“CODE IS LAW” BUT IS CODE A CONTRACT?

SMART CONTRACTS UNDER THE INDIAN CONTRACT ACT, 1872 AND THE INFORMATION TECHNOLOGY ACT, 2000

AUTHOR – KHUSHI PATEL, STUDENT AT UNITEDWORLD SCHOOL OF LAW, KARNAVATI UNIVERSITY

BEST CITATION – KHUSHI PATEL, “CODE IS LAW” BUT IS CODE A CONTRACT? – SMART CONTRACTS UNDER THE INDIAN CONTRACT ACT, 1872 AND THE INFORMATION TECHNOLOGY ACT, 2000, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 6 (7) OF 2026, PG. 409-422, APIS – 3920 – 0001 & ISSN – 2583-2344. DOI – https://doi.org/10.65393/IJLRV6I746

ABSTRACT

Smart contracts — self-executing agreements expressed in blockchain code — are transacting billions of dollars of value daily, yet their legal enforceability under Indian law remains fundamentally uncertain. This article undertakes a systematic doctrinal analysis of smart contracts against the essential requirements of a valid contract under the Indian Contract Act, 1872 (“ICA”) and the authentication and evidentiary framework of the Information Technology Act, 2000 (“IT Act”). The analysis demonstrates that the ICA’s core requirements — offer and acceptance, consideration, capacity, free consent, and legality — can each be satisfied in a smart contract interaction when interpreted in light of the blockchain’s technical architecture. This article proposes the “Informed Interaction Standard” as a workable judicial test for offer and acceptance. It identifies two critical gaps in the IT Act: the non-recognition of blockchain cryptographic authentication as a valid electronic signature and the inapplicability of the Section 65B evidentiary certificate requirement to blockchain records. To address these gaps, the article proposes three targeted legislative interventions: a new Section 10B (IT Act) expressly validating smart contracts; a Section 3A notification recognising blockchain authentication; and a new Section 65C establishing an alternative evidentiary certification pathway for distributed ledger records. Comparative analysis of England, the United States, Singapore, and the European Union confirms that India is an outlier in its failure to resolve these questions and benchmarks the proposed reforms against best international practice.

Keywords: smart contracts, Indian Contract Act 1872, Information Technology Act 2000, blockchain law, decentralised finance, digital signatures, Section 65B, electronic contracts, DAO, law reform.