Smart contracts are blockchain-based programs that automatically execute transactions when predetermined conditions are met. Although the concept was introduced by Nick Szabo before the development of blockchain technology, it became widely used following the launch of Ethereum in 2015.

The term “smart” does not necessarily mean that these contracts use artificial intelligence. It refers primarily to their ability to interact with digital data and automatically perform predefined operations.

Turkish legislation does not currently contain a specific legal definition of smart contracts. Nevertheless, a transaction executed through a smart contract may be legally valid under Turkish law if the general requirements for forming a contract—particularly mutual consent, legal capacity and a lawful subject matter—are satisfied.

Foreign companies using smart contracts in transactions connected with Turkey should also consider:

Whether Turkish law applies to the transaction;
Which courts or arbitral tribunals have jurisdiction;
Whether mandatory written or official form requirements apply;
How the parties and blockchain transactions can be proven; and
Whether consumer, data protection or financial regulations are applicable.

A smart contract may execute a transaction automatically, but automatic execution does not prevent a Turkish court from examining its validity or legal consequences.

Author: Av. Dr. Gökhan Cindemir – Author of Avrupa Kripto Varlık Piyasaları Tüzüğü.