Self-Enforcing Agreements

Definition ∞ Self-enforcing agreements are contracts where the terms and conditions are automatically executed by code, without the need for human intervention or external legal systems. Smart contracts on blockchain platforms are the primary example of this concept. The agreement’s logic is embedded directly into the protocol, ensuring that once conditions are met, the agreed-upon actions occur automatically. This minimizes counterparty risk and enhances trust. They represent a fundamental shift in contract execution.
Context ∞ Self-enforcing agreements are a foundational concept driving innovation in decentralized finance and legal technology, often featured in news regarding blockchain applications. The discussion centers on their ability to create trustless environments and reduce transaction costs. Challenges persist in accurately translating complex legal clauses into executable code and ensuring their legal recognition across jurisdictions.