> For the complete documentation index, see [llms.txt](https://adamdavidlong.gitbook.io/lawsnap-guide-to-smart-contracts/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://adamdavidlong.gitbook.io/lawsnap-guide-to-smart-contracts/smart-contract-fundamentals/smart-contracts-faq/definitions-of-smart-contract.md).

# Definitions of "Smart Contract"

Various definitions of "Smart Contract" have focused on some combination of the following

1. Smart Contracts as a mix of software and contract 
2. Smart Contracts as software implementation of legal contracts
3. Smart Contracts as software running on blockchain or DLT ("Distributed Ledger Technology")

## Smart Contracts as a mix of "software" and "contract"

ISDA, the trade association for financial firms that trade derivatives, has adopted a definition that emphasizes that a Smart Contract can be either, or both, or a mix of (1) legal contract and (2) software:  

> "A smart contract is an automatable and enforceable agreement. Automatable by computer, ***although some parts may require human input and control***. Enforceable ***either*** by ***legal enforcement*** of rights and obligations ***or*** via tamper-proof ***execution of computer code***." \[[6](/lawsnap-guide-to-smart-contracts/smart-contract-fundamentals/smart-contracts-faq/definitions-of-smart-contract.md#sources)]

In contrast, Fries and Kohl-Landgraf, writing on the Oxford Business Law Blog, define a smart contract as requiring ***both*** a legal contract and a software implementation

> Smart Contracts are twofold: They are a digital representation of a legally binding contract and an algorithm to perform the procedural fulfillment. \[[4](/lawsnap-guide-to-smart-contracts/smart-contract-fundamentals/smart-contracts-faq/definitions-of-smart-contract.md#sources)]

The term "smart contract" was originally coined by Nick Szabo, who proposed that a smart contract was best thought of as "contractual clause" that was implemented in hardware and software:

> embedded in the hardware and software we deal with, in such a way as to make breach of contract expensive (if desired, sometimes prohibitively so) for the breacher . . . a real-life example, which we might consider to be the ***primitive ancestor*** of smart contracts, is the humble ***vending machine***." "Smart contracts ***go beyond the vending machine*** in proposing to embed contracts in all sorts of property that is valuable and ***controlled by digital means.***" \[[7](/lawsnap-guide-to-smart-contracts/smart-contract-fundamentals/smart-contracts-faq/definitions-of-smart-contract.md#sources)]\[[8](/lawsnap-guide-to-smart-contracts/smart-contract-fundamentals/smart-contracts-faq/definitions-of-smart-contract.md#sources)]\[[9](/lawsnap-guide-to-smart-contracts/smart-contract-fundamentals/smart-contracts-faq/definitions-of-smart-contract.md#sources)]

### Smart Contracts As Software Implementation of Legal Contracts

Chainlink Blog:

> A smart contract is a deterministic, tamper-proof and reliable ***digital agreement*** run on a decentralized blockchain infrastructure. \[[2](/lawsnap-guide-to-smart-contracts/smart-contract-fundamentals/smart-contracts-faq/definitions-of-smart-contract.md#sources)]

### Smart Contracts As Software Running on a Distributed Ledger

Ethereum Whitepaper:

> "A "smart contract" is simply a program that runs on the ***Ethereum blockchain***. It's a collection of code (its functions) and data (its state) that resides at a specific address on the Ethereum blockchain." \[[3](/lawsnap-guide-to-smart-contracts/smart-contract-fundamentals/smart-contracts-faq/definitions-of-smart-contract.md#sources)]

ISO (International Standards Organization) standard also focuses on smart contracts as a technology, specifically software running on a DLT:

> a smart contract is a computer program stored in a ***distributed ledger*** system wherein the outcome of any execution of the program is recorded on the distributed ledger. . . A smart contract ***might*** represent terms in a contract in law and create a ***legally enforceable obligation*** under the legislation of an applicable jurisdiction \[[5](/lawsnap-guide-to-smart-contracts/smart-contract-fundamentals/smart-contracts-faq/definitions-of-smart-contract.md#sources)]

Richard Gendal Brown offered the following "working definition": 

> A smart-contract is an ***event-driven program***, with state, which runs on a replicated, ***shared ledger*** and which can take custody over assets on that ledger." \[[1](/lawsnap-guide-to-smart-contracts/smart-contract-fundamentals/smart-contracts-faq/definitions-of-smart-contract.md#sources)]

## Sources

\[1] Richard Gendal Brown,  [A Simple Model For Smart Contracts](https://gendal.me/2015/02/10/a-simple-model-for-smart-contracts/), 2015-02-10

\[2] Chainlink, [The Power of Smart Contracts: What They Are and How They Can Revolutionize the Future](https://blog.chain.link/the-power-of-smart-contracts-what-they-are-and-how-they-can-revolutionize-the-future/), 2019-06-07

\[3] Ethereum Foundation, [Introduction to Smart Contracts](https://ethereum.org/en/developers/docs/smart-contracts/), 2021

\[4] Christian Fries & Peter Kohl-Landgraff, [A ‘Smart Derivative Contract’: Constructing a Digital Financial Derivative](https://www.law.ox.ac.uk/business-law-blog/blog/2018/12/smart-derivative-contract-constructing-digital-financial-derivative), 2018-12-19

\[5] International Standards Organization, ISO/TR 23455:2019(en) [Blockchain and distributed ledger technologies — Overview of and interactions between smart contracts in blockchain and distributed ledger technology systems](https://www.iso.org/obp/ui/#iso:std:iso:tr:23455:ed-1:v1:en)

\[6] ISDA & Linklaters, [Smart Contracts and Distributed Ledger -- A Legal Perspective](https://www.isda.org/a/6EKDE/smart-contracts-and-distributed-ledger-a-legal-perspective.pdf), 2017-08

\[7] Nick Szabo, [Smart Contracts: Building Blocks for Digital Markets](https://www.fon.hum.uva.nl/rob/Courses/InformationInSpeech/CDROM/Literature/LOTwinterschool2006/szabo.best.vwh.net/smart_contracts_2.html), 1996

\[8] Nick Szabo, [Formalizing and Securing Relationships on Public Networks](https://firstmonday.org/ojs/index.php/fm/article/view/548), 1997-09-01

\[9] Nick Szabo, [The Idea of Smart Contracts](https://nakamotoinstitute.org/the-idea-of-smart-contracts/), 1997