Smart Contract

A smart contract is an automated contract based on blockchain technology, with terms written in computer code that automatically execute when preset conditions are met, without third-party intervention. In foreign trade, smart contracts are often used in letters of credit, bills of lading, insurance, and payments, improving efficiency, reducing fraud risk, and lowering manual review costs. For example, when goods arrive at the port and customs clearance information is uploaded to the blockchain, the contract can automatically trigger payment. Use cases include cross-border payments, supply chain finance, and digital bill of lading transfer. Precautions: The legal validity of smart contracts is not yet unified across countries, so applicable law and dispute resolution mechanisms must be clarified; code vulnerabilities may lead to execution errors; unlike traditional terms such as letters of credit and documentary collections, smart contracts do not rely on bank credit but on code and on-chain data. The difference from an 'electronic contract' is that an electronic contract is merely an agreement in electronic form, while a smart contract can execute automatically. Foreign trade practitioners should pay attention to rules such as the UNCITRAL Model Law on Electronic Transferable Records and ensure that off-chain data (such as quality inspection reports) is reliably uploaded to the blockchain.