; Performance-based incentives; Performance of contracts