The basis of our entire legal system has been that people who contract with one another do so inherently based on the existence of trust.
It is true that in order to conclude a legally binding contract, certain requirements must be met:
- Consensus between the parties;
- Intention – offer and acceptance;
- The parties must have the legal capacity to contract;
- Certainty in the contract;
- Formalities must be met;
- Lawfulness; and
- Possibility of performance.
Underpinning all of the above is the aspect of trust. The fact that we have, in practice, seen contracts, that comply with all the requirements, being breached is testimony that without trust, there are no prospects of full uninterrupted performance.
Some underlying theory of the causes of breakdown in trust
Over the years, many theories have debated why exactly trust lacks even when it seems that trust is resent. Many experts including Dr. Demartini, has stated that it is all based on shared values or in the case of trust never being present in the first place or where it lacks, the lack of shared values. In essence, where people consider the same things as important, they will collaborate in a mutually acceptable manner to achieve the joint contracted and desired outcome, whether it be in the employment space, ownership or between customer and supplier or stakeholders.
How does technology build or reward trust
Be that as it may, maybe these notions and the recipe for failure or achievement is something of the past. With the introduction of blockchain and similar technology, many experts are of the view that trust would become superfluous. Technology such as blockchain creates an irrefutable, uneditable record and therefore provides that trust whether present or not can no longer adversely affect the performance of agreements.
So, the human question remains – will this make us more or less ethical in our behaviour? Will this make our relationships less or more value driven?
The supporters of token-based incentive schemes, would say that one of the inherent aspects of this technology and blockchain is that it is all reputation based and that users are motivated by points-based incentives. Incentives and point scoring based on good behaviour and reputation. Taking the concept of reputation capital to another level.
In my view, technology could be an enabler rather than another reason or diagnosis for the breakdown in trust and therefore, in contract. Legal practitioners and businesses should, in my view, closely monitor the developments in this space and embrace it as it becomes more developed, familiar, regulated and accessible.